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Europe’s most respected companies 

Executives rank their peers : FT-Price Waterhouse survey 


Shoichiro Toyoda 

? ? | Leading the Keidanren 
v£, as old order crumbles 

_• ..'T frttenrtow, Page 16 



Tottens survey 

Russia’s future is 
in its own hands 

Section HI 


FINANCIAL TIMES 


Ti-opo'*?, N-vwsfctepe' 


MONDAY JUNE 27 1994 


CDU edges ahead 
in east German 
state election 

German chancellor Helmut Kohl’s fThr icti^ 
Democratic party and the opposition Social Demo- 
cratic party were last night running neck and 
neck in the first east German state election since 
1990. Exit polls for the election in Saxony- Anhalt 
showed the CDU edging ahead with 35 jz per cent 
of the vote, while the SPD, led by Rudolf Scharpin g. 
had polled 34.4 per cent The result prompted 
speculation the two parties mi ght, form a grand 
coalition in the state. Page 22 

Hebron killer 'acted alone’: Israel's nffirfni 
inquiry into the Hebron mosque massacre con- 
cluded that Jewish settler Baruch Goldstein acted 
alone when he shot dead 29 Palestinians kneeling 
in prayer. Page 5 

bias Shares in Italy’s state-owned insurer go 
on sale today at L2.400 each, in an international 
public offering which will raise more than L4,800bn 
($3bn), making it Italy's biggest privatisation 
so far. Page 23; Lex, Page 22 

Spain under pressure on ferry route: Spain 
must respond this week to formal complaints 
by the European Commission that it h*« disobeyed 
th e rule s and spirit of the ElTs single market 
by refusing a UK. shipping company access to 
the ferry route between Spam and Morocco. Page 22 

S Korea protests quashed: South Korea, 
intensifying a crackdown on labour strife, used 
thousands of riot police to crush anti-government 
protests by strikers and students. A total of 357 
people were arrested. 

China to consider HK port extension: 

China has told Britain it will give urgent attention 
to proposals at last week's Slno-Brttish talks for 
a HKSlObn (3l.3bn) extension to Hong Kang's 
container port. Page 4 

Russian crime decree raises concern: 

A decree empowering police to launch open warfare 
on organised crime is causing divisions among 
politicians and intellectuals anti raising fears 
that combating criminality may foad to authoritar- 
ian rule. Page 3 

Rebels lire on Kigali: Explosions erupted 
on Mount Kigali the last large {nut of high ground 
held by the government in Rwanda’s capital, 
alter rebel bombardments brought humanitarian 
efforts to a standstill Hutns see France as their 
saviour. Page 5 

Hungary coalition agreed: Hungary's new 
government of former communists and liberals 
passed its final hurdle when assemblies of the 
Socialist party and Alliance of Free Democrats 
approved a coalition. Page 3 

KPRKB Rent Marwick, one of the UK's largest 
accountancy firms, is considering abandoning 
its traditional partnership status in favour of 
incorporation over the next few months. Page 23 

European Monetary System: The order 
of currencies in the EMS grid was unchanged 
in spite of bond market volatility that caused 
a flight of investors to the safe haven D-Mark. 

In a week in which trading was dominated by 
dollar turbulence, the spread between the weakest 
and strongest currencies narrowed to just over 
5 per cent from nearly 6 per cent a week ago. 
Currencies, Page 35 


EM$= Grid 


June 24, 1994 



e% 

Vhe chart shows the member currencies of the 
fiange rate mechanism measured against t he 
nicest currency in the system. Most of the curren- 
; can fluctuate within 15 per cent of agreed central 
es against the other members of the mechanism, 
e exceptions are the D-Mark and the guilder 
idi move in a narrow 2.25 per cent band. 

swers fight for China share: A tie-up 
ween Foster’s of Australia and Wheel ock of 
og Kong to seek joint brewing ventures in 
inn marks a new stage in the struggle for the 
tn try's growing beer market Page 23 

ick seeks to Kmlt profit fall: Conrad 
ick, chairman of The Telegraph group, said 
hoped a drop in profits resulting from an lBp 
in the price of the Daily Telegraph to SOp 
uld be limited to £5m-£lQm in a full year. Page 

ost for sustainable farming: UK 

remment funds for “sustainable forming" have 
in trebled to £ 12 m to try to reduce the use 
igrochemicals and fertilisers. Industry is provid- 
a further £I2m for the scheme. Page 11 

; cross-media ownership delay: 

nr Kroner publishers’ ambitions to take over 
S^Kcasters mw tave to be put on hold 
a use a growing parliamentary logjam is threat- 
ng serious delays to the required legislation, 
fell 

bfefcm business strikes aver budgets 

atchy twodny business strike began 
h many stores, offices and factories shut Awi 
nubhe transport and most small shops staying 
n. Business is opposed to budget measures, 
hiding a general sales tax. Page 4 


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Special summit called after UK vetoes Dehaene as EU Commission president 

Kohl to seek successor to Delors 


By Lionel Barber, David Gardner 
and PhiUp Stephens in Corfu 

Chancellor Helmut Kohl of 
Germany will today start urgent 
talks other European leaders tn 
an attempt to head off a political 
crisis in the Europ ean Union fol- 
lowing the failure of EU leaders 
to agree on a successor to Mr 
Jacques Delors as president of 
the European Commission. 

Chancellor Kohl, bitterly disap- 
pointed that his choice of Mr 
Jean-Luc Dehaene. Belgian prime 
minister, was blocked by what 
was in effect a British veto, has 
railed a special summit in Brus- 
sels on July 15 to resolve the 
dispute. However Informal dis- 


cussions on the issue are expec- 
ted to get underway today. 

Germany takes over the rota- 
ting EU presidency from Greece 
on Friday. Mr Kohl has the tricky 
task of coming up with a new 
candidate acceptable to all 12 
member states. 

Among several rumoured can- 
didates are Mr Peter Sutherland, 
outgoing Irish head of the Gatt 
world trade organisation, and 
Viscount Etienne Davignon, a 
Belgian former industry commis- 
sioner who now heads the Soctett 
Gdndrale de Belgique, the Bel- 
gian conglomerate. Mr Wilfried 
Martens, the former Belgian pre- 
mier, is ai«p being canvassed by 
some EU officials. The weekend 


Pages 2 and 3 

□ Worst of all worlds □ Major saves his job □ Kohl rattled 
as protege falls □ Wider and deeper Union on the cards 
Editorial Comment, Page 21 


stalemate at the Corfu summit 
risks triggering a confrontation 
between member states and the 
newly elected European Parlia- 
ment, which is due to scrutinise 
the Commission president-desig- 
nate at its inaugural session on 
July 19. Some member states 
were concerned that the recently 
elected MEPs might flex their 
muscles b; promoting its own 

ranfl jrjyha 


Under the Maastricht treaty 
the parliament could as a last 
resort block a nomination. 

Efforts to reach agreement on a 
successor to Mr Delors broke up 
in acrimony early on Saturday 
morning. Mr Dehaene secured io 
votes at the end of two ballots. 
Mr Ruud Lubbers. Dutch prime 
minister, and Sir Leon Brittan, 
chief EU trade negotiator, later 
withdrew as candidates. The UK 


decision to continue blocking Mr 
Dehaene caused consternation. 
France and Germany were 
angered by the British refusal to 
bow to what they saw as a con- 
sensus. 

However, several member 
states - including Italy, Portugal 
and the Netherlands - agreed 
with the UK case that France and 
Germany had been heavy-handed 
in pushing Mr Dehaene. 

The Belgian premier remains 
in the race. But on Saturday he 
made clear that he had entered 
the running only after prompting 
from other member states, 
believed to be France and Ger- 
many. He added that becoming 
Commission president was not “a 


must". Mr Lubbers, evidently 
angered at German opposition to 
his candidacy, said: "The German 
chancellor now has a big prob- 
lem. Either be has to persuade 
Mr Major, which I doubt, or we 
have to find a new candidate." 

The deadlock provoked further 
bickering yesterday. Mr Klaus 
Klnkel, the German foreign min- 
ister, said there was "no need" to 
look for a compromise candidate 
despite the British veto. “At this 

Mr Dehaene himself accused 
Britain of blocking his candidacy 
because of domestic problems. 
“On a personal level. 1 have no 
problem with John Major." Mr 
Dehaene said on Belgian televi- 
sion yesterday. 


Major bolsters 
position within 
the Tory party 


By Roland Rudd and 
Phfflp Stephen s 

Mr John Major, the OK prime 
minister, appeared to have tem- 
porarily strengthened his posi- 
tion within his party yesterday 
as Tory Euro-sceptics yesterday 
welcomed his veto of Mr Jean- 
Luc Dehaene as European Com- 
mission president 
After his humiliating climb- 
down two months ago over 
majority voting Mr Major is hop- 
ing that his defiant performance 
at the Corfu summit will appease 
his party's right wing enough to 
remove the threat of a challenge 
to his leadership in the autumn. 
The anger and bewilderment Mr 
Major left behind in Corfu will be 
followed today by noisy applause 
from the Euro-sceptics on the 
Tory backbenches in the House 
of Commons. 

Having narrowly avoiding 
heavy defeat in the recent elec- 
tions for the European parlia- 
ment, Mr Major decided that his 
precarious political position 
meant that isolation among his 
European partners was prefera- 
ble to criticism from Conserva- 
tive MPs at Westminster, 
However leading Euro-sceptics 
warned that the prime minister's 
position could quickly weaken if 
he allowed another federalist to 
be appointed at the special Euro- 
pe summit called for July 15 to 
resolve the issue. 

The decision to use Britain's 
veto appalled Tory members of 
the Positive European group, 
who warned Mr Major that he 
could find himself in a weaker 
position by relying on the sup- 
port of Euro-sceptics. 

However, tbe prime minister 
had little choice but to use the 
veto following a warning from Mr 


Richard Ryder, the chief whip, 
that acceptance of the Belgian 
prime minister as Commission 
president would provoke a 
vicious backlash on the Tory 
backbenches. 

Speaking after the summit the 
prime minister said he was 
“unperturbed" by his isolation. 
Hb said: T believe that it is nec- 
essary, even at the expense of 
painful decisions and difficult 
moments to mala* sure that we 
have the best possible person for 
this vitally important job". 

Mr Major attempted to play 
down suggestions that the move 
could signal a long-term crisis in 
Britain's relations with tbe other 
EU governments. He said that he 
“warmly welcomed" the decision 
to hold another summit in July 
and was “entirely" confident that 
a new candidate could he found 
that was acceptable to everyone. 

Mr Douglas Hurd, the foreign 
secretary, denied that Mr Major 
had acted against his advice fn 
using Britain's veto, saying that 
he had no doubt about the “right- 
ness” of tbe prime minister's 
course. But there were clear 
signs that the foreign office 
would have preferred to avoid an 
n-to -1 position and despite his 
public protestations to the con- 
trary, Mr Hurd seemed less than 
happy at the outcome. 

The prime minister was careful 
to avoid any suggestion that he 
would veto another candidate on 
the basis of “federalist views". 
Instead he stressed that Europe 
needed a president whose 
“instincts are for enterprise, 
openness and subsidiarity”. 

On that basis he is expected to 
promote the candidacy of Mr 
Peter Sutherland, the outgoing 
head of the General Agreement 
on Tariffs and Trade. 



Japanese 
parties 
begin race 
for power 

By William Dawkins in Tokyo 


Japan's political parties 
yesterday began the race to form 
a new government following Sat- 
urday's resignation of Mr Tsu- 
tomu Hata's eigbt-week-oiri 
minority coalition. 

Mr Hata stepped down rather 
than face a parliamentary no-con- 
fidence vote that would risk a 
general election after he failed to 
persuade the opposition Social 
Democratic party to rejoin the 
coalition. “It is urgently impor- 
tant for politicians sharing simi- 
lar policies and ideas to establish 
a stable government and I will 
resign in older to pave the way 
for reform," said Mr Hata. 

Japan faces a pressing eco- 
nomic and foreign policy agenda, 
with the plunge in the dollar's 
value against the yen. the sum- 
mit of the Group of Seven leading 
industrial nations on July 8-10, 
and the nuclear threat in North 
Korea. Mr Hata and his cabinet 
stay on as caretakers until a new 
administration is formed. 

He attempted to calm fears that 


Continued on Page 22 
Bureaucrats cling to power. 
Page 4 

Tokyo adjusts to tempestuous 
times, Page 21 


Ukrainian president Leonid 
Kravchuk emerges from a poll- 
ing booth in Kiev after voting tn 
tbe presidential elections yester- 
day. The main issue for the 
voters was whether Ukraine 
should have closer ties with Rus- 
sia. Kravchuk and his main 
opponent, the former prime min- 
ister Leonid Kuchma, are expec- 
ted to be forced into a nm-off as 
the top two candidates. Report, 

Page 3 Picture : Anoewsd Picas 


Markets expect US Fed to 
lead support of dollar again 


By Peter Marsh in London and 
Richard Tomkins in New York 

Financial markets expect central 
banks led by the US Federal 
Reserve to repeat early this week 
- possibly today - their action to 
lift the dollar ag ains t the D-Mark 
ami the yen. 

But market analysts were scep- 
tical last night about whether a 
rerun of Friday’s intervention 
would be enough to boost tbe VS 
currency. If such action failed it 
would encourage market specula- 
tion about an imminent rise in 
US interest rates. 

A European monetary official 
warned yesterday that after years 
in which US government officials 
displayed lack of concern about 
the dollar, the Fed might be 
forced into monetary tightening. 
“Last Friday the US authorities 
showed they care [about the dol- 
lar] - a bit,” fie said. 

The dollar purchases at the end 


G7 faces hard thne Page 6 

Michael Prows® Page 20 

Green-tacked bear — Page 26 

Looking for action Page 27 

Bonds — ^.Page 28 

Equity markets ^.Page 29 

of last week by 17 central banks 
including the German Bundes- 
bank foiled to lift tbe currency, 
which dosed on Friday in New 
York at Y 100 .525 against the yen 
and DM1.584 against the D-Mark. 

In New York and London trad- 
ers were confident at the week- 
end that central bank interven- 
tion would continue but said this 
would provide a selli n g opportu- 
nity for those wanting to offload 
the currency. 

Mr Stephen Flanagan, vice 
president at New York stockbro- 
kers PaineWebber, said: “There is 
no question that there is an over- 


whelming amount of bearishness 
built up against the dollar." 

Mr Paul Chertkow. global cur- 
rency analyst at Union Bank of 
Switzerland in London said any 
fiutber intervention would have 
to be “aggressive and concerted". 
But be said selling of the dollar 
so for this month, during which 
it fell sharply against the D-Mark 
and Yen, “has been a long way 
from an avalanche", with most 
large institutional investors on 
the sidelines. "The slide in the 
dollar is definitely not a repeat of 
tbe large-scale spiling of curren- 
cies we saw in the European 
exchange rate mechanism crises 
of 1992 and 1993." 

In Washington, the Fed is 
thought to be preoccupied with 
helping the US economy to 
recover, making it less than keen 
to consider an Imminent rise in 
the short-term federal funds rate, 
now 435 per cent, to help the 
dollar. 


CONTENTS 


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UK NM* — « 

La — — 22 

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People Page 16 

Weather „ 22 


Laeda- Page . 

Leon 

Otaaver — 
Menagwmn. 

Media .. . 


WtattuUWSput. 

Arts 


.12 

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. 2a 
.21 
14 
. 17 
.15 
.18 





19 



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The MateB 

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Emergng Marinas 

Worid Bond Martas . 


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FT Worid Actuaries 26 

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Money MaMB 35 

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FINANCIAL TIMES MONDAY JUNE 27 19-M 


NEWS; EUROPE 


FT writers weigh up the two-day summit in Corfu which did not find a new president 

Worst of all worlds as EU leaders fail to agre 


Choosing a succes- 

« sor to Mr Jacques 
Deters as president 
of tbe European 
Commission was 
never going to be 
easy. But amid chaotic scenes at tbe 
European summit in Corfu, the 12 
heads of government of the EU 
ended up with the worst of all 
worlds, write Lionel Barber, David. 
Gardner and Kerin Hope. 

The Belgians are furious with the 
British, for pyerrising a de facto veto 
against Mir Jean-Luc Dehaene, their 
p rime minis ter and overwhelming 
favourite. The Dutch, remain resent- 
ful about the Germans blocking 
their prime minister, Mr Ruud Lub- 
bers. Everyone agrees that the 
selection process is flawed; but with, 
the exception of Mr John Major, UK 
prime minister, no one seems happy 


with the summit stalemate. 

Responsibility for solving tbe cri- 
sis over the Deters succession falls, 
therefore, to Chancellor Helmut 
Kohl. He intends to call a special 
summit on July 15 in Brussels, 
apparently calculating that the 
incoming G erman presidency can 
succeed where the Greeks so pal- 
pably foiled in CazftL 

The choice of a successor to Mr 
Delors was supposed to be settled 

liming a riimrar among Die 12 heads 

of government at the Achflleon, a 
gaudy 19 th-century palace buffi: for 
the Empress Elisabeth of Austria 
which later serv ed as a summer 
retreat for Kaiser Wilhelm of Ger- 
many during the first world war. 

Mr Andreas Papandreou, tire 75- 
year-old Greek premier, whose 
heart condition is unlikely to have 
improved daring the two-day sum- 


mit, chaired the first session. Mr 
Lubbers and Mr Dehaene, both 
Christian Democrats, retired to the 
Corfti Hilton to await the outcome. 
They were replaced by deputies: 
Dutch finance minister Mr WIm 
Kok and Belgian foreign minister 
Mr WiHy Claes, both Socialists in 
their coalition governments. 

Mr Major opened with a presenta- 
tion on behalf of Sir Leon Brittan. 
chief EU trade negotiator and the 
only othpr official candidate for the 
top Commission post. Mr Kok fol- 
lowed with arguments for Mr Lub- 
bers, and Mr Claes for Mr Dehaene. 
Mr Papandreou then threw every- 
one off balance by for an 

immediate seCtfet ballot. 

wi ght countries led by France and 
Germany expressed a preference for 
Mr Dehaene: Belgium, Denmark, 
Greece, Ireland, L uxemb ourg, Por- 


tugal Three - the Netherlands, 
Spain, and Italy - voted for Mr Lub- 
bers. Sir Leon received tbe solitary 
vote of the UK, 

Shortly after midnight. Mr Jac- 
ques San ter, Luxembourg prime 
minister, arrived at the Corfu Hil- 
ton pnd declared an impasse. The 
meeting of the hp«<te of government 
would reconve n e at 10am on Satur- 
day, he o*id- 

Tbe Spanish delegation mean- 
while encouraged the impression 
that their prime minister Felipe 
Gonzdlez was negotiating with Mr 
Lubbers to reach a compromise to 
salvage Dutch national pride, while 
paving the way for Mr Dehaene. 

But within a quarter of an hour, 
the meeting was reconvened, this 
timp chaired by Mr Theodoras Pan- 
galos, the unpredictable Greek 
European affair s minister. Mr 


papandreou ret i red to bed at the 
Imperial hotel though Greek ofil- 
insist that he remained in con- 
tact by telephone. 

The second session was stormy. 
Mr Douglas Hurd. UK foreign minis- 
ter. who generally steers dear of 
hyperbole, called the atmosphere 
“poisonous”. Mr Kok demanded 
that Mr Kohl explain why he was 
against Mr Lubbers* candidacy, but 
railed to receive a satisfactory 
answer. "Normally the chancellor 
has a lot to say, but this time he 
didn’t,'’ said a visibly angry Mr Kok 
later. 

Mr Major rdhsed. point blank, to 
support Mr Dehaene. He told his 
colleagues: "This is not going to be 
sorted out tonight. I wont agree to 
Mr Dehaene even if it's 11 votes to 
one." 

Mr PangakK tried to ease the ten- 


sion. Pointing to Mr Delore, he 
joked: "If It continues like this, we 
will have to ask Jacques to stayoo 
- except he has other plans." 

Mr Deters, who Is In two minds 
about entering next year's race for 
the French presidency, smiled. Per- 
haps lie was savouring the irony of 
a British veto against Mr Dehaene 
having the unintended effect of pR* 
longing his 10 -year stewardship in 
Brussels. Later, however, he specifi- 
cally ruled out staying on for 
another five years. 

In an effort to force a ccnduston. 
Mr Pangalos called for a second 
vote. This time the eight pro- De- 
haene member states picked up sup- 
port fan Spain and Italy, who said 
they were ready to "Join the consen- 
sus". But the British and Dutch 
held out for their candidates. 

By 3am on Saturday morning. Che 


British made clear that!* Defcamt 
was unacceptable to town, Atoning 
be represented a tradition oT.hfg 
go ver nmen t and intemwtentan. 
“Sir Laos* fits tbe MIL Mr Ubbeie 
fits tbe MIL Mr DebMAftilM* hcfc- 
said a UK official. 

Once the heads of govemmaut 
resumed later that morning, Mr 
Lubbers and Sir Leon withdrew 
their candkUtdee. Fbr Sr Lion ft 
was a test cause, the fin tit to the 
first-ever pubHe campai g n for the 
top job in Brussels. Mr Lubbers, 
whose candidacy ran into an 
immovable Mr Kohl had the last 
word. ■ 

■The German Chancellor now has 
a b% problem. Sfthar he bis to per. 
suaos Mr Malor - which I doubt - 
or we have to find tare candi- 
date." said ih* outgoing Dutch pie. 
ntfer. 


Kohl rattled as 
protege falls at 
the last fence 


One of the casualties of the 
Corfu summit was Chancellor 
Tfeimnt KnhT- He pushed hard 
for Mr Jean-Luc Dehaene to 
succeed Mr Jacques Delors as 
president of the Commission, 
only to see the Belgian premia: 
stumble at the last fence. 

Mr Kohl clearly saw Mr 

Paris and Bonn 
need to be a little 
more sensitive 
toward their 
partners, writes 
Lionel Barber 


Dehaene as something of a pro- 
tfegfe. Here was a politician 
without pretensions, slnTled in 
tiie art of compromise, a fer- 
vent supporter of the need for 
deeper political and economic 
integration in Europe - in 
short a man in the chancel- 
lor’s own mould. 

After Mr Dehaene, Mr Kohl’s 
recent track record an person- 
nel matters is looking mixed. 
Mr Steffen Heftmann. the 
right-wing justice minister 
from former East Germany, 
was his first choice for presi- 
dent of the Bundesrepublik; 
but he was forced to bow out 
after Ill-judged remarks about 
the Holocaust 

On Saturday afternoon, there 
was little dis guising Mr Kohl’s 
pique as he fended off ques- 
tions about his own role in the 
Delors succession. He was par- 
ticularly sensitive about why 
he favoured Mr Dehaene over 
the more experienced Mr Rund 
Lubbers, Dutch prime minis- 
ter. 

“I don’t have to explain 
this," said Mr KohL 

The chancellor also betrayed 
irritation at suggestions that 


Por 



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Next time round, the candidates will (probably) be. 


France and Germany had tried 
to push through their candi- 
date without proper consulta- 
tion - a suggestion which Mr 
Lubbers raised shortly after 
denial-frig his own candidacy 
last m onth 

Mr Kohl retorted on Satur- 
day that it was absurd to talk 
about Franco-German hege- 
mony in the European Union. 
The idea was “mad" and 
“primitive’’, he said. 

Yet the impression of a Fran- 
co-German diktat on the Delors 
succession gained force last 
month after the Franco-Ger- 
man s ummit in Mulhouse, the 
traditional high-level meeting 
in winch Bonn and Paris seek 
to co-ordinate positions ahead 
of the EU bpaHc of government 
summit. 

At Mulhonse, officials leaked 
the fact that Mr Kohl and Pres- 
ident Francois Mitterrand had 
agreed to pnt forward Mr 
Dehaene as joint candidate. 
The officials described the deci- 
sion as one of a series of joint 
positions on important EU 
mat ters such as deregulation 
and the future integration of 
central and eastern Europe. 

One of the broader lessons 
from the Delors succession 
affair is that Paris arid R nrm 
need to be a little more sensi- 
tive toward their partners, 
even as they draw closer to one 
another in the cause of Euro- 
pean integration and are eager 
to show the outside world that 
the Franco-German axis 
remains secure in a Union in 
which Germany’s weight is 
growing. 

Mr Jose Manuel Durao Bar- 
roso, Portuguese foreign minis- 
ter, summed up the mood 
among several other delega- 
tions. France and Germany 
were too big countries whose 
cooperation was vital for the 
Union, but “we do not like the 
way tins has b ee n handled". 



• Viscount Etienne Davignon: 

Could otter the race after the Corfu 
gteiemote- Trading ed industry com- 
missioner in the early 1980s. Dreamt 
up pan-European approaches to steel 
crisis and high-tech research. Not 
quite so successful in role as head of 
Soctete G€n£rale de Belgique, the Bel- 
gian conglomerate. Great conceptual 

thinker and ruthless nego tiat or, his 

appointment would signal a strong 
European Commission. Biggest disad- 
vantages: too old to represent New 
Europe. Whether be wins or loses: 
still more invitations to act as Com- 
mission's nnnffirial B rains TtUSL 


• Jean-Luc Dehaene. Belgian PM; 
John Major's de facto veto seems to 
have wrecked Mr Dehaene’s chancre. 
The “Carthorse" could face calls to 
pull out of race with dignity once 
Corfu dust settles. Belgian public stfil 
surprised how cine be came to suc- 
ceeding Jacques Deters. Cm console 
himself that he IS y oung mnny h 
for a top European post. Has an 
important job holding together a 
fragile coalition government. 
Whether he wins or loses: fewer ref- 
erences to his poor table manners 
and more r ecog niti on tint be is a 
top-rank politician. 


• Ruud Lubbers, outgoing Dutch 
prime mins ter. 

Could rejoin race If the Netherlands, 
toe only founder member of tbe Euro- 
club never to have held the top Brus- 
sels job, conforms to Dutch reputation 
for obstinacy. *. Trouble is, he ‘and 
Chancellor Kohl are almost spitting 
tacks at each other, so the Dutch 
might field another runner. Whether 
he wins or loses: dignified but pun- 
gent remarks at summit suggest he’s 
not as boring as everyone makes out 
After burnt bridges of Corfu, unlikely 
to be going bade into family bridge- 
building business. 


• Wttfrfed Martens: 

Belgian PJ4 19TO-82 and Mte noire of 
Mrs Thatcher. Unabashed fedwalht 
Irritated the UK during tbe Gulf cri- 
sis by holding up retease of Belgian 
ammunition far British troop*. But 
he is shrewd and ts Hked fay Chancel- 
lor Kohl. Was a candidate hut could 
not get Belgian government hacking; 
this time to might. Three credentials: 
a Christian Democrat from tbe Low 
Countries, and a former PM. But has 
pledged tq take up his seat In new 
Euro-Parliament Whether be wins or 
loses: proof yon cannot keep Belgians 
away from top jobs in Brussel* 


Major plays safe by denying Dehaene 

British PM found it easier to fight all Europe than the Tory party, reports Philip Stephens 


So this time Mr John Major did 
not blink. After his humiliat- 
Tng cKmbdown two months ago 
over majority voting, the Brit- 
ish prime minis ter calculated 
in Corfu that isolation among 
his European partners was 
preferable to derision from 
Conservative MPs at Westmin- 
ster. 

The decision to veto the 
appointment of Mr Jean-Luc 
Dehaene as the next president 
of the European Commission 
was dictated more by domestic 
than by European politics. 

The anger and bewilderment 
he left behind in Corfu win be 
followed today by noisy 
applause from the Euro-scep- 
tics on the Tory backbenches 
hi the House of Commons. 

There would have been no 
enthusiasm in London Car the 
candidacy of the Belgian prime 
minister even if Mr Major’s 
political position had been 
strong. Mr Dehaene’s instincts 
about the future shape of 
Europe are not those of the 
British government. 

But after narrowly avoiding 
catastrophe in the recent elec- 
tions for tbe European parlia- 
ment, Mr Major decided that 
his precarious political posi- 
tion dictated that he take his 
opposition to the limit - 

The political backlash which 
followed the fiasco over major- 
ity voting - when Mr Major 
first signalled that be would 
stand and figM and thm just 
as quickly retreated - had 


been a salutary lesson. The 
prime minister was told by 
sonar party managos at West- 
minster that acceptance in 
Corfu of Mr Dehaene would 
revive the threat to his pre- 
miership. 

Mr Major did not arrive at 
the summit with a carefully 
laid plan to demonstrate his 
political virility by using 
Britain’s national veto. 

He had been intensely irri- 
tated at the way the Franco- 
German axis had operated to 
promote Mr Dehaene. He had 
tried to persuade tbe Belgian 
prime mTmgter not to enter the 
race by warning him in 
advance of Britain’s opposi- 
tion. 

But if he had decided in 
advance he could not acquiesce 
at this summit in the appoint- 
ment of Mr Dehaene, Mr Major 
had hoped also for something 
less dramatic than a line-up of 
11 to L 

The decision to employ the 
veto was taken only after a 
flurry of consultations with 
other EU leaders and with Mr 
Douglas Hurd, the foreign 'sec- 
retary, and Mr Kenneth 
Clarke, the chancellor, late on 
Friday night. 

Earlier, at the request of toe 
Greek presidency, Mr Major 
had completed a voting slip in 
which he had marked Sir Leon 
Brittan as his first and Mr 
Ruud Lubbers as his second 
choice for the post 

The presidency said there 








John Major, did not blink 
this time 

was no mention on tire slip of a 
veto. Instead the British prime 
minister had simply placed Mr 
Dehaene’s name thir d on his 
list 

At that stage there had been 
hopes still in the British dele- 
gation that a more generalised 
deadlock would allow the 
whole issue, to be deferred until 
after start of the summer 
parliamentary recess late next 
month. Th£ recess, which runs 
until October, would have 
taken the immediate political 
pressure off Mr Major. But 
Chancellor Helmut Kohl’s 
determination to secure Mr 
Debaene’s appointment before 
the first meeting of the new 
European parliament on July 
19 changed the political calcu- 
lation. An unpalatable decision 


Douglas Hurd: looked less 
than happy 

could not be deferred until 
Tory MPs were safely away on 
holiday. 

Despite his public protesta- 
tions to the contrary, Mr Hurd 
looked less than happy at the 
outcome. The foreign secretary 
had told cabinet colleagues 
before the summit that Mr 
Dehaene was no grand federal- 
ist in the mould of Mr Jacques 
Delors. 

Instead he was a political Mr 
Fixit whose integrationist 
instincts would have been tem- 
pered by a large dose of prag- 
matism. Mr Hurd could have 
lived with Mr Dehaene as com- 
mission president 

The foreign secretary has 
indicated that he does not plan 
to bow out from the govern- 
ment in the impending cabinet 


reshuffle. He has said that 
before he leaves be wants to 
put in place the building 
Mocks for Britain’s approach 
to the 1996 intergovernmental 
conference on the next stage of 
EU development 

But tome must now be a 
question mark over bow long 
Mr Hurd will be content run- 
ning a foreign policy dictated 
by tlm Euro-sceptic wing of the 
’fray party. 

For Mr Major tha hnnnpriinto 
political consequences of the 
veto will be favourable. The 
European election results were 
just tolerable enough to 
remove the threat of a summer 
crisis over his leadership. He 
will now hope that his Tbatch- 
ertte performance in Corfu has 
done enough in appeasing the 
right to remove the remaining 
threat of a challenge in the 

autumn 

But in the longer term the 
picture is much less dear. In 
Europe, Mr Kohl will have no 
cause to help Mr Major out of 
the inevitable future scrapes 
that Britain will face. Goman 
officials appear contemptuous 
of Mr Major's insistence that 
he must follow rather than 
lead the Conservative party. 

Mr Major has no guarantee 
that the new candidate who 
emerges for the Commission 
presidency will be any less 
“federalist" than Mr 
He explicitly acknowledged 
this when be set out his rea- 
sons for opposing the Belgian 


Euro-sceptics warn PM to hold out 


By Roland Rudd 

There was unmistakeable 
euphoria among Tory Euro- 
sceptics yesterday over Mr 
John Major’s blocking of Mr 
Jean-Luc Dehaene as the new 
EU president But there was 
also a warning for the British 
prime minister: he must be 
prepared to use the veto again 
or risk losing their support 

Britain’s Euro-sceptics, who 
outnumber Euro-enthusiasts in 
the Conservative party, are 
delighted but could quickly 
turn on Mr Major if he allows 
another federalist to take Mr 
Dehaene’s place at next 
month’s European s ummi t. 

Mr Michael Carttiss, a lead- 
ing Euro-sceptic summed up: 
"IT in July the prime minister 


gives way to another federalist 
he will be finished." 

It is a view also shared by 
some centrist backbenchers. “If 
by standing firm Mr Major 
secures the appointment of a 
president who is acceptable to 
both wings of the party he win 
have done himself enormous 
good," said another Tory MP. 
“But if the prime minister 
caves In to another federalist 
he will be in a worse position.” 

Sir John Hannan, secretary 
of toe 1922 committee of back- 
bench Tory MPs, said: “If the 
use of Britain’s veto l eads to 
the appointment of a compro- 
mise candidate, as appears to 
be the case, then this should 
satisfy toe Euro-sceptics and 
pro-Europeans.” 

Mr Douglas Hurd, foreign 


secretary, remains confident 
that the issue of a replacement 
for Mr Jacques Delors, EU 
president, will be quickly 
resolved, and that a candid a te 
acceptable to all 12 EU states 
can be found. 

Speaking on BBC television’s 
Breakfast with Frost he said 
there was no question of 
Britain accepting a renewed 
bid by Mr Dehaene. who stood 
for the “out-of-date" ideas of 
government intervention and 
centralising power in Europe. 

Mr Norman Lamont, the for- 
mer chancellor and a critic of 
the government, said: "The 
prime minister's insistence 
that the next president of the 
European Commission should 
be acceptable to all member 
states will have the support of 


all Conservatives.” 

Mr James Cran, another 
leading Eurosceptic, predicted 
that backbenchers would be 
“hu mming the government’s 
tune”. He said: “The prime 
minister listened to his mem- 
bers, most of whom will 
applaud what he has done. The 
rote oftheUKistoactasa 
sceptic.” 

But the Euroenthusiasts of 
the Tory Positive European 
group had a warning of their 
own: "The Euro- sceptics are a 
fickle group” said one pro-Eu- 
ropean Tory MP. 

“They have backed him 
before only to castigate him 
once he backs down. And Mr 
Major will have to accept a fed- 
eralist of some sorts at the 
next summit”. 


The government eftmbdown 
earlier this year over qualified 
majority voting enraged toe 
Euro-sceptics who were ted to 
believe that toe prime minister 
would resist toe new voting 
procedure. 

A number of backbenchers 
believed that the prime mini* , 
ter had little option but to use 
toe veto since the Conserva- 
tives had made it an issue in 
the European elections. 

Sir Norman Fowler, party 
chairman, yesterday said the 
Corfu summit showed tout the 
Tories were the only party pre- 
pared to use the UK’s veto. But 
having used it once, the prime 
minister may be under pres- 
sure to use the veto again as 
the price for the continued sup- 
port of toe Euro-sceptics. 


\n. v 

\\^ c 

lim 1 


• Peter Sutherland, Irish director 
general of Gatt 

Consummate self-publicist with an 
outside chance after deadlock. Knows 
Brussels after admired stint as compe- 
tition cooimisjtapar 196MB. Must 
quickly confect anti-British creden- 
tials and be obsequious to French, 
whom be accused of feck of leader- 
ship during lest year's Uruguay 
Round showdown. If Germans Uka 
him. they're hot tefflhg. Whether be 
wins or bees: canvassing Sutherland 
for top tatasattonal job* te hab- 
it-fanning. so rare chance of damage 
to ego. 


prime minister. Mr Dehaene 
had been unacceptable because 
he came from a “tradition of 
big government and a tradition 
of interventionism”. No men- 
tion was made of his views on 
toe future structure of the EU. 
At Westminster, the price of 
appeasement of the Tory right 
will be to antagonise further 
the pro-European centre-left of 
Mr Major’s party. And it is 
they rather than toe Euro-scep- 
tics who have In Mr Clarke an 
alternative candidate for the 
premiership. 

Mr Major insists he is notin 
thrall to the right of his party. 
During toe European election 
campaign he told cabinet col- 
leagues that his exposition of 
the case for a multi-speed, 
multi-track Europe had beat 
misunderstood as a prec u rsor 
for British disengagement from 
the next stage of European 
integration. 

But It is hard to escape the 
conclusion that the successor 
to Lady Thatcher is being pul- 
led inexorably into reposition- 
ing toe Conservatives as the 
party of nationalism rather 
than of European ban 

There is a good case to be 
put for developing the Euro- 
pean Union of the future as a 
more flexible and diverse asso- 
ciation than envisaged by 
old-fashioned tategnitionalists. 
But Mr Major did that ease no 
service at the Corfu summit 


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FINANCIAL times MONDAY JUNE 27 1994 


NEWS: EUROPE 


3 


> 


} 


Any other business? 
Wider and deeper 
Union on the cards 


Although the 
Corfu summit 
ended in 
ill-tempered 
chaos because 
of EU leaders’ 
failure to agree on a successor 
to Mr Jacques Delors, they did, 
amid the Ionian splendour 
bahny weather, get some work 
done. 

The summit set an A ggntfa 
for Anther “widening" of the 
EU to east and south, and set 
in train preparations for “deep- 
ening* integration at the 1996 
Maastricht review conference. 

In the follow-up to the Delors 
White Paper on jobs, competi- 
tiveness and growth, endorsed 
by last December’s Brussels 
summit the heads of govern- 
ment signed up to a balanced 
package of "an open econ- 
omy. . . geared to solidarity": 
flexible labour markets and 
deregulation on the one band 
but, on the other, assured 
finance for trans-European 
infrastructure and a 10 -gtm 
salute for the elected works 
councils in pan-Kuropean com- 
panies that all member states 
except tbe UK agreed to set up 
last week. 

The summit began by put- 
ting in place four more budd- 
ing blocks in tbe construction 
of poet-communist Europe. 

The leaders of Austria, Fin- 
land, Sweden and Norway 
signed their accession treaties 
to the Union, aimed at bring- 
ing them in next year. Aus- 
trians this month approved 
entry in a referendum, but the 
three Nordic countries still 
face difficult plebiscites on 
membership this autumn. 

The summit conclusions 
therefore devoted praise to file 
newcomers, “in the vanguard 
of the efforts to promote envi- 
ronmental and social protec- 
tion, transparency and open 
government, areas considered 
essential by a large part of the 
Union's citizens” In this 
month’s Euro-elections. The 
EU was self-critical of its own 
feeble measures on open gov- 
ernment, stating that these 
“require further elaboration”. 

The partnership and free 
trade agreement with Russia 
signed at Corfu, described by 
British Prime Minister John 
Major as "the most comprehen- 
sive agreement ever concluded 
between the Union and any 
other country”, followed the 
similar agreement signed with 
Ukraine in Luxembourg last 
week. 

Unexpectedly, the 12 pat a 
figure, of Ecu500m (£385m), on 
the aid they are willing to pro- 
vide Ukraine to shut down the 
Chernobyl nuclear plant and 
replace them through the com- 
pletion of three (ratter than. 


as expected, five) nuclear reac- 
tors already under construc- 
tion. The co ntr o ve rsial plan is 
placed in the framework of 
"adequate safety standards”, 
effective measures on electric- 
ity pricing, energy saving and 
alternative energy sources, and 
the ratification of the Vienna 
convention an nuclear liability. 

The EcuSOOm looks like the 
Opening EU bid. to encourage 
the US and Japan to stump up 
serious funding for the plan at 
Tiprt month’s Group of Seven 
summit in Naples. 

Third, the summit welcomed 
the membership applications 

this spring from Hungary and 

Poland, and affirmed thaf ftw* 
association agreements with 
these two countries and the 
Czech and Slovak republics 
would be used to propel them 
towards entry. The summit 

European leaders 
did make 
progress on 
non-Dehaene 
matters, reports 
David Gardner 


approved a similar agreement 
with Slovenia, and set itself 
the goal of extending this 
nmhraiia eventually to file Bal- 
tic states. 

Fourth. to the satisfac- 
tion of the ElTs Greek hosts, 
the summit stated that “the 
nwrt phaM of enlargement of 
the Union will involve Cyprus 
and Malta”, subject to the reso- 
lution of the Cyprus confli ct. 

This is also subject to suc- 
cess in the 1996 constitutional 
review of EU decision-making, 
presented at Corfu as a precon- 
dition for further enlargement 
To thin mri, the arnnwiit cre- 
ated a “reflection group" to 
begin work in June next year 
on “tbe wei ghting of votes, the 
thw»ghnid for qualified major- 
ity decisions, number of mem- 
bers of the Commission" and 
any other reform “deemed nec- 
essary to facilitate the work of 
the (EU] institutions and guar- 
antee their effective operation 
in the perspective of enlarge- 
ment". 

The main partici pants in this 

group will be named by foreign 
ministers of the 12 and the 
Commission president Bat 
Germany and the Benelux 
countries overcame British and 
French objections to letting in 
the European Parfiament. two 
representatives of which “will 
participate in" - rather than 
merely “be associated with” - 
the group's work. Mr Kohl 
wants Mr Delors to chair the 


group, a move likely to be 
resisted by the UK should the 
outgoing Brussels chief assent 
In the White Paper discus- 
sion. the summit rifled for all 
increases in productivity to the 
end of the century to be 
ploughed back into investment 
and jobs, and more effort to 
reduce non-wage labour costs. 
Shifting some of these costs on 
to the environment reappeared 
on the EU wish-list with the 
summit "taking note” of the 
still stalled EU discussion on 
carbon, and energy taxes. 

The ronehigfnns endorsed a 
fast-track approach to liberali- 
sing energy telecommuni- 
cations networks. It also 
agreed an a priority list of 11 
trans-European transport 
links, including high-speed 
train fairs across flip channel, 
through Austria's Brenner 
pass, and from France south to 
Spain end Italy and north to 
Germany. A list of energy pro- 
jects will be studied further. 

Hie controvers y ova* raising 
additional EU funding for 
these predominantly privately 
or nationally funded projects 
appears more or less resolved. 
The summit “confirms that 
measures will be taken - if 
proved necessary - in order 
that priority projects do not 
r un into financial obstacles 
that would jeopardise their 

imp l flTnpnta tinn". 

This victory for Mr Delors 
was followed by two others: 
the reaffirmation of the EU 
“social dimension” as an indis- 
pensable corollary to the d»g i» 
market; and the f frai to name a 

mvnictgr in each member gtrtfp 

responsible for co-ordinating 
all aspects of information tech- 
nology development, a main 
tfipiri p of the white paper. 

The deregulators, led by Ger- 
many and the UK, got their 
task force as weQ. This will do 
a cost-benefit analysis of not 
only EU but na tional legisla- 
tion to weed out obstacles to 
jobs and competitiveness. But 
it will be run by the Commis- 
sion. and can be exp e c t ed to 
focus strongly on national red 
tape. 

Tanking forward to the suc- 
cessive German and French EU 
presidencies, the summit 
endorsed the Franco-German 
call for a global strategy to 
combat racism and xenophobia 
in Europe, with a timetable 
running up to next June's sum- 
mit. 

Tbe conclusions draw a veil 
over the Delors succession cri- 
sis. but note that tbe recent 
Euro-elections gave clear warn- 
ing that “the Union will be 
judged by its citizens" on the 
strength of the measures it 
takes to defend their jobs and 
security. 




An event of less than 


summit importance 



By Kerin Hope 


was the Greek 
the Corfu summit 
r flipping the pages 
ens tabloid could 
ed it completely, 
ece's role as host 
weight newspapers 
ant to let it over- 
; weekend's main 
ions: an imminent 
if Prime Minister 
pantheon's cabinet 
werning Socialists’ 
ig in the European 
3 d a list issued by 
> Ministry, naming 
. time Greece’s 200 
tenders. 

I on Corfu - except 
session.” headlined 
l the heavyweight 
3 g that the Euro- 
s’ failure to agree 
Commission presi- 
-a blow to the 
v stature of the 
nion". 

the other sober 
ipaper, focused on 
led Friday night’s 
riller" as Mr Theo- 
Jos, Greece’s Euro- 
alrs minister, 
, the early hours to 
h the candidacy of 
: Dehaene, the Bel- 


on Mr Dehaene 
comment Only 
te it front-page 
g that “Britain 
3ehaene’s elec- 
ting daily, con- 
>mpli cations in 

ir Commission 
te that thfi pro- 

js unification 
d down, and 
e a period of 


stagnation in EU activities.” 

For the Greek tabloids, there 
was only one stony from the 
summit Mr Pangatos’s refusal 
to greet Mr Silvio Berlusconi, 
the Italian prime minister, at 
the signing ceremony for tlge 
HU’S pact with Russia. 

Ethnos, along with half a 
dozen other papers, gave a col- 
ourful account of the “the ven- 
detta between Pangalos and 
Berlusconi”. 

Eleftheros Typos described at 
length the efforts by Greek 
government officials to cover 
up an embarrassing moment 
between the Greek Socialist, 
who refused to greet the Italian 
right-winger, including the 
Foreign Ministry spokesman’s 
assertion that “nothing like 
that happened”. 

Several papers printed a pic- 
ture. taken at the previous 
night’s official dinner and pro- 
duced later by the Italian gov- 
ernment spokesman. It showed 
the burly Mr Pangalos gripping 
Mr Berlusconi's hand. 

Mr Pangalos’s gesture in ref- 
using to greet Mr Berlusconi 
wan approval from most news- 
papers, which have given wide- 
spread coverage to tbe Greek 
minis ter's criticism of Italy's 
neo-fascists. 

But Eleftheros Typos ‘s politi- 
cal column noted disapprov- 
ingly: “Greece is traditionally a 
hospitable country and Mr 
Pangalos should have been 
aware of that It’s not a ques- 
tion of culture but of Greek 
social custom.” 

However, opinions were 
mixed an whether Greece’s six- 
month EU presidency had 
proved successful 

goihimertm concluded that 
"in general Greece not only 
responded to the cha llenge of 

the presidency, hat succeeded 
in changing the exceptionally 
ne gativ e image that prevailed 


at the start of this six months.” 

Concluding both the EU 
enlargement talks and the 
agreements with Russia and 
Ukraine “gave a boost to 
Greece’s role on the European 
and international scene at a 
time when the country was 
getting worryingly low rat- 
ings". 

But Apogeomatxrri, the con- 
servative evening newspaper, 
maintained that the summit 
“revealed the nakedness of the 
Greek presidency, which was 
unprepared on everything and 
made no attempt to promote 
issues of broader Greek inter- 
est which are also of European 
interest. It has been a lost 
opportunity.” 

Kathimerini's opinion col- 
umn added some advice for 
politicians diplo mats han- 
dling Greece’s disputes with its 
Raikati neighbours and Tur- 
key, based an watching the EU 
at work: “Greece’s foreign pol- 
icy problems have to be pres- 
ented to international organi- 
sations on the basis of study, 
specific plans and modern 
diplomacy. Our arguments 
must be realistic to presuade 
our allies. A disjointed presen- 
tation of unyielding positions 
leads to failure." 

One achievement at the sum- 
mit, hailed mainly on the econ- 
mic pages, was Greece’s inclu- 
sion in three projects in the 
EXTs plan for trans-European 
transport and energy net- 
works. But several newspapers 
also ran gloomy commentaries 
on Greece’s revised plan for 
economic convergence with file 
rest of the EU, announced just 
before the summit Eleftheros 
Typos said: “The tragedy of the 
convergence plan is not just 
that it won’t lead us to Europe 
but that there will be four 
years of austerity in the mean- 
time.” 


Anti-crime measures split Russians 


Sweeping new decree could revive bad old 
days of authoritarian rule, reports John Lloyd 



Boris Yeltsin: says clampdown is justified by the crisis 
only 48 horns for being held 


A decree empowering 
Russian police to 
launch open warfare 
on organised crime, which Is 
due to come into effect today, 
is rynsing divisions among pol- 
iticians and intellectuals and 
raising fears that combating 
i criminality may lead to author- 
i itarian rule. 

The cam paign was author- 
ised by a decree from President 
Boris Yeltsin two weeks ago 
and was deemed by the parlia- 
ment last week to be unoonsti- 
tntionaL 

However, General Mikhail 
Yegorov, tbe first deputy inte- 
rior a Russia’s top 

official on organised crime, 
brushed aside deputies’ objec- 
tions, saying they were acting 
out of self-interest 
“Checks on bank accounts 
win show what financial sup- 
port cer tain pnUHriaTin have. 
It’s only natural; they don’t 
want this information made 
public," be said. 

Mr Victor Stepashin, head of 
the Federal Counter-Intelli- 
gence Service (FCS) - succes- 
sor to the KGB - said last 
week: *Tm all for the violation 

of human rights If the human 
is a hwnitjt or a criminal.” This 
view may be popular crime 
has long since topped the opin- 
ion polls as the issue of great 
est public concern. 

The decree allows suspects 
to be held 1 noftttiniTmi<»flrin for 
up to 30 days; authorises 
searches of offices, fiats and 
hotel rooms without warra n ts; 
and gives police the right to 
open bank accounts to scru- 
tiny. “Bank or commercial 
secrets cannot preve n t investi- 
gation of criminal acts,” 

Gen Yegorov. 

Even Mr Yeltsin has cot 
tried to claim that it is consti- 
tutional - the constitution, for 
example, allows a period of 


without charge. Mr Yeltsin 
argues that the clampdown is 
justified by the crisis into 
which crime is plunging the 
country. 

Its scale, in Russia and the 
other former Soviet states, is 
attracting great international 
concern. Mr Louis Freeh, direc- 
tor of the US FBI, leaves today 
for a 10 -day trip to Russia and 
other east and central Euro- 


pean nations for talks on how 
to control the spread of crime 
— particularly in the areas of 
theft of nuclear material and 
drugs. 

Commenting on Mr Yeltsin’s 
decree, Mr Freeh said it 
attempted to hold back "an 
avalanche of violent crime 
threatening the very structure 

of gove rnment " 

US nffiHaia estimate Russian 
gangs have 100,000 members 


and are linked with US, Sicil- 
ian and Colombian drug traf- 
fickers. 

Mr Stepashin has claimed 
that foreign intelligence ser- 
vices - especially those of the 
Baltic states - are using Rus- 
sian gangs to destabilise the 
Russian state. He claims that a 
decree , re-establishing the for- 
merly banned Investigation 
department in the FCS. is 
awaiting presidential signa- 


ture. This would give the for- 
mer KGB back many of its for- 
mer powers. 

Figures published by the 
Russian authorities over the 
weekend point to huge rises in 
drug use and crimes. The fig- 
ures show l.5m addicts in Rus- 
sia as against 800,000 in 1992, 
almost a doubling in two years, 
and claim tha t lm hectares are 
now growing the hemp from 
which opium is made, while 
400 farms have been turned 
over to narcotic production. 

While the decree and tbe 
activity are likely to be popu- 
lar among people who now wit- 
ness both greatly increased 
violence and conspicuous lux- 
ury on the part of criminals - 
bombings alone have gone up 
from 16 in 1993 to 118 in only 
the first six months of 1994 - it 
is tearing Russia’s politicians 
apart 

Mr Grigori’ Yavlinsky, bead 
of the reformist Yabloko fac- 
tion in the lower house, 
clashed angrily and publicly 
with Mr Anatoly Sobchak, 
mayor of St Petersburg, at a 
World Economic Forum confer- 
ence in Moscow last week on 
the issue. 

Tbe former claimed that the 
president was tearing up his 
own constitution and the latter 
defended the necessity for it 
before society was engulfed in 
crime. 

Though Mr Yavlinsky 
claimed the prosector’s office 
was “in chaos” under tbe twin 
pressures of a presidential 
decree on the one hand and a 
constitution on the other, Mr 
Alexei llyushenko, the acting 
public prosecutor, appears to 
support the decree. 

“It is a question of whether 
the state can bring the Mafia 
to its knees - or vice versa," 
Mr llyushenko told the Inter- 
fax news agency. 


Turn-out 
high for 
Ukraine 
election 

By J& Barshay and 
Chrystia ft wl an d In Kiev 

Ukrainians turned out in large 
numbers yesterday for their 
first post-independence presi- 
dential election. Preliminary 
results are not expected until 
later today, but most observ- 
ers expect top contenders. 
President Leonid Kravchuk 
and Mr Leonid Knriima, tbe 
former prime minis ter, to flu* 
each other in run-offe on July 
10 . 

Opinion polls cm the eve of 
the elections suggest that Mr 
Kravchuk has made a near 
miraculous transformation, 
from fee man who destroyed 
Ukraine's economy, to the only 
leader who can guarantee the 
country’s stability. “I know 
fimt nothing has changed for 
the better under Kravchuk, 
things have got worse,” said 
Mrs Yulia Sokol a 48-year- old 
engineer who cast her ballot 
for tiis famuih wrt in central 
Kiev. “The most important 
thing Is to keep the peace.” 

Manipulating state televi- 
sion with his considerable 
political sMD, Mr Kravchuk in 
recent weeks seems to have 
successfully reshaped the 
national debate. Now, instead 
of being about repairing the 
economy, it is about maintain- 
ing nafirmal mtia p ptidffnca and 

stability. 

Even Mr Kuchma, who was 
the clear front-runner until 
very recently, has been forced 
on the defensive. As former 
director of the Soviet Union’s 
largest nuclear missile plant, 
Mr Knrfinia comes from the 
heart of the old regime and 
has advocated closer ties with 
Russia. However, campaigning 
in central Ukraine on tbe eve 
of the elections. Hr K nc fam a 
was forced to tone down his 
pro-Rossian rhetoric. 

The need to defend his 
Ukrainian credentials has 
diluted bis image as a strong 
man who can impose law and 
order and revive the Ukrai- 
nian economy. The most likely 
result is that Mr Kravchuk 
aid Mr Knriiwui win the bulk 
of the votes, but neither an 
outright majority. 

Under Ukrainian election 
law if no candidate wins more 
than 50 per cent of the vote in 
the first round, the top two 
compete in a second round. 

Analysts are waxy of making 
predictions. Following the sur- 
prisingly strong showing of a 
firebrand outsider In last 
week’s presidential poll in 
Belarus, Ukraine’s tradition- 
ally quiescent neighbour, some 
pundits warn an upset is possi- 
ble here as weD. 

If Ukrainians deft the pre- 
dictions, their votes could go 
in two very different direc- 
tions: the hardline socialist 
candidate and chairman of 
parliament, Mr Oleksandr 
Moroz, or Mr Yotodymyr Lano- 
riy, a reform-minded econo- 
mist and forme- cabinet minis- 
ter- These outsiders, and Mr 
Ttnrfrma, could be the benefi- 
ciaries of a protest vote. 


Hungary parties agree coalition 


| By Nicholas Denton In Budapest 

Hungary's new government of former 
communists and liberals passed its ffaai 
hurdle yesterday when assemblies of the 
Socialist party and Alliance of Free Demo- 
crats approved a coalition. 

In last month's parliamentary elections 
the Socialists gained an absolute majority 
of seats. But toe Socialists were aware of 
toe 'concern aroused, both internationally 
and domestically , by the prospect of one- 
party rule by former communists, however 
reformed. The Free Democrats' wnminai 


veto right over government decisions acts 
as a safeguard of sorts that Hungary will 
stick to its free market and western orien- 
tation. 

The alliance gives toe new government 
the hroad support and legitimacy it needs 
to implement austerity measures to deal 
with large budget and current account def- 
icits. The way Is now dear for Mr Gyula 
Horn, 61-year-old leader of the Socialists 
and former foreign minis ter, to be sworn 
in as Hungary’s prime minis ter and to 
appoint his cabinet in mid-July. 

As expected, Mr Laszlo Bekesi, finance 


minister in the last communist govern- 
ment, will return to the post With another 
Socialist nominated to the Industry and 
Trade Ministry, the former co mmunis ts 
are set to dominate economic policy. 

The new government plans to introduce 
protectionist measures to curb imports. It 
promises bankr u ptcy law reform to keep 
companies alive if it would cost more to 
dose them, and rapid privatisation of 
banks and utilities. That and the forewarn- 
ing of energy price increases add to the 
likelihood that the $lbn-phis sell-off of the 
power industry will go ahead soon. 



IS Hi 




pinaNOAI TIMES MONDAY JUNE 27 W4_ 


1: INTERNATIONAL 


Peking to speed up 
HK port dealings 


By Simon Holberton 
in Hong Kong 

fMna has foM Britain that it 
will give urgent attention to 
proposals made at last week’s 
Sino-British talks for a 
HKjaOhn (£85700 extension to 
Bong Kong’s container port 

The colony possesses one of 
the world's busiest container 
ports, but the construction of 
the ninth terminal (CT9) has 
been delayed because of the 
poor atmosphere surrounding 
Stno-British relations. The con- 
sortium h uilfttng CT9 ba« also 

been engaged in negotiations 
with tire Hong Kong govern- 
ment over the price and terms 
of lanH acquisition. 

The consortium, which 
includes the trading houses 
Jardine Mat-haHm and Hutchi- 
son Whampoa, was locked in 
dispute with the government 
over who would be responsible 
for access roads and bridges to 
CT9. Both sides were trying to 
get the -other to shoulder the 
cost 

However, company execu- 
tives said that signs of 
improvement in Sino-British 
ties, which have been evident 
since the spring, encouraged 
tiie consortium to reach agree- 
ment with the government so 
that an agreed position could 
be presented to China for 



Patten talring im rhancaii 


approval. Precise details of this 
agreement are not available 
but one company executive 
Raid details of the fond grant 
had “substantially been 


China's undertaking to deal 
expeditiously with CT9 might 
-emerge as the only real prog- 
ress made during the 29th 
meeting of the Joint t .iaistm 
Group (JLG). its meeting was 
dramatically suspended on 
Thursday until today to allow 
the two sides to reach an 
a grpoiriwnt. on the t ransf er of 
milit ary fond. 

However, it is unclear 
whether a marathon session of 


talks at tiie weekend narrowed 
the differences between the 
two s ufficiently , nfnninia said 
talks would continue this 
morning 

A failure to agree win inev- 
itably raise doubts about Chi- 
na’s recent overtur e to Britain 
to improve relations. But what- 
ever the result of the JLG talks 
there remains a general expec- 
tation that Sino-British ties 
will i mpro ve after the Legisla- 
tive Council (LegCo) votes tins 
Wednesday an Governor Chris 
Patten's democracy proposals 
for the conduct of the colony's 
1995 elections. 

The vote by members erf the 
60-strang assembly is expected 
to be very close. Over the 
weekend an aide to Mr Fatten 
said the government was cer- 
tain of 26 votes and was confi- 
dent erf three or four others. 

But the governor is taking 
no chances. He has been 
actively lobbying LegCo mem- 
bers fin- support and will do so 
right up to the vote. Senior 
members of the Liberal party, 
a conservative group which 
wants to water down his pro- 
posals, have also been trying to 
win support. 

Mr Patten attacked the Lib- 
erals’ proposed amendments, 
suggesting they would lead to 
elections which could be 
rigged. 


China opens shipping 
industry to foreigners 


By Tony Walker in Belong 

China is opening its shi pp in g 
industry to foreign investors 
and is liberalising access to 
ports as part of a tt e mpts to 
meet requirements for entry to 
the General Agreement on Tar- 
iffs and Trade. 

Mr Huang Zhendong, com- 
munication minister, said Chi- 
nese partners must hold a 
majority stake in newly-formed 
ventures serving local water- 
ways, and senior posts must be 
held by Chinese. 

Conditions for foreign inves- 
tors seeking partnership in 
Chinese shipping are similar to 
those being offered for civil 
aviation. Bering announced 
earlier this month, that it 
would welcome foreign, 
involvement with local air- 
lines. 


Mr Huang, quoted by the 
nfflfiial China Daily, said for- 
eign companies would be 
allowed to become involved in 
cargo-handling at Chinese 
ports and would also be per- 
mitted to operate some inland 
and coastal shipping routes. 

Foreign companies could 
also set op wholly-owned agen- 
cies to canvas cargo, issue doc- 
uments and negotiate con- 
tracts for their ships- However 
wholly foreign-owned busi- 
nesses would be excluded from 
China's domestic waterways. 

Foreign shippers and ship- 
ping agencies have long com- 
plained about China's highly 
restrictive policies, including 
barriers to fair access to Chi- 
nese ports. 

China has also made it vey 
difficult for foreign shippers to 
secure contracts for matnland- 


sourced cargo. This has been 
the subject of repeated repre- 
sentations by large shipping 

lings. 

Mr Huang promised a 
“favourable environment" for 
foreign investors seeking 
opportunities in the develop- 
ment of China’s wharves. But 
these ventures which are vital 
to the national economy must 
have Chinese majority share. 

China, which is seeking to 
become a founder member of 
the World Trade Organisation 
when it comes into bong wyyt 
year, will this week step up its 
efforts to meet Gatt require- 
ments. 

The Gatt spatial working 
group on China is due tp con- 
vene in Geneva tomorrow and 
Chinese officials hope these 
discussions will help expedite 
entry negotiations. 


Tokyo civil servants believe reform will fail to cu rb their role 

Bureaucrats cling to power 


By Gerard Baker bi Tokyo 

At a meeting with journalists 
earlier this month, a senior 
bureaucrat at one of the more 
influent ial ministries was 
asked whether the current 
political uncertainty in Japan 
was adversely affecting the 
execution of policy. 

The facial expression of 
pained bewilderment at the 
naivete of the questioner was 
more eloquent than the answer 
itself: "Hie government may 
change,” responded the 
nation’s servant, “but the pol- 
icy remains the same.” 

It was a disarm tng i y candid 
admissi on, even from a Japa- 
nese bureaucrat. But in the 
current crisis, it neatly high- 
lights the largely unchanged 
distribution of power in the 
Japanese political system. 

The collapse erf 38 years of 
Liberal Democratic party rule 
lnct summer was Hwmg ht by 
many to herald also the end of 
civil service power. The new 
prime minister. Mr Morihiro 
Eosokawa, pledged to redress 


the balance between the 
bureaucrats and elected pditi- 
ffaM. in the years of LDP rule 
a cosy pHEdmttF had built bp 
between the ministers and the 
f unctionari es who nominally 
served them. 

With ministers moving rap- 
idly between jobs, often in 
place as a result of political 
favours rather than talent or 
expaieoce. the scope to domi- 
nate was considerable for the 
bureaucrats - a highly edu- 
cated cadre. 

But the end of the L DP h ege- 
mony has not brought with it a 
substantial decline in the 
bureaucrats’ power. Some even 
argue that it has been 

anfeanrwd- In the WOldS of ODE 
poli tic al analyst: “The political 
crisis has distracted the politi- 
cians from the business of gov- 
erning; the bureaucracy bas 
been left to get cm with its own 
business of running tog coun- 
try." 

The Ministry of Finance sits 
at the pinnacle of the country's 
power structure. Mr Jiro Saito, 
the respected vice-minister (the 


top dvil servant), at the minis' 
try bas spent most of the last 
year fighting for an increase fo 
consumption: tax to offset the 
fiscal effect of the large income, 
tax cuts that take effect this 
summer. 

His attempts to secure the 
tax increase were rebuffed In 

February when the socialists 
(then lumbers of the coalition) 

resisted ft. 

But Mr Saito continued the 
battle; and last week he was 
reappointed for a rare second 
year in his post. Few of bis 
expect the ministry. 

to lose. 

But bureaucrats do not enjoy 
untrammeled power, as Mr Sal- 
to’s earlier setback suggests, 
ami some analysts believe 
their role is about to diminish. 

Mr Douglas Os t rom, at the 
Japan Economic Institute, 
points out: “Bureaucrats dis- 
agree with, one another and are 
reluctant to initiate substantial 
policy shifts on their own 7 
politicians need to do the dirty 
work of brokering agreements 
and selling proposals.” 


And the long-awaited deregu- 
lation of Japan’s economy will 

take away many of the bureau- 
crats’ functions. So far. how- 
ever, there has been ilittte sub- 
stantive progress in tra ns la tin g ByGarerti Baker 


Diary of 
Japan’s 
descent 
to chaos 


the widespread desire for 
deregulation into action. And 
only those measures with the 
bureaucrats* * blessing have 
been enacted. 

The political rdfonrts enacted 
in the last year may yet also 
bring about a deelihe is the 
ministri es’ power. When an 
election is held under the new 
rules the current instability 
may give way to a government 
p> g^i i nh wd by a majority, and 
committed to reform. 

But the burea uc rats ara, as 
yet, untroubled. They accept 
the arguments for political and 
institutional reform, but they 
do not believe ft wiB seri o usly 
diminish thair role. Their justi- 
fication is simple the system 
works. They phyed a big part 
In bringing about the Japanese 
economic miracle and. though 
tarnished of late, they argue 
the miracle is stiXHntecL 



Four North Korean soldiers just inside the d emar c ation zone watch yesterday as a US serviceman (right) talks to his South Korean 
cou n ter part ahead of talks between north and south on the nndear issue tomorrow. i 


Pakistan business strikes over budget’s tougher tax regime 


By Fartum Bokhari 
h Islamabad 

A patchy two-day business 
strike began yesterday in 
Pakistan with many stores, 
n ffi rw! and factories ab u t down 
but public transport and most 
small shops staying open. 


The FPCCI (Federation of 
Pakistan Chambers of Com- 
merce and Industry) - Pakis- 
tan’s largest business organisa- 
tion TOMt e up of wmuu 120 trade 
associations and 30 business 
chambers, called the strike to 
protest against the budget, 
announced earlier this month. 


Businessmen oppose- the gov- 
ernment’s plans to introduce a 
general sales tax, new exrise 
duties an an ad valorem basis 
to be collected by tax officials 
with the powers to search, and 
other measures making strin- 
gent demands on those who 
query thrir tax assessments. 


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In Karachi, Pakistan’s busi- 
ness capital and Lahore, the 
country’s second city, factories 
and huge offices were closed, 
but small shops ignored the 
call to strike. The Karachi 
Stock Exchange, which had 
announced business as ngnal , 
closed for an hour because of 
the absence of jobbers but then 
officially reopened despite lack 
of business. The smaller 
Lahore and Islamabad bourses 
remained officially open but 
trade was negligible. 

The FPCCI warned it would 


consider farther measures to 
press its case, later this week. 
“We will continue our pro- 
test.. We will not sleep after 
these two days,” said Mr SJL 
Manser, federation president 
The Pakistani government 
has taken a tough stand 
against the FPCCI Prime 
Minister Benazir Bhutto 
suggested over the weekend 
that the strike was in part 
politically motivated. Some 
senior government officials 
accuse Mr Nawaz Sharif, the 
farmer prime minister, to have 


encouraged the business reac- 
tion. 

“I appeal, to professional, 
businessmen who have no 
political affiliations to think of 
the national interest” said Ms. 
Bhutto. She defended the bud* 
get measures and said: “We' 
cannot allow people to live in 
huge palaces and not pay 


The new measures include a 
requirement that anyone 
appealing against their tax 
assessment deposit 25 per «*nt 
of the assessed tax demand 


before court proceedings begin. 
Senior officials justify the 
move on the grounds that in 
order to restrain the g row in g 
budget deficit, the government 
must confront the chronic 
problem of tax collection fell- 
ing behind target. In the past, 
taxpayers have been able to 
appeal against thrir tax assess- 
ment by paying a nominal 
court fee. As a result, over 
50,000 cases are awaiting ver- 
dicts and the taxpayers 
involved owe some RslObn 
(£215m). 


The sequence of avaarta ter 
which Japan's pottttte bwte 
been transformed frma 

stability Wo rimes bmmk 
< 2 » l««e tttft with a Mriir 

or ecaudate that reared ft* 

sjdtoterlngoftheUberri 

DoocrifolMillfUVjrel, 

ultimately, tbe red of to 
38 -year rule. 

Following deftat in a no- 
confidence motion the LDP 
lost its overall majority to 
election* bat My. 

Since then, coafitka . . 
governments have grappled 
with the ptoMerea el pettteal 
rriontt, foreign retatlw. red 
the longest re ration th e re 
the second warid war to a 

qiMTft QllOPOKpSMIlftl 

crisis. 

UBS | 

N Angnrt-foiMi far Party 
l ead er MoilWtnHo eota w a. 
mu— ju s g to a g foB ra fo rm , 

thehaedofarew-party 
t y f m Mng Hu 


■ Nomber 13 - BIO* aimed 
at reforming Japan 1 * Corrupt 
paBtiod system paaed by 

Lower Hanre of foe Dirt and 
rentto typer House, where 
thev are boozed down In 
coatooverslae over hndgrt and 
foreign calif for foe opening 
of Japan’s rice market 
IBM 

■ January 20 - Reform 
measures paired by Urmt 
B ouse mauMee. and sent 
to till amulrm 

■ January U - Full Upper 

Howe votes down reforms, 
watered-down verstou later 
peared with LHP backing 

■ February 4 - Hoeokxwa 
suddenly announces new. 7 
par rent consumption tax to 
finance popored Income tax 
cate designed to lift economy 
oat of race— Ion. Forced to 
withdraw pbm five days later, 

■ February !! - Trade 
summit wtth US President BiH 
(Staton aids fan tenure after 
Hoookawa rejects US demands 
to set n umeric a l targets for 
opening up Japanese markets. 

■ March -LDP blocks 
tax-cutting budget in attempt 4 
to force Hoeokawa to dear 
doubts oarer a shady 1881 loan 

he Is alleged to have used far 
apolitical campaign. 

■ April g - Hosokawn resigns 
abruptly to take respansthUfty 
for parliamentary deadlock 
and for questionable 
management of bis personal 
fands in the 1380s. 

■ April 25 - Tsntomu Hate 
of the Japan Benewal Party 
elected prime minister with 
socialists 1 help. 

Later that day they leave 
coaUtion in protest at what 
they see as efforts to 
marginalise than. 

■ April 28 - Hata forms 
Japan's first minority 
government since 1948. 

■ June 23 - With tadt 
barking of LDP and Socialist*, 
budget is passed. LDP 
immediately submits 
no-confidence motion. 

■ June 25 - Hata a nno unces 
resignation of cabinet 


Afghans exchange one hell for another , 

The fighting has created thousands of refugees, writes Stefan Wagstyl 


M r Kutub Khan, his 
wife and their four 
smaTl children have 
spent the last month in a shel- 
ter made of sheets in a refugee 
camp in the sweltering heat of 

eastern Afghanis tan 

Around thaw are hundreds 
of other make-shift shelters 
and thousands of tents. The 
rocky ground is so hard it 
takes five men. a week to (fig a 
latrine. Nothing thrives in this 
desert except scorpions; there 
are no trees, no gharta from the 
sun and no escape from the 
wind. Children die daily from 
dysentery and malaria. 

“It’s very hard to live in the 
Open," says Mr Khan, who can- 
not find apace for his family in 
a tent “But we don't see any 
hope of going back home.” 

Relief agencies estimate 
there are about 150,000 refu- 
gees in and around the town of 
Jalabad. Most have fled the lat- 
est outbreak of fi ghting in 
Kabul, the capital, which 
began on January L The rest 
have come from other parts of 
Afghanistan. As Mr Sotorios 
Mousouris, the UN secretary 
general’s personal representa- 
tive for Afghanistan, says: 
“You can. imag ing bow bullish 
conditions must be, if people 
are ready to come to these 
camps to escape the fighting 
and to get food.” 

Hard as life is in the battle 
zones of Kabul and elsewhere, 
it could soon get worse. Mr 
Burhanuddin Rabbanl, the 
president whose writ does not 
extend much beyond his 
ruined capital, is due to step 


down tomorrow under the 
terms of a power-sharing 
accord reached two years ago 
with rival mujihadeen. leaders. 
But he is refusing to go - to 
the fatonw! anger of Mr Gul- 
buddin Hekmatyar, the nonft- 
nal prime minister and baad of 
mujihadeen forces trying to 


last month. But he has yet to 
find a formula acceptable to 
the rival warlords and Mr 
Hekmatyar, for one, views thq 
initiative with d e ep suspicion. 

Only five gears ago, Afghan- 
istan was the focus of world 
attention. But after the Soviet, 
invaders marched home in 1989 


main issue their bloody battles 
have been unable to resolve is 
control of Kabul, a pleasant 
city of L5m which was mostly 
intact when the Soviets left 
Today it Is a collection of bat- 
tered ruins - at least 10,000 of 
its inhabitants have been 
killed since 1992, includi ng 


An artillery barrage and air raids swept 
opponents of Afghan President Burhanuddin 
Rabbani from thrir last main position in Kabul 
yestaday, but the opposition retaliated with 
bombing strikes on a w e stern city, writes Reu- 
ter from Kahnl. 

Officials and hospitals reported at least 28 
dead and more than 210 injured, most of them 
civilians, in two days of fierce battles in the 
capital, Kabul, and toe western dty of Herat 

President Rabbani’s fighters launched a 
relentless artillery and rocket bombardment on 
bases of ex-communist Gen Abdul Rashid Dos- 
tum on Tapae Maranjan mountain. Sporadic 


artillery fire continued to hit areas still con- 
trolled by Dostum and Prime Minister Gul- 
buddin Hekmatyar’s Hexb-blslami forces on the 
southern and eastern outskirts, 

Dostum retaliated, and two jets from his 
bases in northern Afghanistan dropped eight 
bombs era the centre of Herat, 630 km west of 
Kabul. “All targets and casualties woe civil- 
ians, " a UN official ««id , 

Habbani’s government decided to launch its 
assault after reports that Hekmatyar and Us 
allies were preparing a similar offensive in the 
run-up to the scheduled e xpiry of BabbanTs 
term in office tomorrow. 


wrest Kabul from the control 
of Mr Rabbani and his military 
chief, Mr Ahmad Shah MasootL 

Mr Hekmatyar told journal- 
ists in Jalabad this month that 
he still wants a peaceful settle- 
ment “But if the other side 
insists on staying in power 
that will mean war.” Mr Rab- 
bani bas said he cannot quit 
nritil there is peace and haw 
condemned Mr Hekmatyar asa 
“warmonger' 1 . 

Anxious to avoid further 
destruction. Mr Boutros Bout- 
ros-Ghali, the UN secretary 
general, is trying to bring 
Afghan leaders together for 

taTfrg through a miaann headed 

by Mr Mahmood Mestiri, the 
former Tunisian foreign minis- 
ter, Who Visited Afghanistan 


and the communist govern- 
ment they left behind collapsed 
in early 1992, international 
interest has waned. But the 
fighting has not About 4m out 
of a population of 20m are still 
living outside the country, 
principally as refugees in 
Pakistan and Iran. Three 
accords between the nine war-' 
ring mujihadeen factions 
Peshawar 1992, Islamabad 1993 - 
and Jalalabad also 1993 - have 
felled to end the dvil war. 

While Soviet troops were in 
Afghanistan, the fighting wasl 
mostly in the mountains and 
the villages. But after they pul- 
led out the mujihadeen pushed 
into the cities, dividing up ter- 
ritory between them, according 
to their regional strengths. The 


over 2,500 this year. About 

500.000 have fled their hn*neg 

300.000 hiding in the dty and 
the rest mostly in the 
around Jalabad. 

The city is bring defended In 
Mr Rabbani's. name by Mr 
Masood, the defence 
who inherited much of the 
Communist army's supplies. 
They are financed princi pally 
by shipments of AfehancX 
reocy from Russia, where it is 
still printed - much to the 
annoyance of Mr Rabbani’s 
enemies. 

The, chief attacker is Mr 
Hekmatyar, the leader of the 
Heab-i-Islaxnl guerrillas, the 
favourites of Pakistan and the 
US in the war against the 
Soviet forces. Late last year 


Mr Hekmatyar scored a coup 
by persuading General Rashid 
Dostum, wmatar of the 
minority in northern Afghan- 
istan and a former ally of Pres- 
■ident Rabbani, to ^ifc« 
and bring Ms troops in fo the 
battle for Kabul But the tacti- 
cal advantage was eroded ear- 
lier this year when Gen Dos- 
tum’s forces lost control of 
Kabul airport to fierce flirting 
with Mr Masood's men. 

Outside Kabul* power Is 
largely in the lands of fry *! 
warlords such as Mr i m»il 
an ally of Mr Masood. 
who has brought a measure of 
peace to the western oasis of 
Herat, and Mr Abdul Qadir. 
'governor of .fotefoharf m. the 
east, which lies across the 
main road from Kabul to Pakis- 
tan. In the countryside, partlc- 
in the mountains, power 
is fragmented even further - a 
few villages can wake a nun 
important, as long as he has 
£“»• These men take money 
from wherever they can, nota- 
bly from the hurt-growing b»>^, 
om trade. " 

It is hard to see what can 
bring an end to tWf anarchy- 
With its cfBwpT«T mhr of tribal 
and ethnic groups, Afghan- 
*stan has never been a strongly 
united country and Afghan 
leaders have often been quick 
to settle their dlsoutas by ffehl* 

*ng. The involvement of the 
Soviet Union end the US in 
thrir ware has left ttwre with 
an enormous arsenal with 
which to pursue their quarrels 
at the expanse of people Hke 
Mr Khan and his family. 















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HNANCLU. TIMES MONDAY JUNE 27 1994 


NEWS: INTERNATIONAL 


Hutus see France as their saviour 

Leslie Crawford in Rwanda reports on the intervention force’s arrival 


A notice at the border 
post between Bakavu 
in eastern Zaire and 
Cyangugu in south-western 
Rwanda, one of the last 
re maining bastions of the 
country’s Hutu government 
and army, reads: 

“Attention Zaireans and Bantu 
people! The Tuts aggaRgiT> g are 
out to exterminate us. For cen- 
turies the ungrateful - and 
unmerciful Tutsi have used 
t heir powers, daughters and 
corruption to subject the 
Bantu. But we know the Tutsi, 
that race of vipers, drinkers of 
untrue blood. We will never 
allow them to fulfil their 
dreams in Kivuland.” 

Those crowding around the 
border post nod their h«»te in 
agreement. They have wel- 
comed with open arms the 
French intervention force 
which began deploying last 
week. Bed, white and blue bun-, 
ting festoon the dusty town of 
Cyangugu. French flags Sutter 
from cars and mopeds. 

“The French have come to 
save us from the [Tutsi-led 
rebel} Rwandan Patriotic 
Front.” says a local ra raftama n 
“The RPF is the army of the 
Tutsis. They kOl their presi- 
dent and now they want to kfU 
all Hutus who wield power.” 

Less than 10 miles away, 
French troops guard the last' 



8,000 Tutsis who remain in tire 
locality, ft is not known how 
many were killed in the 10 
weeks of slaughter that fol- 

■ i^pfl| i^ .h^~irn *ai r 0rasfr~ 

fa April Tlre fest^FieBch fte-- 
ays into. westem-Rwanda. have 
uncoverectmass graves, fa the 
vfOagetm|^a^gn^- women, 
were w%smfig 'H6od stains' 1 


off thp rails of a parish 
tdransbl 

- The * refugee camp at 
Nyamshishi sits Amon g 1 tea 
rpIantS^ons: The 
a&ltws'i Biag to the steep 
sIope« £ ffiGB rows of terraced tea ' 

hniteg.' , 

the wntng H began,” 


thin. “We took refuge fa Cyan- 
gugu parish. The mayor said 
he could protect us here, so we 
were taken to tire stadium. 
Later, the mayor came with 
soldiers and a list of people, 
who were taken away. The 
mayor and the soldiers ramfl 
three more limes. Always they 
took people away. The last 
time we rioted, that is why we 
are in camp.” 

Despite the French presence, 
Hutu (yF ut ^ ' | > 1|lw h*' soldiers »tmI 
gendarmes still , patrol the 
camp. Voices drop Ho a hush 
when they approach.. The refu- 
gees fear the would-be Hutu 
protectors, who, until last 
week; would tum.a hliad eye 
what Hutu militia raided the 
camp. 

- Since the arriitfl of the 
French flvB days ago,' the mili- 
tias have melted into the back- 
ground. Road blocks' and the 
menacing guards have disap- 


foreign intervention force 


The classifica t ion: of western 
Rwanda has made the inter- 
vention of a few hundred 
French troops appear devastat- 
ingjy simple. But the <*«np> is 
deceptive. . ■ ?* 

The French presence may 
act as a deterrenf^io further 
kflhngs, but the gulf, that sepa- 
rates the Hutus in ’Cyangugu 
fca^lKa Tutsis. at the refugee 
damp ' canno t be -bridged by a 


The Hutus’ wefcome is based 
on a misunderstanding: . they 
regard the French as their 
allies, not as the neutral 
humanitarian force they pro- 
fess to be. Having propped up 
General Habyarimana’s mili- 
tary government for years, the 
Hutus clearly expect the 

Since the arrival 
of the French 
five days ago, the 
militias have 
melted into the 
background 

French to push the rebels, who 
control two thirds of the coun- 
try, h«<* fain Uganda. 

Even if the French expedi- 
tion avoids taking sides fa the 
conflict, their presence in west- 
ern Rwanda may act as a 
buffer force between retre ati ng 
government troops and the 
rebel advance. 

At the camp, the refugees 
worry about what will happen 
to them when the French 
leave. Rather than salvation, 
the Tutsis fear they hawalmly 
a brief reprieve. ■' ' v . 


Hebron report urges 
segregation at prayers 


By Ju&an Ozaaoa in Jerusalem 

Jews and Mostems should be 
completely segregated at the 
Tomb of the Patriarchs in 
Hebron, where 29 Palestinian 
worshippers woe murdered by 
a Jewish fimuHc four iwiwiHw 
ago, and Jewish worshippers 
should be banned from carry- 
ing weapons at the rite, an 
Turno n inquiry tptn the massa- 
cre recommended yesterday. 

The Commission of Inquiry, 
which investigated the Febru- 
ary 25 slaughter at the Hebron 
mosque; cleared the govern: 
matt and senior primary and 
police officers of any personal 
blame for the incident, which 
inflamed Arab-Israeli tension 
and 1 delay ed fcatf — fa tt BP at 
the peace process. 

The inquiry said Dr Baruch 
Goldstein, the wm who fired 
111 bullets into Palestinians 
kmwiing fa early morning 
prayers and was then beatem to 
death by survivors, acted alone 
- contrary to the testimony 
and allegations of several Pal- 
estinian witnesses. The five- 
man onmmlMb)^ hlawmfl insuf- 
ficient security precautions, 
fadterfpfine of Israeli guards at 

tfin winaq nw wri pOOT WHH rtinft . 

tion between police, bender 
police «nd the TmnaU army. 

The Ibrahimi mosque, mice a 


gothic crusader church, was 
bufit on the site on the Tomb 
of the Patriarchs or Cave of 
Machpelah - the traditional 
burial place of the biblical 
patriarchs Abraham (Ibrahim), 
Isaac and Jacob and is 
intensely holy to both Arab 
and Jew. 

The report was welcomed by 
the ca bi net, minister of police 
and ^army chief of staff but «m- 
denmed by -the Palestine Uber- 

atirm^ Qr gariisatirm 

/. ‘T^p’t think that the act fa 
fee Htwroh mosque was an 
indftvichial act,* 1 said Mr Nabil 
Shaath, ~Pate8tfaian “minister” 
for intematkmal co-opoation. 
“The Israeli' government and 
the policy of (Jewish) settle- 
ment c ar ry complete responsi- 
bility for this ugly crime.” 

Hebron municipality, which 
described the report as a 
“whitewash" also accused the 
Israeli gover n ment, of continu- 
ing to “oppress” Palestinians 
by refusing to re-open the 
mosque and the central mar- 
ket 

Col Mbshe Givati, farmer 
army of Hebron, 

also questioned the report. 
“The wwnntfeBrihn points at a 
series of faults but finds no-one 
responsible - this is impossi- 
ble," he told Israel radio. 

However, toy recommending 


segregated prayers and prohib- 
iting Jews carrying weapons 
the rmmmiaalffl u rlftflri y points 
to the fallacy which underlined 
Israeli security operations at 
Hebron: that Jews were at risk 
from Arab attacks and not 
vice-versa. 

“R was never expected that a 
Jew coming to pray at the 
mosque would open fire on Pal- 
estinians," said Gen Shiomo 
Gaztt, former ndlltary co^mlto- 
afar fa the occupied territories. 
Gen Gat it said mfHfa»r y anrf 
police had never made contin- 
gency plans for such an event 
because it could not have been 
foreseen. 

However Gen Gazit, who was 
in charge of Hebron when Jews 
-first re-eettled there after the 
1967 Arab-Israeli war, said: 
“The writing was on the wall 
for a long time. If you allow 
two different religions to pray 
fa the same place and these 
two reUgions are fa a political, 
ideological and religious con- 
flict than tills calls for trou- 
ble.” Gen Gazit said he person- 
ally recommended that new 
security precautions be taken 
at othv rehgioFus sites where 
Jews and Moslems mingle such 
as the Temple Mount in Jeru- 
salem; the ancient synagogue 
fa Jericho and the tnrrih of the 
prophet Samuel 


Mexicafpimier 

asked 


By Damian Fraser - ■ : -u 
in Mexico Ctty 

Mr Jorge Carpizo, Mexico’s 
respected interior minister 
charged with supervising tins * 
August’s presidential election, , 
was yesterday under urgent 
pressure to retract bte resigna- 
tion submitted cm Friday. . ; . 

Mr Carpteo smd he wished to 
quit after denbunrihg those fa 
society who opposed demo- 


- Would be?foir -<aiMi credible. 
;■ Evmi if changes 

: his ft resign 

; Unity fa 

the rulfag^ l^ -party, and 
potential for ‘ furtiier upsets 
before or .after the' August elec- 
tion. Mr CaippsO is aRied with 
the reformist wing of the 
party, which; 1ms ' steadily lost 
power fa recefa monfhs to the 
hardline faction!' •• 

Over the past months Mr 


cratic reforms. President Carpizo has threatened to 
Carlos Salinas immediately resign several times because of 
rejected the r esignatinn. Yen- ' 'ogpnsififm. withfai tbe- ERI to 
today , a government official -inqdemEsitetfon^ ofjdemocratic 

-^efbrms.44r Oaipbso^said in his 
.fssignation ' letter be- was 
“incfenanf-gid disflldsldiied" ■ 
withthe most “^ven^sectos^ 
were 


said t^ere Weire digns that Mr- 
Carpizo would change his . 
wrfnfl, but that an agreement 



' Carpizo^ .Who '_as, 
minister is head of the Federat^T 
Electoral Institute, has been -^af^of thefr group Without can- 
the key official in^ goventoeot.^SLdmng What .te. good for 
efforts to persuade opposition; Mexico”, fadicatiog bus ifrnsba- 
parties and the wider pubfic 'tito ecriehdedto tite goveridng 
that the presidential, vote party. 


i : •/. ‘ 

' 

t ' 

r ■ 


US 


wornes 





A crackdown on substan- 
dard shipping by the 
US Coast Guard is pro- 
voking concern among the 
world's shipowners. 

Some are worried that the 
"blacklist” of companies whose 
vessels have been targeted for 
special safety checks when 
they enter US waters does not 
distinguish between serious 
offenders and those caught for 
tninnr problems. 

They are also concerned that 
the list, compiled for internal 
use by the coast guard but 
available to any inquirer under 
the US Freedom of Information 
Act, could be commercially 
damaging . Shipowners not on 
the list see tt as a means of 
gaining competitive advantage. 

The International Chamber 
of Shipping, based in London, 
said that the principle of tar- 
geting substandard ships bad 
been accepted in many coun- 
trtes but that publicly naming 
offenders had to be undertaken 
carefully when it could have 
commercial repercussions. “It’s 
a bit like reporting a road 
transport company because 
one of its lorries had a punc- 
ture," said Captain John Joyce, 
marine manager. . 

The coast guard’s initial ust 
was compiled fa May and com- 
prised 120 companies whose 
Sups were to be tergetol for 
special checks. A revised list, 
which with 187 names, became 
available last week. 

Fears about the threat to the 
marine environment fonowmg 
fa® grounding of the ofl 
Exxon Valdez off the coast of 
Alaska In 19® prompted tte 
tougher action by the TO 
authorities, and a number of 
other countries have plans to 
introduce “blacklists - 
The coast guards current 
list includes several 
well-known shipping cmij£ 

Bkswwks 

tiers and oil tankers. 

Shell was put 
because one of its gas carriers 


Charles Batchelor 
on dangers and . 
cpriftisipn arising 
from listing 
sub-standard 
r ships $ 4C -' 


was found to have two four- 
inch cracks fa its deck after a 
rough Atlantic crossing. “This 
was very minor staff,” said a 
spokesman. “It was not struc- 
tural and we repaired ft fa 
sftiL. Our vessels are maint- 
ained to a very high standard 
and we would say we are 
edreimely.'jeapm&^ owners." 

The similarity of many, 
names fa thB shipping fadostry 
has also led to confUrionwith 
Worldwide Ship Ma n age m e n t, 
a South American company 
which appears on the list, 
being mistaken by some read- 
ers of the fist fok World-Wide 
Shipping Agenpy/aHmig jKong 
group, adtich. does not . 

The coa st gi& ai rd u ses' a 
unique idoitifring number for 
every company but this, does 
not appear on the published 
lists. 

“This was intended .to be an 
internal docume^to belp our 
Tnarina safety OCSsEfiTS US0’-tMx 
resources better,” ■'said Com- 
n^nndar peter Pophp, a senior 
US coast guard qfficiaL “W<? 
should not be bojuding vesfids’ 
with a good history, Because of 
the Freedom. of Information 
Act the list is graflahte to tbe I 

public.” '■ * l ' 

The coast guard believed ite 
list was based on sound info? - 
mation but, tt new evident . 
emerged, tt would be wiffing-tor; 
adjust its pr ogramme, he^|^ * 
“This has been nnmfag for j ag -^i 
than two months and'wenra; 
getting more fafOnnatiQUiariS . 
feed-back from the fadustt^^^ 

Some companies cm t& Cfe*; 
list had been taken off mea^* 
end if they had been afrte^fo 
show they wwe not — 12 

or twwwgar of tire 

the infringement 


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6 


NEWS: THE AMERICAS 


G7 faces hard time to keep the lid on the $ 

FT reporters look at the likelihood of upsets this week in world currency markets 


T he Group of Seven lead- 
ing industrial nations 
has 12 days to stop the 
dollar drama turning into a cri- 
sis. 

As G7 leaders approach their 
anwnal summit in Naples at 
the end of next week, they 
want to avoid any perception 
in financial markets they are 
unable to arrest the fall 
against the D-Mark and Japa- 
nese yen of the world's leading 
trading currency. But on the 
evidence of last week the G7 - 
US, Japan, Germany, France, 
Italy, Britain and Canada — 
will have Us work cut out. 

Heavy intervention on Fri- 
day by most of the G7 central 
banks, backed by central hanks 
in other European countries, 
failed to lift the dollar from its 
lacklustre position against 
other main currencies. 

On Friday night In New 
York the dollar closed at 
Y100.525 against the yen and 
DM1.584 against the D-Mark, 
below the levels at which the 
central hanks first intervened 
earlier that day. Since the first 
week of June, the dollar has 



Roger Bootle: bond markets 
lacking in confidence 

slipped about 5 yen - last week 
briefly passing under Y100 - 
aw? 8 pfennigs. 

Many investors believe Fri- 
day's efforts to buy dollars led 
by the US Federal Reserve will 
have to be repeated early this 
week, perhaps today, in a fur- 
ther show of strength to prop 
the ailing currency. 

But in both the US and 
Europe, currency analysts said 


negative sentiment toward the 
dollar had taken root “I don’t 
think anyone wants to hold a 
buck right now," said a dealer 
at a Japanese bank in New 
York. Mr Stephen Lewis, 
research director at London 
Bond Broking, a securities 
dealer, said: “The dominant 
mood in the market is tfiat the 
dollar has further to fan." 

Behind these thoughts is 
that the Fed is judged unwill- 
ing to consider a rise in 
short-term Interest rates to 
defend the dollar. Such a move 
could jeopardise the US recov- 
ery, the main drive behind 
signs of stronger economic con- 
ditions throughout the indus- 
trialised world. 

Meanwhile, the perception 
has -grown that the Bundes- 
bank is unlikely to continue 
cutting short-term borrowing 
rates, because of signs of eco- 
nomic pick-up to Germany. . 

As a result, many twnt the 
gap between short-term inter- 
est rates in Germany and the 
US is about to widen, after 
months of general narrowing. 
At present three-month inter- 


bank rates in Germany are 
about 4 S per cent and in the 
US about 4.6 per cent ~ the 
further they move apart the 
more incentive investors have 
to hold D-Marks. 

Also holding back the dollar 
against the yen is the large 

Japanese account sur- 

plus with (he US and lack of 
progress In trade talks between 
the two countries. 

Mr John Lipsky, chid econo- 
mist at Salomon Brothers, the 
US investment hawk, said last 
Friday's intervention had at 
least succeeded in dispelling 
doubts about the in t ention Of 
US authorities and G7 partners 
to quell currency Instability. 
“It's hardly the last word: 
there is likely more action to 
come," Mr Lipsky said. 

But the chances of success of 
further rounds of intervention 
are open to question. One 
European monetary official 
said much Friday's support for 
the dollar was “pretty much 
token", coming after years of 
general lack of concern hi the 
US about dollar weakness. 
“Unless the Americans back up 


intervention with a policy 
action, [an increase in interest 
rates] the moves wont have 
much impact," he said. 

A further question mark can 
be raised over the willingness 
of the Bundesbank to join 
larg&scale operati on s to boost 
the dollar. Any action by the 
Goman central bank to buy 
dollars for D-Marks risks an 
increase in the German money 
supply, playing havoc with the 
MS money-supply calculations 
the bank uses to judge eco- 
nomic conditions. For this rea- 
son there is "general scepti- 
cism about the Bundesbank's 
willingness" to 'intervene, 
according to Mr Gerry Hol- 
thawi , r»hipf European econo- 
mist at Lehman Brothers. 

Nervousness over the 
is expected to continue to spill 
over to world band and equity 
markets, which were fragile 
last week on fears about how 
an increase in US interest rates 
c pniri endanger signs at Bfoiwi 
economic recovery. 

Mr Roger Bootle, chief econo- 
mist at Midland Global Mar- 
kets, said even if US borrowing 


rates went up, the same would 
not necessarily hare to happen 
in Europe. But he added: Th IS 
years I have never seen a situa- 
tion where the bond markets 
were more lacking hi confi- 
dence t fr nT| they are now." 

He said pressure an the dol- 
lar was exagg er ated by many 
investors' over-enthusiasm for 
the US currency last year. 
They had built up large stocks 
of dollars and were now keen 
to selL And ha believed that 
although Japanese institu- 
tional investors had cash to 
invest, many had seen the 
. value of their overseas hold- 
ings whittled 'away by cur- 
rency shifts and ware no lon- 
ger prepared to buy foreign 
exchange assets. "The Japa- 
nese are the buyers of last 
resort and if they don't come 
in [to support currencies] this 
can cause problems,” Mr 
Bootie said. 

Peter Marsh and Peter 
John In London and 

Birharf T mwlrins in 

New York 


US court backs 
property rights 


By George Graham 

to Wa s h ington 

The US Supreme Court has 
given new weight to the right 3 
of property with a ground- 
breaking Hqi-toton to limit local 
governments’ power ova pri- 
vate landowners. 

In upholding shop-owner Mrs 
Florence Dolan’s lawsuit 
against the town of Tigard, 
Oregon, the court ruled that 
governments must prove that 
the planning requirements 
they impose on landowners 
must not only be related in 
nature to some legitimate pub- 
lic purpose hut that also must 
be “roughly proportional" in 
their tm pact 

Mrs Dolan had challe n ged 
Tigard’s demand that, in 
return for permission to doable 
the size of her plumbing and 
electrical supply store, she set 
aside roughly 10 per cent of her 
property to building a storm 
d rainag e s y st em and a bicycle 
path. ' 

The 84 vote revealed one of 
the principal fault lines 


between the court's right and 
left wings, and greatly 
increases the importance the 
justices attach to the “takings 
clause" of the constitution, 
which prohibits the t aki n g 
of private property for pub- 
lic use without just compensa- 
tion. 

"We see no reason why the 
Takings Clause of the Fifth 
Amendment, as much a part of 
the Bill of Rights as the First 
Amendment or Fourth Amend- 
ment, should be rele g a t ed to 
the status of a poor relation," 
wrote Chief Justice William 
Rehnquist in the majority 
opinion. 

The First Amendment's right 
to freedom of religion, speech 
and association and the 
Fourth’s right to be secure 
from unreasonable searches 
and seizures have generally 
ranked higher in the court's 
priorities. 

Justice John Paul Stevens, 
writing in dissent, said the 
court's right-wing majority had 
broken "considerable and 
nnpropjtious new ground”. 


WORLD CUP 


Still hot, but with dull patches 



Jurek Martin 
in Washington 
forecasts some 
tighter games 

The World Cup is 
now 10 days old, 
and still it beguiles. 
In feet it beguiles so 
much that it is only 
right and proper to make the case 
that it is far too good to last 

The beginning of the downhill 
slide appeared to have come last 
Thursday night when, after 16 
matches, a goal-less draw finally 
took place. The fact that it was 
between South Korea and Bolivia, 
loved only by their mothers, and 
that there has not been one since, 
might seem to suggest an aberra- 
tion, but there are other bits and 
pieces of evidence, mlud. 

The earlier game that day - Italy 
vs Norway - was pretty dour stuff, 
too, obscured by the feet that the 
Azzurri eked out a 1-0 win while 
playing three-quarters of the game 
with only 10 men and without 
Roberto Baggio, withdrawn from 
the field in either the bravest or 
dumbest coaching decision of the 
World Cup. Norway's lack of imagi- 
nation was conspicuous. 

A day later, Mexico (two) and 
Ireland (one) managed to double the 
goals (three) previously scored in 
Group E. But, allowing for the 
unquenchable enthusiasm of Irish 
and Mexican fans in the Florida 
heat, there was simply not enough 
in the match to dissuade the neu- 
tral observer from going for a beer 
or checking out Wimbledon cm the 
cable channel. (Brazil, on present 
form, would never drive anyone to 
drink - except Champagne). 

The battle of the European flat- 
lands - Belgium vs Holland - on 
Saturday only produced one goal 
As such games go it was pretty 
good, but you could sense that the 
two sides would probably have set- 
tled for neutralising each other if 
they had not been neighbours In 
competition for the next presidency 
of the European Union. 

The first-round matches, when 
one loss does not necessarily mean 
elimination, have enabled some 
sides, especially those with every- 
thing to gain by holding nothing 
back, to play out of their socks. The 
prime example has been Switzer- 
land, with a World Cup history as 
memorable as Us national political 
system (fevourite trivia question: 
came any Swiss politician). But sev- 
eral other teams, fnrimKng - the US 
and Saudi Arabia, have exceeded all 
reasonable expectations. 

As the tournament progresses. 



Shin Hong Gi of South Korea (left) and Bolivia’s ifrwtn Sanchez tangle during the first goalless draw picmvap 


however, playing to entertain may 
take second place to playing not to 
lose or to win by the necessary min- 
imum, especially if the heat does 
not abate. Germany have already 
done this twice while Argentina, 
Looking better all the time, came 
out for the second half against 
Nigeria determined mostly to sit an 
a one-goal Lead. 

Admittedly, the number of red 
and yellow cards banded out so far 

- an average of 3M per game for a 
mere felony, plus seven capital 
offences, and almost all to defenders 

- ought to give offensive taamR an 
edge, which was doubtless the 
intention of Fife, soccer’s governing 
body, in its instructions to referees. 

B ut most of the 22-man squads 
are loaded with interchange- 
able midfield and defensive 
parts, which is why Baggio was con- 
sidered expendable when bis team 
fell a man short 

Nor has the World Cup yet pro- 
duced great contrasts in styles. 
Most teams now play a similar sort 
of gamp, sharing everything, mix- 
ing long and shut balls, trying to 
get out wide for the cross, bringing 
up tall defenders for comers and 
free kids. Even Brazil’s methodol- 
ogy conforms to type, though they 
play it better, while Nigeria’s varia- 
tion is only that, when allowed. 


they counter-attack at warp speed. 

Virtually no tactical innovation 
has been unveiled here. Even Mara- 
dona's dead-ball artistry, especially 
with the quickly-taken free kick, 
has been seen before, though per- 
haps not in Greece or Nigeria. 

This may mean that, as the com- 
petition gets tighter and as teams 
lose the capacity to surprise that 
comes with unfamillarlty, conserva- 
tism will prevail. And tiiwt 
duller mat ches. 

After all, at this level, soccer is a 
game played by professionals who 
are not in the business of being 
embarrassed or outwitted. The 
same applies to US sports. Baseball 
regularly introduces young phen- 
oms who start oat blasting borne 
runs or striking out batters by the 

dfMWlS- 

But the old pros sooner or later 
sort most of them out, discovering 
their weaknesses: that they cannot 
hit breaking balls or that they fell 
into a predictable pitch pattern. 
There are enough good soccer 
brains around to apply similar les- 
sons, as the Swiss did to Gheorghe 
Bag! of Rom an ia , fin* example, sim- 
ply denying 1dm the ball in forward 
positions in the second half. 

Exceptional performers can rise 
above all this, and it may help if a 
player or three Imposes himself on 
the tournament - as Moore and 


Charlton, Feld, Beckenbauer and 
Maradona have in the past. Roma- 
no. Bebeto, Dunga, Rai and Leon- 
ardo have all shown tills ability to 
transcend but unfortunately, for all 
except Brazilians, they play for the 
same team. 

Even the poor Russians solved 
most of the problems posed by 
Romano by clutching his shorts, 
shirt, neck and ankles and assum- 
ing the wall would be enough to 
block the subsequent free kick. It 
may not have been edifying but 
only twice, when Romario escaped 
to scare himself and when be was 
fouled inside the penalty area, did 
the tactic fa SL 

So, unpopular as the proposition 
may be. mlud, it could be that the 
World Cup has passed Its 
high-water mark. The US team 
might not progress much further, 
thus diminishing domestic interest, 
as might not the Irish, thus lessen- 
ing brewers’ interest The fans 
could start getting antsy, too, as 
they did in Los Angeles after 
Mexico-Ireland (luckily the game 
was played in Florida). 

Arid here is an heretical thmig ht; 
the World Cup has been great so far 
in mostly awful hot weather, but 
relatively cooler fronts are rolling 
in. What if it turns out that soccer 
is only played at its best in extreme 
heat? The prosecution rests. 


Chariton in stands spells 
a day’s peace and quiet 


Ireland manager Jack Charlton 

- barred from the touchline for 
tomorrow’s make-or-breakWorld 

Cop Cfronp E match agatost 
Norway - has battled officialdom 
for most of Us career, hot has 
always had a reputation for 

fairness. 

Fife, soccer’s governing body, 
was becoming more and mare 
inflated by his wUngelng and 
Us behaviour at the World Cap. 
Result: banishment from 
tomorrow's game - Chariton is 
free to wateh it from the stands 

- for shooting at officials. 

He was also fined 20.000 Swiss 
Francs (nearly £10,000) as was 
the Irish PA. Ireland player John 
Aldridge was fined 2^500 Swiss 
Francs for what fife called 
"IQ-mannered behaviour” during 
last Friday’s 2-1 defeat by Mexico 
in Orlando. 

Ireland's fans wfll worry about 
the effects on their team. 

Non-Irish fans are hoping fora 
day’s peace and quiet- i . . 

S American giants 
on target for final 

Brazil and Argentina have never 
met in a World Cup final, but 
their form indicates that they may 
be on course for a meeting in 
Pasadena on July 17. 

Both won their first two games 
convincingly. If they continue 
to win, they wxD avoid each other 
during the three knock-out stages 
that stand between first-round 
qualifiers and the finaL 
Diego Maradona, Argentina's 
born-again star, is producing Iris 
best form stance guiding Argentina 
to World Ciqi victory right years 
ago. Argentina meet Bulgaria 
tar their final Group D game on 
Thursday. 

Tomorrow, Brazil - who have 
already thumped Russia (2-0) and 
Cameroon (3-0) - play Sweden 
in Group B. 

Germany may miss 
key defender 

German defender Thomas Stnmz 
has been hurt again and may miss 
today's Group C game against 
South Korea. Straus hurt Us right 

fy m prf ri ng again ^m ln yn fight 
workout, before the Germans left 
Chicago for Dallas. 

“This is a setback. If Stnmz 
cant play, I have to rethink 
ev e ry thi ng again," mM German 
coach Berti Vogts. Germany, the 

holders, have four points and look 
certain to qualify for the second 
round. 


In Dallas, the Germans 
practised at the Southern 
Methodist Univ ers i t y Arid In 
sizzling heat “They have to move; 

they are top-fit and the heat cant 
be an excuse,” said Vogts, 
recalling that Germany's opening 
game against Bolivia (1-0) was 
played in similar conditions. 

Stnmz missed the Bolvia match 
but returned for tite game against 
Spain (1-1) and is a key player 
an the right 

Vogts was angry with his team 
fffbr tfw iwrfrfi mpfad fiprfii, 
and tensions have been Ugh- “We 
have to prepare our mid-field ' 
better. We want to beat the 
Koreans. We want to win Group 
C because we want to stay in 
Chicago for our second-nmnd 
match," he said. 

Korea still have a chance of 
reaching the second round. 

Defender Qm Pan Keun and 
nrid-flelder Lee Toung Jin, injured 
in last Thursday's draw against 
Bolivia, have recovered. . . 

In today's other match - also 
Group C- Spain play Bolivia in 
Chicago. 

Nigeria coach 
ponders defeat 

Nigeria’s coach. Clemens 
Westerhaf, didn’t mess about 
when discussing Us side’s 24 
defeat by Argentina m Saturday . 

"I con gr a tu la te Aigeuiiua an 
scoring two goals while my 

players were busy talking with 
the referee," be said. What did 
be think of Maradona? “I thought 
he played well at first But later 
be became tfredand complained 
Hire a baby.” 

Police facing - 
crutch dilemma 

Security precautions have been 
intense at each of the nine World 
Cup venues. 

■ llwnialnlnfl first-round schedule 


There have been no reports of 
hooliganism - feared by officials 
- but a ban on taking flag-poles 
and other sharp objects into the 
stadiums has not proved 
successful. New Jersey pohoe hare 
noticed a rise in leg injuries 
among spectators. 

“People are coming through 
the gates an crutches, then pulling 
tear flags from their underwear 
and flying them from a crutch," 
said police spokesman John - 
Hagerty. "And we can’t do 
anything. Ton can’t take a guy’s 
crotches away from him- He might 
really be injured or disabled." 


GROUP D 







2 

Mgsria 


.1 

Bulgaria 

„4 

Greece — 


.0 

GROUP F 






Betokn 

_1 

■ ■ m — 

1 lUfifirH 

1_ 


.0 

Saudi Arabia 2 



.1 

■ Stwndfc 






GROUP A 







p 

W D 

L 

Pta 


SaPzoriand 

2 

1 1 

O 

4 


USA 

2 

1 .1 

0 

4 


Romania 

2 

1 D 

1 

3 


Cotombta 

2 

0 0 

2 

0 


GROUP B 







P 

W D 

L 

Pta 


Brazil 

2 

2 0 

0 

6 


Sweden 

2 

1 1 

0 

4 


Cameroon 

2 

O 1 

1 

1 


Rueeia 

2 

a o 

2 

0 


GROUP C 







P 

W D 

L 

Pta 


Qwrnany 

2 

1 1 

0 

4 


Spain 

2 

0 2 

0 

2 


SJfena 

2 

0 2 

0 

2 


BoMa 

2 

0 1 

1 

1 


GROUP D 







P 

W D 

L 

PtB 


Argentina 

2 

2 0 

0 

6 


BJgerla 

2 

1 0 

1 

3 


Moaria 

2 

1 0 

1 

a 


Greece 

2 

0 0 

2 

0 


GROUP E . 







P 

W D 

L 

Pts 


Mexico 

2 

1 0 

1 

3 


Wand 

2 

1 0 

1 

3 


Baftr 

2 

7 0 

1 

3 


NOfMr 

2 

1 0 

1 

3 


GROUP F 







P 

W 0 

L 

Pta 


Belgium 

2 

2 0 

0 

6 


Saudi Arabia 

2 

1 Q 

1 

3 


t a. jR^ni 

I RJMIKJ 

2 

1 0 

1 

3 


Morocco 

2 

0 0 

2 

0 



Data 

Group Venue 

TtaW 

Match 

Today 

C 

CNcago 

aoopm 

BotMavs Spain 


C 

Dense . 

930pm 

QanvywS. Korea 

Tomorrow 

E 

Near Jersey 

S30pm 

Ireland vs Norway 


E 

WroWngton 

530pm 

Italy vs Mexico 


B 

San ftanctaeo 

030pm 

Rueria vs Cameroon 


B 

Detroit 

9.00pm 

Brazil W Sweden 

Wed 2tVB 

F . 

Oitendo 

530pm 

Morocco vs Holland 


F 

Washington 

530pm 

Belgium w S. AraWa 

■nw»3o* 

D 

Boann 

1230am 

Greece vs Nigeria 


D 

Mm . 

1230am 

ArgenOga vs Brigada 


rltae 

The top tap rides from aarii group. ptu» tht Mat tour beat pa rtr a m aa ^ contest the wound 
•MOB. Jo* a-e. TlK quatanMB b* played an the weekend of .My 9-10. bi Boston, Danes, 
Haw Jaraay and San ftandaoo; ttaa sands on Wednesday, July 13 {New Jersey rod Lob 
A ngela*); and fra Anal on Sunday. July 17 Qua Angeled). 



;KV. 








1 Nj 

■ 


FINANCIAL TIMES MONDAY JUNE 27 1994 


ADVERTISEMENT 



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. "* !*■& - 



•" -■ --r- ^ 

/P V’» „ 

■ J -; ... 


* *. ly-’ 

T Z ■ r '-&x? 

■ • • s 

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•••■»».. “V 


* 


Global Perspective Provides 


Japanese companies are trying to adjust tothe^bpn^crless age* in which 


the tines cj demarcation among Img'&tabbshed pm economic structures 

worldwide have blurred* ^ ;; - 

While some companies greet the new . age with trepidation, Toshiba 
Corporation views the greaterglobdfifation (fitsbiisfow&<*s the key to enhancing 
to competitiveness and raisa# efficiency. Toshiba President Fundo Sato explains 
why he welcomes die dawn of die *5 borderless f 9 era. 

' -juT ; hyRusseBMcO&ock 


Mr. fksdo Sato, President and Chief Executive Officer, Tbshiba Corporation 


McCulloch: Internationalisation is widely 
viewed as offering solutions to many of the 
problems facing Japanese companies, such as 
rising trade friction and the yen's strong 
appreciation against theJUS dollar , : What is 
Ibshiba’s view on ihh& 

Sato: In Japan internationalisation — the 
globalisation of business — was originally 
thought of as just the scale of overseas opera- 
tions: the number of bases, the level of rales 
and production output It was also export- 
oriented and cooidmated from the centre, 
from Japan. By these criteria, Tbshiba is very 
much a global organisation. Vfe have more 
than 80 business bases around the world; our 
30 overseas production bases last year generat- 
ed output worth ¥400 billion, and during the 
same period we recorded overseas sales of 
¥1.4 trillion. 


1993 Overseas Sales Worth 
VI A trillion 

However, we do not think” this kind of 
approach to globalisation is sufficient, nor do 
we believe it can continue in its present form. 
It doesn’t help us to deal with lower levels of 
competitiveness triggered by the yen’s appreci- 
ation or the stronger competition we meet 
from foreign products in our domestic market. 

We see our operations as forming more of 
a network linking equals, with Tbkyo as an im- 
portant centre, but not the only one. Wfe expect 
an erosion of the borders between Japan and 
overseas and see truly global operations as 
borderless. 




. 

I- •_ 



Tbshiba Systems (Fttmce) SAA t new factor* bidlt last year, 
makes toner (powdered Ink) for copters made in the adfacatt 


McCulloch : What do you see are the 
advantages to Tbshiba of this borderless 
approach? 

Sato: Ttanscending bonders in its global or- 
ganisation will give tbshiba greater flexibility ., 
in all aspects of our operations. We will be able 
to respond more promptly to political arid eco- 
nomic changes, and deal more effectively with 
such problems as currency appreciation anti- 
trade imbalances. ■ 


Speed and Competi^^ 

McCulloch: How are you going to realise 
this borderless style of operations? Is there arty 
key to getting there? : * , ‘ ; ; 

Sato: If there is a key, it s a famili a r one: . s A . Xii 

companies must offer competitively priced ^ ^»|||JI 

products that meet market demands; and do ' 
so in a speedy fashion. That sounds easy, 
but there’s an array of problems to be solved t 
before these goals can be achieved globally. . : 

Look at the problems facing export- . ^ . 

oriented companies. It’s becoming increasing- • ; • - 

ly difficult to export competitive everyday. , . 0 ... ; . . 
products from Japan. The strength of the . 

££wy work* wMnrt it. *"***S3B3& : ■ 

to procure less expensive materials as vre need,,^^ , v 
thorn On top of this, we have to mate 

inventory «•»*[ SS^fSK^V-r 

inventory at as low a level as possible. Vfehay^ 

to be sensitive to market needs, and aWe 


develop leading-edge products quickly. It’s a 
tall order, and the key to achieving these goals 
.‘is logistics. 

_ . McCulloch: What exactly do you mean by 
logistics? - S .... . v 

Sato: AtTbshiba^ it has a double meaning. 
First there is logistics as an innovation in 
management. This establishes a common sys- 
J tem that doselylmks and encourages collabo- 
ration .among' 6nr production, sales and , 
tecihnology-devdbpment . operations. What* 
we want here is a system that lets us respond 
quicksand predsdy to the market Ip tjis 
way, to take one example, people developing - 
technology get input on needs finom sales peo- 
ple. The ultimate goal is to reduce the time 
taken for development, production and sales, 
and to cut down on inventory. 

. Logistics, used in an international context, 
also explains our system for optimising global 
production and diversifying procurement The 
ultimate goal here is to boost competitive 
power. 


Logistics Seen as Key 

McCulloch: What strategies are you fol- 
lowing to achieve these goals? 

Sato: In the first sense, as a management 
system, we aim for precise control over the 
- resources that management h as at its disposal 
and to promote strategic alliances with other 
companies. Secondly, in our international 
operations, we are targeting diversification 
of procuremoat and .an optimised system of 
global production. 

McCulloch: J(f I understand correctly 
that’s four clear themes: resources control 
strategic" "trances, diversified procurement 
and, optioned, production. Can we look at 
eadh In. more detail? v-V;. 

: V Sator CCitamly. . ■ v> / 

T --.-TV. 

•••• . T 

-- • 


•• : • (9C •. 

■ &v. ‘-♦‘T” • 

• 

i .‘ir-a. > • 
■ f 


r • Hahiirfi 

amtegy for ' 
tmc^dnfiixa 
ECmiraue the 
borders between 
Japn and oversea* 


McCulloch: How do you control 
resources? 

Sato: Our business is constantly evolving. 
In the 1970s, consumer products and heavy 
electrical apparatus accounted for most of our 
sales fay far. Tbday, the major part comes from 
information/communication systems and 
electronic devices. With our business structure 
shifting in this way— towards products based 
on rapidly advancing technologies — time and 
timing are critical factors for any management 
strategy. This is where responsiveness comes 
in. Speediness in every facet of our business 
activities, including production, sales and 
distribution, is an important means to 
establishing our predominance in the m ay kat 
and overcoming severe competition. 

With the borderless operations we en- 
visage; we must be prompt in incorporating 
market needs into our products. So speediness 
is not only a way of responding, it’s a resource 
in itself. It energises us and keeps us in front, 
ahead of the pack. Wfe are encouraging an in- 
house understanding of Tbshiba as a product 
community^ one grounded in speed and sensi- 
tivity. ^ this way, we try to cut the lead times - 
for development, production and sales, reduce 
inventories to a minimum and improve our 
utilisation of management resources — man- 
power, materials, capital, information and time 


Strategic Alliances Maximise 
Resources 

McCulloch: You seem to have a strong 
conviction of the value of strategic alliances. 

Sato: Yes. Alliances are attractive for a 
number of reasons. For example; the digital 
revolution and the development of multimedia 
can only reach fruition through the cross- 
fertilisation of technologies, bringing together 
partners from the media, c ommunicatio ns and 
computing. We are contributing here through 
6 ih~ links with Time Warner and other com- 
panies. Another consideration is cost. New 
technologies require enormous investments in 
research, plant and equipment. Alliances like 
ours with IBM and Siemens for development 
of 256-megabit DRAMs allow the partners to 
maximise the use of their resources, realise 
cost advantages and speed up development. 
Moreover, the diffusion of the developed 
technology also encourages competition at the 
production stage. Finally, the dynamic pace 
and vast extent of modern technology is just 
too much for any single company. Tbday, no 
company can avoid incorporating technologies 
from other companies in its products. The best 


Promotion of logistics strategy 

•L Logistics as inno v ation in management 
control of management resources 
to ensure effiriml utilisation (manpower, 
materials, capital, information ana t&pc) 

I p) Strategic affiances 
IL Expansion of the global logistics system 
(3) Diversified procurement 
(4) Optimised global production ' 


in Touch with Tomorrow 

TOSHIBA 


way to do that is by building up trust and 
working together in design-in and similar 
projects. 

Competition, Cooperation and 
Complementarity 


. Until recently, many companies saw tie- 
ups with competitors as incompatible with 
seeking to win in the market But we believe 
that strategic alliances with competitors enable 
us — and our partners — to respond to rapidly 
changing markets. Our basic approach to alli- 
ances is to always keep in mind the three “Cs” 
that underpin successful relations: Com- 
petition, Cooperation and Complementarity. 

McCtittoch: What exactly do you mean by 
diversification of procurement? 

Sato: The strong yen is encouraging more 
foreign corporations to enter the Japanese 
market, while at the same time it erodes the 
competitive strength of products and compo- 
nents made in Japan. One solution to this lies 
in more diversified procurement bolstering in- 
ternational procurement and increasing im- 
ports to Japan, and promoting greater local 
procurement at overseas production bases. We 
are raising local content ratios and expanding 
imports. We have also set up international 
procurement offices, which we call IPOs, in 
nine locations around the world, including 
London. Through adopting these measures — 
increased imports to Japan, including imports 
of semiconductors, and greater local procure- 
ment by local subsidiaries — we are striving to 
become more competitive. 




• (*./ 

4i 


In addition to cotour television sets, 7bshiba Consunter’Produets 
(IUQ Ltd. began numufactMiring commercial-use air conditioners 
in 199L 

McCulloch: Honing now to the final 
theme, could you expand on what you mean 
by optimal production? 

Sato: In the global network we are aiming 
for, business must develop along both global 
and local lines. Some products are becoming 
increasingly international in nature. Products 
tike electronic components, which are built to 
international standards with only very limited 
local variation, should be manufactured for 
the world market at whichever place best 
ensures our international competitiveness. 

But then there are products that meet 
specific local needs and demands. Household 
appliances are designed for very localised 
needs and markets, and need to be developed, 
manufactured and sold within that market. 
Tbshiba embarked 4 on r production of 
commercial-use air conditioners in the UJC 
in 1991, in addition to colour television sets, 
in order to provide products suiting the Euro- 
pean lifestyle: 

This selection of production sites which 
best match the character of the product, along 
with diversification of procurement, is the 
foundation for a global logistics network. 

At Tbshiba, implementation of these poli- 
cies has improved our responsiveness and 
competitiveness. As the boiderless economy 
develops, we will continue our efforts to de- 
velop a logistics strategy that promotes further 
growth. 


V-IT • 
"X*UA : -- 






FINANCIAL TIMES MONDAY JUNE 27 1994 


EUROPE’S MOST RESPECTER COMPANIES 


I J Europe's business leaders choose the competitors they most respect, in 

== — a survey by the Financial Times and Price Waterhouse. This two page 
europesmost special report reveals the top 25 companies, from six countries and 17 
companies sectors. The survey throws up some intriguing themes. Europe's top 
j- 1 ,„ OS ocutio«vit* I business people are increasingly prepared to look across borders in 
1 rTM^ WATERHOUSE \ sean ^ 1 0 f competitors to emulate - and rivals to fear. But national . 
business cultures still vary in the emphasis they place on different qualities. German 
companies place more emphasis on training, for example, British companies on market 


most 


IA aioCl*Tioii»lT» 


leadership ana France on Keeping stair happy, overall, tne survey otters, perflaps, 1 
clear snapshot of the Europe’s new business pecking order. And the winners are. . . 


and France on 



Glen Peters on the key messaj 




Value added 
policies bring 
big benefits 


v 


Customer loyalty and 


i i fTmm 


clear policy top agenda 


By PmiTaytor and 
Peter Martin 


E urope's most 
respected companies 
include a retailer 
which has stock to its 
core business and an interna- 
tional engineering group 
largely created over the past 
sue years. 

Marks and Spencer, the high 
street retailer, almost a 
national institution is Britain, 
and ABB Asea Brown Bcveri, 
the pioneering Swedish-Swiss 
multinational Indu strial group, 
emerged as dear winners when 
top executives were asked to 
identify their most respected 
European companies, regard- 
less of sector. 

Both companies won the 
praise of their peers. In partic- 
ular for their leadership and 
management qualities. ABB’s 
supporters highlighted the 
group’s strategy, while M&S's 
customer focus attracted much 
support 

M&S received particularly 
strong backing from UK-based 
respondents, while ABB won 
more broad-based support from 
executives across Europe. Both 
companies obtained the most 
votes from companies in their 
respective sectors. 

The survey asked senior 
executives in each sector - 
c hairmen, chief executives and 
fln ywrp directors - to identify 
their most respected competi- 
tors on seven dimensions of 
excellence: customer focus, 
staff, products and services, 
business performance, leader- 
ship anil manag ement, strat- 
egy, and environmental issues. 

Respondents were invited to 
identify the qualities b ehind 
these judgments and to nomi- 
nate the European company 
they most respected overall. 

Because this is the first peer 
group survey of its kind In 
Europe, yeaixm-year compari- 
sons are not possible. In addi- 
tion, response rates in some 
sectors, for example steel, 
property and entertainment 
sectors, were low and have 
been excluded from the sector 
results. 

the questionnaire was sent 
to 637 companies, achieving a 
response rata of around 30 per 


cent, relatively high for a 
postal survey. There waB a 
slightly higher response from 
the UK. Since the results are 
based on the views of those 
executives who did respond, 
they are impressionistic rather 
than scientific. 

Nevertheless the results, 
which span 17 different sectors 
and nine countries across 
Europe, provide a unique snap- 
shot of senior management 
attitudes and current thinking, 
providing some important 
insights into which qualities 
Europe’s business leaders most 
admire. 

In particular the results 
highlight the willingness of 


Only one of the 
top rated 
companies — 
Richard Branson’s 
UK-based Virgin, 
- is not a quoted 
company 


many senior executives to vote 
for companies outside their 
countries. 

Italian and French execu- 
tives traded to vote for inter- 
national companies, suggesting 
a more pan-European focus. 
British anil German executives 
were more inclined to vote for 
their domestic counterp a rts. 

A wide range of companies 
qualified for accolades. The 
overall top 25 companies irre- 
spective of sector, include 
world-class competitors from 
most industry sectors and 
eight nations. 

Nine of the top 25 are based 
in Britain, four each are 
French and German, three are 
Swiss, two are Belgian and two 
of the top five, Royal Dutch/ 
Shell and Unilever, are Anglo- 
Dqtch. 

Only one of the top rated 
companies - Virgin, the UK- 
based airline and entertain- 
ment group run by Mr Richard 
Branson - is not a quoted com- 
pany. Another, L’Ordal, the 
world's largest cosmetics 
group, is quoted but majority 
controlled by Mrs Liliane Bet- 


tencourt, daughter of the 
group’s founder.- bow 

Some, like British Telecom, 
the UK-based global telecom- 
munications group, have made 
the transition from govern- 
ment ownership to the private 
sector quite recently. 

Forty per cent of the top 25, 
including three fi rum rial stal- 
warts - Deutsche Bank, Union. 
Bank of Switzerland and Zur- 
ich Insurance - are in service 
sectors, but the top 25 also 
includes heavyweight indus- 
trial players such as Rolls- 
Royce, Bayerische Motoren 
Werke, GEC and siemens. Sig- 
nificantly most of the top 25 
companies also headed the lists 
for executives* moat respected 
companies in their own sec- 
tors, often by a large margin . 
For example. Royal Dutch/ 
Shell, Unilever and Roche were 
all clear winners in their 
respective sectors. 

There were, however, sur- 
prises. For example, Reuters 
topped the media sector by a 
large margin, but did not 
appear in the top 25. Neither 
did Phifipp Holzmaxm, which 
won the construction, home- 
building and building material 
group, or Muenchener Ruck- 
versicherungs Gesellschaft 
which led the insurance 
sector. 

- in gnqprai respondents indi- 
cated the winning companies 
showed a commitment to their 
shareholders, customers, and 
employees. 

The most frequently cited 
qualities across all sectors 
were consistent growth and 
long-term profitability, clear 
business objectives and high 
customer loyalty. 

At the other rad of the scale, 
demonstrations of cmmnitiTKmt 
to equal opportunities, progres- 
sive qualities regarding child- 
care and taking a strong posi- 
tion on social issues earned 
little praise. Perhaps more sur- 
prisingly investing heavily in 
research and development also 
came low down the scale of 
respected qualities. 

Some cited characteristics 
stand out at country level Cus- 
tomer loyalty was the most 
valued quality in the UK, but 
came lower down the scale of 
priorities for respondents from 


Peter Martin outlines how the survey was conducted 


637 companies judge 
their competitors 


T be survey was 
conducted by selecting 
the largest companies 
in Europe. To do this, we 
started with the FT 500 list of 
Europe’s 500 largest publicly 
quoted companies (measured 
by market capitalisation), then 
searched other databases to 
add large privately-owned and 
state-owned companies. 

To ensure that the exercise 
was a true pan-European 
survey, we compared each 
country’s number of 
companies with its share or 
European gdp. Where 
countries were 

under-represented, we 
searched out and added more 
companies, 

Tbe final list - 037 
companies - strikes a balance 
between representing 
countries fairly and ensuring 
that all participants are large, 
well-known companies. 

The companies were then 
divided into industry sectors, 
starting with the classification 
used for the FT 500, but 
amending it to amalgamate 
some of the smaller sectors. 
Tbe aim was to produce 
sectors in which all the 
members would see each other 
as competitors. In most, 
though not all cases this aim 
was achieved. 

Some companies are 
significant players in a 
number of Adds - fids was 
found particularly in the 
chemicals and 

pharmaceuticals sectors. In 
this first year of the survey, it 
proved too complex a task to 
include companies in more 


than one sector, although a 
small number of exceptions 
were made - in the chemicals, 
pharmaceuticals and 
household sectors, where some 
duplicate listings were 
allowed. 

Once the sectors were 
chosen, we wrote to the 
chairman, chief executive and 
finance director of each 
company, asking them to 
name their most respected 
competitors from the list we 
provided of companies in their 
sector. The letters and 
accompanying questionnaires 
were in the main European 
languages. 

The questionnaires asked 
executives to vote for their 
best (and, if they wished, the 
second-best) company/ 
competitor from tbe list, 
judged on seven factors of 
excellence: customer focus, 
people, products and services, 
business performance, 
leadership and management, 
strategy, and environmental 
Issues. 

We encouraged them to 
indicate the qualities which 
contributed to these 
judgments. We also asked 
them to nominate the 
European company they most 
respected, regardless of 
industry sector. 

To improve response, we 
followed up with reminder 
letters and phone calls. At the 
end of the exercise, we were 
confident that the letters bad 
reached the appropriate 
people, and that where no 
reply bad been received it was 
because H was not co mpa ny 


policy to reply, or because, as 
one executive put it *1 drat 
know enough about my 
competitors to answer”. 

O nce answers had been 
received, we entered them into 
a database and carried out a 
number of analyses, of which 
some of tbe results are shown 
on these pages. A few industry 
sectors produced relatively 
poor responses, and were 
omitted from the detailed 
analyses. 

The selection of the two 
winning companies was based 
on their clear lead over their 
rivals in the overall voting, 
within their sectors, and on 
each of the seven dhaenstans 

Of envltowy 

Though both companies won 
votes from outride their home 
countries, Marks and Spencer 
had particularly strong 
support in the UK. ABB 
attracted a diverse spread of 
voters. 

As the table shows, most of 
the top 25 companies were 
able to draw on substantial 
cross-border support. 

The top 25 companies, 
almost all of them household 
names, are drawn from nearly 
every country in western 
Europe, and represent a wide 
range of industry, 
management styles, and 
approaches to business. 


SURVEY TEAM 
Price Waterhouse: Simon 
Whicker, Brian Martin, Robert 
Sandry 

financial Times: Paul Taylor, 
Peter Martin, Angela 
Bteasflale, Alan Wraigfat 


the other large European coun- 
tries. Growth and profitability 
was the most Important attri- 
bute for respondents from Ger- 
many rad France, and ranked 
second in tbe UK and Italy, but 
came eleventh in Spain. 

A satisfied staff was rated 
tbe most important In the 
Netherlands and was high on 
most other country lists. But it 
was sot regarded as being par- 
ticularly important in either 
the UK or Italy. 

Training and development 
was rated as the third most 
important quality in Germany, 
but was only tenth for UK 
respondents. Providing staff 
with tile resources to deli ver 
high quality services and prod- 
ucts was tbe top attribute in 
Italy, and fourth in tbe UK, but 
was less Important in France 
ana Germany. 

At sector level it was harder 
to draw firm conclusions. Nev- 
ertheless the survey produced 
same surprising and some pre- 
dictable results. 

For example, it was predict- 
able that customer loyally was 
tbe most highly valued attri- 
bute in tiie retail sector and 
came first or second in con- 
struction, engineering and food 
processing industries. Cus- 
tomer service ranked as the 
most important or second most 
important attribute , in -the 
banking ; rhrnmrafc , electronics 
and teleC QTnTmTmra ti ons * 

However, although research 
and development was rated the 
joint top attribute in phatma- 
ceuticals it hardly received a 
mention in other sectors. The 
use of technology was the 
number one attribute for the 
media sector and ranked num- 
ber three for telecommunica- 
tions, but was lower ranked in 
other industries. 

More predictably pollution 
reduction was judged to be the 
most important factor for com- 
panies in the construction, 
electricity and water, and oil 
and gas sectors. 

Significantly in those sectors 
which are undergoing substan- 
tial regulatory change or tech- 
nological development - for 
example electricity, water, and 
telecommunications - adapt- 
ing to the needs of the 1990s 
was the top rated quality. 



T he- theme which 
unites the winning 
companies in our sur- 
vey and earns than 
the respect of their European 
peers is a commitment to their 
shareholders, customers and 
employees. 

The message which emerges 
is clear - if you can enhance 
value for each, of these “stake- 
holder'’ groups you wffl earn a 
prize. But if you can use the 
principle of value enhance- 
ment to drive all your opera- 
tional, inve stm e nt , and finan- 
cial decisions then you will 
earn the glittering prize. 

Enhancing value for its 
stakeholders is one principle 
that drives M&S. "Value for 
money” is delivered to the cus- 
tomer by a business strategy 
that creates the greatest cash 
value for the shareholder. The 
recent “outstanding value” 
sales campaign exemplifies 
M&S’s ability to meet the 
needs of both customers and 
stakeholders: it raised turnover 
by 10 per cent, year-on-year, 
without an apparent redaction 
in margins. 

Higher returns, lower risk 
and more rapid growth are 
used by Percy Barnevik and 
his team at ABB to create 
value for their stakeholders. 
Shareholders benefit from a 
continuous push into gro w t h 
markets, a focus oh reducing 
fixed costs and reductions in 
net debt 

Customers receive an unusu- 
ally high level of customer ser- 
vice: and employees benefit 
from the devolution of respon- 
sibility which is a hallmark of 
Bamevfk’s strategy. 

M&S and ABB have distinc- 
tive leadership and manage- 
ment styles which receive 
much praise from their perns. 
Their success highlights the 
message that delivering value 
to stakeholders is intrinsically 
Indeed to sound management. 

In ABB's case, tins is a deci- 
sive vote for the company’s 

toe/w^cfr^fio^Bamevik to 
manage a business with 200,000 
employees from a head office 
of only 150 people. Top man- 
agement must not only allo- 
cate resources and resolve con- 
flicts, but also create a 
common purpose, challen ge 
tike Status quo and « ti iMihte 
corporate renewal 
Elsewhere in the rankings, 
information technology has 
propelled Reuters into the 
“most admired” category. 
Same 90 per cent of the group’s 
revenue now comes from finan- 
cial information and transac- 
tion products. Reuters’ domi- 
nant position in the dealing 
rooms of the world’s financial 
centres has been gained 
through aggressive acquisi- 
tions, strong market position- 
ing, advanced products and 
buoyant ra«h generation. It is 
a recipe for gaining and retain- 


ing the commitment of the 
company’s stakeholders. 

Shell’s positive attitude- to its 
stakeholders has also received 
strong endorsement in the sur- 
vey. The company's position is 
strengthened by strict debt 
control commitment to tar- 
gets of 14 per cent return on 
capital employed and and 12 
per cent return on investment 
British Airways’ customer 
service record helped make It 
the overall winner in the trans- 
port sector. BA is also commit- 
ted to its employees: mecha- 
nisms such as regular 
employee surveys give staff a 
say in how the business is run. 

. At Unilever, co-chairman Sir 
Michael Perry says shareholder 
value is high on his list of pri- 
orities. The group’s strategy - 
attacking the cost base, focus- 
ing corporate resources more 
tightly, and innovating in 
brands - earns It strong 
endorsement from its peers in 
the food and drinks sector. 

Brands are also essential to 
BMW, which tops the automo- 
tive seeks-. Its brand image of 
high qualify and high perfor- 
mance is a symbol of its com- 
mitment to its customers. 
Brand strategy will be the key 
to its. relatio nship with newly- 
acquired Rover - the two 
brands will be kept distinct 
and will he developed indepen- 
dently. 

BMW may be a better-known 
brand, but Siemens is German 
industry’s bell weather. Many 
of its divisions operate in 
depressed markets, and the 
growth rate, of its biggest mar- 
ket, telecoms, will slacken as 
tile initial stages of wiring up 
East Germany are completed. 
But the company has retains 
the admiration of its competi- 
tors in the electronics sector. 

In the banking sector Deut- 
sche Bank is most respected by 
its peers for its overall busi- 
ness perf ormance and market 
leadership. With over half its 
shareholders outside Germany, 
and with strong local subsid- 
iaries in in Spaia the UK and 
Italy, Deutsche Baltic must suc- 
cessfully address the interests 
of a widespread' group of Euro- ( 
pean stakeholders. 

- The message of the survey is 
that the most successful top 
managements now judge their 
business deriginns by flip value 
that they create, and that they 
are~ judged in turn by their 
ability to deliver value to their 
stakeholders. 

For those who wish to join 
the select ranks of Europe's 
most respected companies, the 
message is equally clear to 
aspire to this list, you must 
identify the key factors that 
add value to your business, 
and make them work for you. 

Glen Peters is a partner with 
Price Waterhouse Management 
Consultants, where he heads the 
market and customer manage- 
ment division. 


Xj” 


$ 


People, property and product have proved their worth over the decades for the British retailer 


Three-P principles pull M&S through 


M arks and Spencer's 
chairman Sir Rich- 
ard Greenbury does 
not have much time for mod- 
em managprnoiT it gurus. He is 
more likely to turn for inspira- 
tion in running his company to 
one of his heroes, former US 
president Harry S Truman. 

Part of the reason could be 
that Tru m an was a man after 
the spirited M&S chairman’s 
own heart “He was feisty. He 
said what he thought” 
Perhaps more importantly. 
Sir Richard regards a passage 
in Truman’s memoirs s ummar - 
ising his thoughts on running 
large organisations as one of 
the best management texts 
ever written. Truman, like Sir 
Richard, thought management 
was largely a matter of good 
sense. Running a country was 
little different from running 
any large body. 

Marks and Spencer has bad a 
century to shape its philosophy 
and style. It has stayed dose to 
its founders’ principles. 

The company grew ont of 
market stall in Leeds, northern 
England, set up in 1884 by a 
Polish- Jewish immigrant, 
Michael Marks. Ten years later 
Marks moved to Manchester 
and went into partnership with 
a Yorkshireman, Tom Spencer. 
They founded a string of Marks 
and Spencer's “penny 
bazaars”, with the slogan: 
“Don’t ask the price, it’s a 
penny". 

From market stalls to shop- 
ping arcade stores, the busi- 
ness evolved into a chain of 
department stores and later 
into the familiar format 
offering clothing and 
food. 

The business was driven for- 
ward by a partnership between 


Michael Marks' son Simon, and 
Israel Sieff in 1915. They ran 
the company as a chain of 
stores until the 1960s and laid 
the foundations underpinning 
today’s success. 

One was a policy of acquir- 
ing freehold and long leasehold 
properties. Another was cut- 
ting out wholesalers and mid- 
dleme n to buy good s in bulk 
direct from manufacturers. A 
third was an emphasis on qual- 
ity and innovation. 

As Simon Marks said in 1936: 
“Efficient distribution is not a 
static conception, it involves 
constant alertness and study of 
the changing habits, desires 
and tastes of the consumer,” 
He might have had difficulty 
grasping the scale of the com- 
pany today. It has 254 stores, 
72 of them in seven countries 
outside the UK, as well as own- 
ing Brooks Brothers In tbe US 
and Japan, Kings supermar- 
kets in the US, and the D’Al- 
lalrd's chain in Canada. It also 
has 76 franchise stores in IS 
countries. M&S employs 62^00 
people, and Tnade profits last 
year of £851m .on sales of 
£&54bn. 

The guiding philosophy few 
changed little from Marks' 
time Sir Richard sums this up 
as “giving customers tbe best 
value for money - that is the 
price paid in relation to the 
[quality of) the good - and the 
best service." 

Sir Richard acknowledges 
his debt to his predecessors. He 
summarises the strengths of 
Marks and Spencer as "the 
three Ps* - people, property 
and product 

M&S has a reputation for 
taking on young people, train- 
ing than, and keeping them. 
Sir Richard joined at 16 and 





Sir Richard Greenbury: Htfle time for management gnrns 


many of its senior executives 
are career-tong employees. 

Staff are wrapped into a cor- 
porate welfare and benefits 
system which Includes compet- 
itive pay, and a non-contribu- 
tory pension scheme which, 
costs the company £50m a 
year. 

Sir Richard says M&S pro- 
motes young talent and 
attempts to nurture “maver- 
icks and entrepreneurs”. 

One of the company's most 
valuable legacies is a property 
portfolio of which 92 per cent 
is freehold or long leasehold - 
a great asset when many retail- 
ers are struggling to pay rent 

The policy of buying free- 
holds continues today. 

“Buy a prime freehold ate 
and get the business right” 
says Sr Richard. “If you don’t 
get it right, it’s still a prime 
freehold site, and you can sell 


it and kiss it goodbye.” 

The third “P" - product 
quality - is inextricably Unload 
to Marks and Spencer's rela- 
tionship with its suppliers, 
regarded by many as the most 
important feature setting it 
apart from its rivals. 

M&S was one of the first 
retailers, in 1335, to set up its 
own quality-control and 
research laboratories. It speci- 
fies stringent standards to its 
snpphers, many of which it has 
bran dealing with for decades. 

At the same time, by buying 
early in large quantities, it can 
get very good prices. M&S has 
a reputation for being a tough 
nQtotiator; Sir Richard says it 
Is hard, hut fair. 

Fai rne s s , he adds, is another 
guiding principle, “if I was 
asked the two qualities that 
mean most to me. I would say 
integrity and fair dealing were 


number one. Number two is 
courage, not physical courage, 
but courage to make derisions 
and get on with things.” 

The company’s reputation 
for integrity - exemplified by 
tts.poMcy of paying suppliers 
within 20 days and food suppli- 
ers within 10 days - is one of 
the factors that has enabled it 
to expand into other areas 
such as financial services. 

As for courage to get on with 
things, M&S is planning a dim 
investment programme over 
the next three years to 
increase its UK fioorapace and 
expand its overseas operations. 
Its main targets are France 
and Spain, south-east Asia 
where pilot stores have proved 
successful and, eventually, 
Japan and China. 

The pace of expansion w3l 
however, be measured and wifi 
be through organic growth and 
franchising, not through acqui- 
sition. Marks and Spencer has 
had less than happy experi- 
ences with acquisitions. Its 
acquisiticai of Brooks Bros in 
the US and Japan is regarded 
as a rare mistake. Many retail 
analysts believe M&S paid too 
m uc h (3750m) for a b usiness 
which is yet to nu fl n fr the per- 
formance of the rest of thn 


group. _ 

As the business expands. Sir ™ 


Richard another principle will 
guide his strategy. It is a prin- 
ciple he illustrates by reference 
to another of his passions - 
football “I used to love the 
Bra silian s, and I still love my 
own team Manchester United, 
because they have a belief that 
winning is very, very impor- 
tant... but if you win with a bit 
of style, it helps.” 


Neil Buckley 


s 








- - — "■ - n*a6i 




— — ■ ■» ■ — * ■"■ •■ l 






through 


f 


FINANCIAL TIMES MONDAY JUNP. 97 iQQa . 


EUROPE’S MOST RESPECTED COMPANIES 


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Peter Martin on national views 


.'■?r : 



bat are the corpo- 
rate qualities that 
Europe’s business 
leaders most admire? The 
Financial Times/Price Water- 
house sn rv e y asked top man - 
agers to name the co mp e tito r s 
they most respected on seven 
factors of business perfor- 
mance, and to list the qualities 
that contributed to ibis excel- 
lence. 

Their responses give a 
unique snapshot of the quali- 
ties important to business suc- 
cess in the 1990s. Each cate- 
gory has its own s u rprise s . 

Companies best show they 
are focused upon their compa- 
nies for example, by demon- 
strating that their customers 
are loyal. At least; that, is so 
for British managers. Their 
response is enough to take 
customer loyalty to the top of 
the ranking on this issue, 
overall and in those industry 
sectors in which British com- 
panies are strongly repre- 
sented^ 

But managers, from other 
countries placed less emphasis 
on easterner loyalty: only in 
SweAueyns the,, British^ view 
shared. 

Germany and Switzerland 
plumped for easterner service, 
which was the top ranked 
quality. in nearly half the 
industry sectors; France and 
die Netherlands went for good 
communications with custom- 
ers. Managers in Italy put 
good use of technology at the 
top of their list of qualities, a 
view shared by tin electricity, 
media, on and gas industries. 

There was less national 
polarisation on the second cat- 
egory: people. In France and 
the Netherlands, .satisfied, 
loyal staff was most Impor- 
tant; in Britain and Italy, this 
lagged behind giving people 
the means and facilities, to 
dettver results. 

Li Germany training was 
the most important people fac- 
tor, a view shared by many 
industry sectors. But all 
respondents believed that pro- 
gressive childcare policies and 
demonstrating "real” equal 
op p o rtu nities mattered least. 

The answers In the third cat- 
egory, which asked for the 
company with the best prod- 
ucts and services, produced 
one very surprising result. In 
almost every country, invest- 
ing heavily in RAD was sees 
as making little contribution 
to product excellence; quality 
also made little impact Tte 
most important issue, in most 
countries, was meeting real 
market needs. 

In Britain, perhaps 
reflecting industry's tradition- 
ally concentrated structure, 
market leadership was semi as 
most important This view was 
also shared in industries in 
which volume is critical (such 
as food processing and com- 
mercial banking). . 

Despite the negative attitude 



eral view that 
prod ‘ 1 3 


was hot 
innovative 
wasuefei as 
product 
issue in Gehtuv'hd Switzer- 
land, and ttafooFscocedweU in 
Italy. 

TT mmfrmi ty ; 1 rM grvwi on *H» 

factors contributing to out- 
standing hqsib£ss perfor- 
mance. In ai^jpat* every coun- 
try and industry sector, 
consistent . 'growth and 

^^d^toMc^^^^ahiance. 
More _ ... 

fc low-cost 

a parti cu- 

'to 

nnta fanuHng ’ hruriiipa* perfor- 
mance. V 
Among industrial sectors, 
only cars .ahd^bevereges pot 
low costs u' ^contribu- 
tory factor to te&hKss perfor- 
mance. PertepalKurope’s top 
co m p ani e s are more vulnera- 
ble to low-cost competition 
than they realise. { 

There was a^ dear, agree- 
ment onquallwfcfflft'makB 
the most important cOTtribu- 

a positive^^^mo^^?* 

^Germany ] and the. Nether- 
lands, perhaps reflecting the 
way business works in these 
two countries, gave, equal 
weight to c ommunic a t i ng the 
company’s aims and making 
sure, they were shared by 
everyone from the top down. 

Taking a strong position on 
social issues came bottom, 
almost everywhere. . 

What Is the most important 
element in giving', a company 
an effective strate g y ? As in the 
leadership category, dear pol- 
icy and objectives came top in 
- .every country and 
yrqsponding to the 
market .needs ofjtoe 1990s 
came next. 

There was much emphasis 
on sfMng opportunities in tire 
emerging European market 
But, perhaps worrying!?, the 
rest of the world seemed less 
important Only British man- 
agers seemed to care about 
doing business cat several con- 
tinents, them g it a HmHtal of 
Industries across national 
boundaries from insurance to 

engineering shared the view. 

Only in Rqly (and in the oil 
and gas sector) were managers 
ex p ecte d to hare knowledge of 
international markets. 

", There was littte en thu s ias m, 
for tiie seventh category, in 
which managers were asked to 
nominate the wwipwy which 
cared most about the environ- 
ment Hbwever, a dear tread 
was evident; managers think 
of goad e nvtr o n mmitd hehav- . 

lour primarily in tanas-of prof ' 

duction processes, hot packag- 
ing or product design. • 

Thus, investing in^olhitfoh 
control meas u re s came top in , 
most countries, • while, 
reflecting environmental pol- 
icy hi products, packaging and ; 
the tike came bottom*. * i 



Paul Taylor takes a look at some of the results by sector 

Benchmark is set by clear 

groups 


winners in 

W 



hen Europe’s senior 
executives were 
acVtw^ to nominate 
the meet respected companies 
in their industries on the heels 
of seven measures of business 
performance, dear winners 
emerged in most business .sec- 
tors. 

As a result the first Finan- 
cial Times/Price Waterhouse 
survey should provide a valu- 
able tod for corporate execu- 
tives and others wishing to 
benchmark their -companies 
against the best in Europe. - 
This is a summary of the 
some afthe resalts by sector: 

• Automobiles/ Auto Trucks 
& Parts 

Bayerische Motaren Werke, the 

Rff rmim mrmakgr name tig) in 

this sector which had a partio- 
ulariy high response rate. 

BMW was followed by Robert 
Bosch, the German compo- 
nents mahnfa c tnra r. and then. 
Peugeot -Cftroen, the French 
motor group. 

• Banks ' 

Although Deutsche Bank no 
longer ranks as Europe’s big- 
gest' bank - that title is now 1 
held by HSBC following 4ts 
takeover of Midland Bank - 
the German bank emerged vtefl 
ahead of its rivals in a 
sector. 6 • ■ - 

um&Bb ranked fifth 


Reasons for selecliiig companies 


Most & Least Important Qualities 

■ CwtmMrNoust 

Most Important Er^oys high customer loyalty 

Least Important Makes good use of technology 

In Its customer services 

■ People 

Most Important 

Least Important 

People have the means and fadMJeSjtb. 
defter resists 

Has demonstrated *iear equal opportunities 

■ Products and S«vk 

Most Important 

Least important 

me 

ftnducts solve problems end provMs-bsnsMs 

-■ 

Invests heavily in RM> \ 


Most Important 

Least Important 

Has shewn oonsistant growth ' ’ 

and tong-term profitabBty .Vj 

Is a low coat producer 

■ Leadership «d Use 

Most Important 

Least Important 

Displays positive . • 

style and attractive behaviour > 

Takes a strong position ori-aodei issues 

iSMev 

Moat Important 
Least Important 

Clear pofley and objectives 

Focusing on revenue growth ' r 
rather than cost reduction 

IlnlroiMM* 

Most Important 
Laast Important 

Invests In poAutipn raducltbh messwes 

Po^cy shows In' products "and packaging 

Source: Flianc^ TVnesaPrfcb W^arbotae ' 

■ .ij' f .-!« .. 


with r 'Germany% BHF-Bank, 
behind UBS, Uoyds^Baiiin and 
Spain's de B ant a n der 

• Beverages A Tbbaoco 

In tins sector the only two ndn- 
British contenders, LVMH 
Lords Vuitton Moet Hennessy , 
the French luxury goods 
group, and Hetoeken, the 
Dutch hrewm which has a sub- 
stantial .international reach, 
topped the rankings. 

However, Guinness and 
Whitbread were well placed 
and &and Met scored weH 

• Chemical, Paper & Packag- 
ing 

Cfba-Geigy, of Switzerland, 
which also has substantial 
p ha r maceuticals interests, took 
first place in this sector even 
though L’Air Liquids, the 
world’s biggest industrial gases 
group, made it into the top 25 
list. Ciba did well mostly 
because of its customer focus, 
products and financial perfor- 
mance. 

Howe ver, unlike many other 
sectors, votes were very evenly 
spread across the industry. 


’•‘It -Air i.iqiridg nime s ectm^ foi- transport mid communication s 
towed closely by K3, of the UK; group, And Pinault, which 
^AkxB^eflthe Netherlands^ gin^ens tha Printemps stores. also 

equal ^RSbiUS^PouIenc, thd SrfeicI} . Wmadethe -top five. r *■ 


chemicals grotqt. 


Homebuild 


• Cot 

ing & Building : _ 

German and. British companies 
shared the top hon our s to this 
sector. Philipp Holzmann 
emerged with most votes fay a 
clear majority, followed by 
Britain’s RMC Group, thd 
world’s biggest concrete pro- 
ducer, and Pilkington, the UK 
glassmaker. 

Dykerhoff , the German 
c ement group which recently 
acquired a 50.05 per cent stake 
in Ciments Luxembourgeols, 
and Wolseley, the UK-based 
heating and plumbing mer- 
chant, also made it into the 
sector top five. 

• Diversified Holding Corn- 


This was one of the most dif- 
ficult categories to rank 
because of the wide range of 
business activit ies co vered. 

Nevertheless BTR, the Brit- 
ish industrial conglomerate, 
emerged as clear winner, 
closely followed by UK-based 
Rentokil and Hanson. Char- 
geurs, the French textiles 


» Electricity & Water 
Germany’s largest utility 
group, RWE, led the electricity 
and water field, closely fol- 
lowed by Britain’s Powergen 
and , then Belgium’s Electrabel, 
National Grid and Sweden’s 
Vattenfall utility. 

• Electronics A Electrical 
Components 

Siemens came top by a wide 
margin, followed by Alcatel- 
Alsthom, of France, Finland’s 
Nokia, Sweden’s Electrolux, 
Britain’s GEC and then Philips 
of the Netherlands. 

• Engineering 

Although ABB Asea Brown 
Boveri dominated this sector, 
Britain’s Rolls-Royce and 
l .fade, the German lift truck 
maker also rated highly. 

The top three were followed 
by Sandvik of Sweden 
and Williams Holdings of 
the UK. 

• Food Processors 
Unilever and Switzerland’s 
Nestle group headed this sec- 


tor. They ranked fifth and 
sixth in the overall winners 
group. 

They were followed by BSN, 
the French-based multinational 
food group, Barilla, Italy's fam- 
ily owned pasta and biscuit 
group, was ranked number 
four to the sector. 

• Insurance 

Germany’s Muechener Ruck* 
versteherungs group won the 
most praise in this category 
followed by Fords, the Dutch/ 
Belgium group, Swiss Reinsur- 
ance. Zurich Insurance and 
Allianz, Europe's biggest insur- 
ance company. 

• Media, Printing & Adver- 
tising 

Reuters Holdings, the new and 
financial information group, 
stood head-and-shoulders 
above its rivals to this cate- 
gory receiving as many com- 
mendations as the next five 
companies put together. 

Reed-Elsevier, the Anglo- 
Duteh publishing group, came 
second, followed by the Ger- 
man Bertelsmann media 
group, Britain's EMAP and 
Welters Kluwer, the. Dutch 
publishing group. 

• Pharmaceuticals A Health- 
care 

Switzerland’s Rocha pkenjed 
. the- top slot to tilris aeete^n 

Surprisingly however, Roche 
did not figure to the 25 overall 
winners. Glaxo, ™uh\ i$rinto 
the- top 25. But in the sector it 
ranked third hahind its arch 
ulcer drug competitor Swe- 
den’s Astra. SmithKline Bee- 
cham ranked fourth. 

• Retail ' 

British companies, J Sainsbuxy 
and John Lewis took second 
and third places respectively 
after Marks & Spencer. 

Mlgros, Switzerland’s leading 
food retailer, came fourth fol- 
lowed by the French-owned 
Carreftmr group. 

• Telecoms A Communica- 
tions 

British Telecom emerged as 
the top-rated company, fol- 
lowed by PTT Nederland, the 
partially privatised Dutch tele- 
communications and postal 
company, and Vodafone, 
the UK cellular network opera- 
te-. 

France Telecom, ranked 
number four followed by Cable 
A Wireless which owns -the 
Mercury network in the UK. 


Ian Rodger explains how ABB has grown into the largest power engineering group in the world 

The inside story of a model multinational 
H 


ardly a week, goes by 
without ABB Asea 
Brown Boveri,* the 
Swedtofeb-Swiss international 
\ engineering- group, Jxag died 
asr the' model • multinational 
industrial enterprise of our 
-■ • ; : • *y ; ( 

^5 'Management ’consultants, s 
economists and social scien- 


Some kind of 
misunderstanding,: .. 


surprisingly 

actually declined to take part 

in the survey. There were, 
however, one or ^? sur ' 

p -— 

petitors « cr0: ® v Eui ?|^ 

Meanwhile, 

bott P9S 

Ke»i~ also varied 

five 


quite markedly between aso- 
tors. j 

The bigbek response rates 
of up to 50 per. * *« 


But 


parts 

response ratesin 
metals processtog and house- 1 
hold, textiles A dofhtng sec-‘ 
tors only made ft into the 
mid-teens. 

In addition,- With almost 
2RQ0 senior executives from. 
Europe’s largest companies] 
asked to ’vote* on their peers, i 
thwe were a-tew mteUTHfe^ ->f-' 
standings. For exanqde, jq® -,/-i 
eral returned qpestfonnaire^l 
were ruled hr 
respondents 
own 


language. English was chosen 
at the outset, although a 
minority of the present 218,000 
employees have English as 
their mother lang u age. ^ 
■‘“Today, 'all executives use 
Rn gHah as their wiwmnn lan- 
guage amL-ABB’s currency to- 
gtohal j ^ e rti ng and comdhda- 
tion ls the US dollar. Jfost 
from the very 
begfrming’ABB established a 
,seapSdospxda» to emwgtag^ common set of values, policies 
trends* to companj develop-^ Jattai operational gnMeBnes to 
rin att. J dUrh^Ste &wtege if for saf eguard, . and promote a 
-interviews, , knqwing^toar- gro^w i^c. u mbrella cn^bnre.'* 

thing . ABB' a - ^saysT^fchefTe^ii z-iBvmisBB'* choice of Zorich 
eageriy throu^iouf tl^^^ " as aBeadquarters, only a short 
£j. ^fijgh| from. every major, centre 

jnwtel •multinanm^gSt jpper- ^i^T, Bmrye^ and with efllcient 
|ates to'T4B ; cemtriesimd f '^ar- foSsvery co nti ne n t, 

etU pom' j^xxinpaiiy’s nndti- 

smarra^^iing; - in ifcteastia- « - N ^ABBiiwas framed to. January 
:&ieh.4®^s.'Bs^^aHp^ SQ/50 msger of 


and &p^- mahagei»eh£ : &8 
1 InfaaajfttianaL 


‘USrediah 
and 


robotics 


the bevoages & teba^co andj- -, to» . , . f .. 

automobiles/auto .triicks ATvv- year Mr ^FerqyaigTtmp. ymm-TSown Bovmt, the 

' ’ Bahteriki "chief ‘ executive, /Swtes power engineering and 

rant makers. 


V' 



.& wrote to toe FT about the need . 
to btoia inidttoitiimd team^ 
: for a global company. “Asimsi- 
. j ness g^s more globalised, toe 
j .cmn peliti ve advantages of muL 
jttmjttepM .teams increase. Any 
, ^iMsgTwiationality corporate 
^ch^ffe wHl nm into problems 
ffifaaiaa it aims to integrate 
~ ^ Tp.tions from othm 
‘ he said. . 
t4same time, we strive 
^''a^obal co rp o r a te 
our 
L.Uu^key 
a <xkmnon 


The 'nffihl shareholders -of 
both groups recognised that 
moves to. privatisation and 
deregulation in many countries 
WOUld mean an fnfamatinrwil 

restrucfarJng of their main 
businesses was inevitable. 

Only the higieetazid stran- 
gest would survive , the shake- 
out and Asea 'and Brown 
Boveri recognised they had lib 
tie chance alone. Together 
toeir Chahow would be greatly 
enhanced*, wtih. 
who had ‘already 




an totemational reputation at 
Asea, as chief executive. 

Mr BamevOc recently divided 
the development of ABB to 
date Into two phases. The first, 
from 1987 to 1990, he said, was 
dominated by acquisitions to 
give the group critical scale to 
the biggest markets while tak- 
ing out excess capacity. 

By far the most important 
were the 1989 acquisition of the 
power tamsjqrigsioa and distri- 
butian operations af Westing- 
house Electric and the take- 
over .of Combustion 
Engineering . 

Through these operations, 
toe gpup acquired a US base 
with «*fa« of $5hn a com- 
pettove nuclear power genera- 
tion technolog y. 

SzzicO T&i, the group has 
been.in a consolidation phase, 
althou^i acquisitions have 
cohttoued to figure proud - 
nentiy, with a spec ial em phasis 
an central and eastern Euro- 
pean countries. Also, a new 
business development thrust in 
the tot growing Asian coun- 
tries was launched. 

Overall group employment 
has stabilised at just above 
200,000, gWhnngh this has been 
the net result of massive acqui- 
sitions offset by redundancies 
averaging 1,000 people a month 
tot year. 

This and an annual turnover 

of $2&3bn last year makes ABB 
the largest power engineering 
group to tte world, and one of 
toe most widely spread. A little 
ovfer half of 1993 group reve- - 



Percy Barnevik: etimtoafed intermediate layers of control 


nues came from western 
Europe, neatly a quarter from 
Asia and a fifth from the 
Americas. 

Profits, after doubting in the 
two years following the 
merger, stagnated at toe begin- 
ning of the 1990s, last year 
reaching JLTflhn before taxes 
and extraordinary items. How- 
ever, through rationalisation, 
ABB has managed to turn a 
■$2Jbn net debt at the end of 
1990 Into a J242m net liquid 
position at the end of last year.- 


Mr Bamevik’s initial man- 
agement approach was to push 
down operating responsibility 
to the operating units and 
eliminate intermediate layers 
of control- to doing so, the 
group created some 5,000 profit 
centres. Executive board mem- 
bers carried both divisional 
and re gional responsibilities in 
the now conventional matrix 
structure. 

However, last year he modi- 
fied ‘this structure signifi- 
cantly, reducing tte nninber of 


divisions, or segments as ABB 
calls them, from seven to five 
and undoing the matrix at 
executive board leveL 

The idea, he said, was to 
improve the group’s ability to 
respond with all its resources 
to customer demands to large, 
complex system projects. 

Although still a young 
group, ABB has already devel- 
oped a unique corporate cul- 
ture, where nationality no lon- 
ger determines an employee’s 
prospects. 

The one glaring deficiency in 
the structure is its capitaL 
ABB is still owned entirely by 
Asea and BBC. While both the 
Asea and BBC shares are 
quoted and are much .more 
widely held than they used to 
be, group executives befieve 
that its credibility as ^multi- 
national would be greatly 
<mhflnra»ri by a conversion of 
these into ABB shares. ' 

There are significant techni- 
cal and legal difficulties to . ach- 
ieving this, largely because 
.there is no ideal jurisdiction in 
which to base a multinational 
entity like ABB, and the domi- 
nant Swedish and Swiss share- 
holders of Asea and BBC do 
not want to lose toeir influ- 
ence. 

But Mr Barnevik believes it 
will happen, to the next few 
years, a period he calls the 
“the expansion phase". This 
phase seems to have got under 
way in tte first quarter of this 
year, with a 20 per cent surge 
in pretax profits to $24fim. 


--VJ 


mtotuv 




10 



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FINANCIAL TIMES MONDAY JUNE 27 19$4 


11 


NEWS: UK 


Media legislation ‘may be postponed’ 


By Raymond Snoddy 

N«ppaper publishers' ambitions to 
broadcasters may 
save ro be postponed because a erow- 
iflg ^riiammtary logjam Is threaten- 
delays to the required Jeg- 

J^itain’s National Heritage muns- 
to fear there may not be time in the 
19M-95 legislative calendar for pri- 
mary legislation an the n 
That would mean reforms to allow 
cross-media” ownership might be 
delayed until 1996 at the earliest, 
along with legislation on a range of 
issues vital to the ftiture of British 


television, such as amendments to 
controversial aspects of the 1990 
Broadcasting Act 

A delay to legiatatum would be a 
severe blow to Channel 4 in its cam- 
paign toreduce its payments to ITV 
c o mpanies by £5Qm a year. 

It would also be a setback to media 
groups such as Rupert Murdoch’s 
News International which is Qyrnght 
to have ambitions to enter British 


The Labour opposition may seek to 
exploit the gov ernment 's 
by contrasting the delay to the UK 
with the wide-ranging- plans of the 
Clinton administration to develop US 


media and information industries. 

The information industries have 
been Identified as an important 
growth area for the future of British 
industry. 

Legislative proposals on key issues 
ranging from the ftiture of Channel 5 
-and plans for digital television to 
white papers on the ftiture of the BBC 

and the press and privacy, are already 
considerably delayed. 

Whitehall departments have just 
lodged their bids for legislative slots 
and the outlines of the Queen's 
Speech - to be delivered in the 
- are expec te d to be decided 
by the of mryfh or early 


next. National Heritage ministers fear 
tbe legislative timetable will be domi- 
nated by issues such as the privatisa- 
tion of the railways and the Post 
Office. 

An interdepartmental committee on 
cross-media ow nership is due to com- 
plete its work this s ummer , It is Bkety 
to recommend a relaxation of the 
rules that prevent publishers owning- 
mare than 20 per cent of broadcasting 
companies and vice versa. 

Primary legislation would be 
needed for anything other than a 
qwiaTi increase in the permissible 


■The cross-media ownership roles 


are' central to any ftirther liberalisa- 
tion oT rrv ownership regulations. 
Last year’s change to tbe rules to 
allow one company to own two ITV 
licences, except to London, was seen 
as an interim step. 

A legal framework for digital radio- 

and dig i t al terrestrial television 
would also be held up. 

The plan, to unite the regulators, 
the Broadcasting Complaints Commis- 
sion and the Broadcasting Standards 
Council would also have to wait 

However the renewal of the BBC’s 
Royal Charter, which runs out at the 
end of 1996, appears unlikely to be 
affected. 


Rotterdam and 
Humber ports 
in trade drive 


By tan H a mBton Fszay, 

Northern Correspondent 

The ports of Rotterdam in the 
Netherlands and the Humber 
in northern England are to 
jointly promote their growing 
shipping links to try to divert 
more trade from the UK and 
other European competitors. 

The first of a series of pre- 
sentations to manufacturers 
and distribution companies 
wfll be held tomorrow to Wake- 
field, West Yorkshire. 

The ports used to promote 
separately but started talking 
last year about trying to make 
Humber-Rotterdam the - princi- 
pal trade route between Britain 
and tiie European mainland. 

Although the ports compete 
for deep-sea traffic they believe 
there is scope to co-operate on 
roadborne freight needing 
Noth Sea passage. 

The Humber is Britain’s 
busiest estuary. It carried 60m 
tonnes of cargo last year - sur- 
passing the Thames for the 
first trine, with about 40,000 
shipping movements. Its main 
ports Of Hull, Tmminghflm, 
Gocfle and Grimsby are supple- 
mented by io river wharves, 
and about 100 other berths. It 
accounts for 17 per cent of the 
UK’s seaborne trade and. this 
share is to rise to 25 

per cent to six year&.Hupib&. 
traffic has Increased hy.5G per 


A principal attraction 's the 
TJK’s motorway network, 
winch puts 40mpeople - most 
of Britain north tit London and 
the southeast — within a day’s 
return lorry drive. .... - 
Rotterdam r handles 300m 
tonnes of canto year and 
offe r s direct ?nn^rfoto Euro- 
pean markets of 328m people 
withto 24 hm^aiye. • ' i ' 

The advrmt-Gf-the Channel 
tunnel has sp arred co-opera- 
tion. . .. •** ■' • ■ • 

Both RottmrLam jrodHmn- 
bendde n» 

tunnel wQl have tittle impact 
on their operation .because it 
will - faflMDy handle only about 
&n tonnes erf freight This com- 
pares with about ISra tonnes of 
container traffic through Hie 
Humber and Titon tonnes 
through Bott^d^r-lhe maiv 
ket where tij» tuhnetia hoping 

- a jatm'vwdqn] aflocal pub- 
lic and private -sectors;- Is 

«m pharie»ig ^ BH t( j lj ^ ji Trfwwlnn 
♦ rngiq tnrt^iTn^- bottl^neok "arid 

the convenience .of ^umber- 
Rotterdau^^r.f> roadborne 
ftdght to -and Axnn, Eorope for ' 
Scotland, northern 1 'England, 
the Midlands and Ireland. 

Rotterdam Port. Promotion 
Council, the , partnership’s 
Netheriands 'says 

the prate. can a§gi££i 
able” economk^endntBT to 



Emergency workers at tbe scene of tbe weekend derafiment in which two people’died 


Vandalism 
probe after 
derailment 


Police were investigating the 
possibility of vandalism yes- 
terday after two people were 
kfQed and four figured when a 
p assenger train was derailed 
at Greenock in Scotland late 
on Sa t u r day night 

The dead were believed to be 
the driver and a passenger on 
tile service from Wcsnyss Bay 
on the Clyde coast to Glasgow. 

Four other passenger? were 
treated at Inverclyde iRoyal 
Hospital, Gonrock, and later 
disc ha rged. 

A police spokeswoman said: 
“As tar as we are concerned 
there was debris on the trade. 
The first carriage was extenr 
dvely *«— H Wie can’t rule; 
out vandalism.” 

The train hit an overhead 
bridge at Drumfrocker Street, 
ripping the sides off the lead- 
ing unit. 


Support grows for ‘green’ farming 


^rbsbarahKaivuvN 

British government, funds for 
“sustainable tearing " have 
been trshled' to £12pi-to try to 
reduce^ iteie^ use ' of agro- 

rfrprrrtralq - anil feitilfam ■ _ _ . 

Industry is" providing a ftjr : 
ther gi2m for- a sdietoe vrii^k!..!^me-af agrochemicals 
is backed by Mrs Ggifam ^^^^ustainable methods involve 
bari£ ’GJ! agnenttnre mfotet^^tameri cutting the use of 
She- 
find' 


plant and bird life and protect 
the rural w^v lr nningnt and the 
welfare of animals. * 
Sustainable ~ farming is 
becoming a buzzword to agri- 
culture. .The .'^concept has 
.grown but of pressure from tbe 
/^green* lobby to bait spiraling 


$o ch^ttoals^ile maintaining 
jkrf , profitSB^y;^rather Irian giv- 
kraa ing'up tije“use of artificial for-. 





| FLIGHTS 



farming ^organic production. 

Prqjectefiacked by a govern- 
ment scheme to infroduce sus- 
tainable- methods 'show how 
use of weedkfllera can be cut 
fay using spraying machines 
that recognise weeds. - 

Some of the projects show 
how producers can. encourage, 
natural predators to eat harm- 
ful crop pester Another 
research initiative is ajmed at; 
showing farmers, how fb ram-' 
trot nitrogen leaphing into trie 
Boll when spreading. m^rtBre. ; 


Tbs scheme has attracted 
growing interest from produc- 
ers since it was set up two 
years ago. 

Mr Rex Chester, a fanner 
who chairs trie management^ 
committee for the ptejectaft 
said: “Farmers need to respond 
to the growing public concern, 
for wildlife and trie environ* 
ment” But. he “We can’t 

* '1 ' -I*_ ■ .1 


eating ineatjs.-a sriv At the 
extreme end^ the demands 


become 


Britain in brief 


tssaum, 

mm* 

Economic 
growth seen 
as steady 

Steady economic growth in 
the next few years, driven by 
stronger commercial 
investment, is envisaged by 
Cambridge Econometrics, an 
economic consultancy, to its 
latest set of forecasts issued 
today. 

Consumer spending will 
remain restrained partly 
because oTtrie tax rises 
announced togt year. Export - 
growth will be fairly high as 
a result of-geakral economic 
expansion across mnch of the 
developed world. 

Cambridge Econometrics 
expects gross domestic product 
to increase JL8 per cent this 
year, staMBsfag at 2A per cent 
In 1995 and 1996. Investment 
growth will average 4 pear cent 
a year between this year and 
1996, while consumer 
spending wJB slow by the end 
of this year as the tax 
increases bite. 

The consultancy says 
i nflatio n ary pressures' wfll 
increase as the economy 
expands, with the retail prices 
todax increasing 4.4 per cent 
next year after 2J> per cent 
fids year. 

Stronger economic activity 
should lead to a decline to the 
government’s borrowing 
requirement, which is 
expected to tan from 4J> per 
cent of gross domestic product 
this year to 3 per cent next 
year. 

Publisher to 
launch 30 titles 


An international consortium 
plane to publish 30 new 
magazines next month, the 

la r gaat nimhwr of titlat 

launched by a single publisher 
in trie UK. 

The consortium; railed Retail 
Revolution, will distribute the 
titles through TPS, a 
'Windsor-based newspaper and 
'’^magazine distribution group 
which wfll defiver the products 
to an initial 4J00 UK petrol 


; v_ r servtc$_steti£ms. 


Retail Revolution's largest 
shareholder to the 
London-based Richbell group, 
a private company that owns 
the Egon Ronay food guides, 
and Service Station, a 
magazine Tor garage owners. 

‘Hie company also owns 
Overdrive and Dial, the fuel 
credit cards businesses, which 
will provide trie accounting 
software for Retail Revolution. 


Executives 
spurn perks 

Most British executives value 
salary increases tar more than 
perks when dunging jobs, 
says a survey by a leading 
recruitment company. 

Responses from 146 job 
applicants canvassed in a 
survey of rec ruitm ent trends 
carried out by KPMG Search 
and Selection, a recr uitme nt 
services company, found that 
63 per cent of them said they 
would prefer to have the 
equivalent increase In salary 
instead of some or all of the 
perks on offer. 

Benefits considered most 
important were 
non-contributory pensions, 
company cats and healthcare. 
Those thought least important 
were longer holidays. 


National Power 
deals approved 

Hie European Commission’s 
competition directorate has 
approved contracts between 
National Power, trie electricity 
generator, and private UK coal 
producers in spite of 
com plaints that they were 
discriminatory. 

It had earlier said In a 
preliminary finding that the 
generator was not justified 
In paying significantly lower 
prices to private companies 
than to British Coal 


Amoco site 
for expansion 

Amoco, the US oil company, 
plans to spend £80m to expand 
its natural gas terminal at 
Seal Sands to Teesside to a 
project which will link the 
facility with British Gas’s 

waBPfl*! fa-gnamisslmi system 

The Teesside terminal is toe 
destination of toe 255-nrile 
Cats pipeline which runs 1 ■ i 
through trie central North Sea, 
and through which the 
Armada gas will be sent. .’ 



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12 




fiftWSW./.'— --f 


THE WEEK AHEAD 


FINANCIAL TIMES MONDAY JUNE -27 1994 


DIVIDEND & INTEREST PAYMENTS 


■ TOQAY 

JWbl Own. 73% Bd 1888 Y72DWUJ 
MMn tad. D*». Crap. a*% Bi 1080 
*418.75 

Ban fat mm Ma ms WttUO 
tty oJ Oxfcri tav. T«t l.Hp 

Dm Ha. bwk o* o*. pt mu mi 
EbcWOs da Am TO** Out M. aoOB 
CtOBOJO 

B1 Bt Hn. 8*% fed. Cwh. BA Z30B E7W73 
Bronmwy Putfortcn* 1^ 
fiaWHnpoit Me* Jaran urn* fltel Ba 

1 SOB SHOTS 
UrlMUp 

Ft* firek W Fin. Uni a. Ow. forJha. 

jamynmikTK UBp 

Lam t mkMk iaaep 

NO Smrtar CD 1 * Tat 263p . ^ , 

MhonOnno KodmM* 94- Brt 3001 *49MS 

HT & T 711* Mo. 198B CSTZSO 

Setae taL SwPVta. Rato NtalMOWBOBlO 
Burt** Bacb UK Bd. 1887 Y830000XI 
Do. ai taw vwoodoo 
9 m 1 CteM AH'S Mb M t» Bc*d 2029 
£19321 

SM* Baik d Mn> Souti wMm 10ft Ma- 

lM7NZSfana 


Bafea 7»im »». »W CBi 12 sajtass 


OuabMTM iJJt Cvlifl Ln *08 EM 
Btaa CM* Mb 7«H Or PI U12«i 
B0C4JM* PL2275p 
0 o.Z HMK 14 
Do.3rt*4ndPl ^ „ 

Bad*Mon Bftft Or Uh In BOOMS feJS 
BaaOiopa 7« Ui Ln WU 


IlftDb. 2008 BSD 

Haring OM B* 6* Pf1.78p 

Uamt Ddmmmmt «* Pap. on. Oiti 


Oo. M Pap. 0b. £2J0 
CU. IIBftXtDh 20WE3L75 
F A C to* HI 1t»* Db 2B14. 0823 
RMwi A Maaon 7* Pt 1A 
FMy Howto 3ft Or M Pf 2Jp 
f#Bm*V*2S 
RfereYM 

Mam to*. Tft. fee. I2ip 
QATX Cats. 90373 
Qnnan famed Eqrty Tat Z4p 

terantn vwua am. oasast* 

Oaaaim Pti.TBp 

OBL Ajxumt 7ft* un ill mar tons 

OanonMUfe 

Oo.TKPL2.TWSc 

aaeaMuah Monpagv fte. 100. BriaL HW 

amsenuo 


BafcnaflTJNWPtlSi 

BridonlWK Eb. E5.13S 
Do. MK Ui Ln IQnr E93I2S 
Do. 7MI (Jb Ln WV7 ORB 
HM VMa 3\ift Pap Db El-75 
Do.4HPaiv0b.e200 

Do.4HHPap.Db.E2.nS 


Btarto Aaaoa 5* Pt 2A> 

BriL Wkv Sftft Or W PI 2»P 


BriLaMaOan.MaNw4HPnp.E2dO 
Do. Dm Mm Pam. Ana. 30p 


BriL Petytm» MB. 70* CVFM PI&TSp 

BiMon BaWia EM PT. M78p 
Do. mm nc MB Db 308 K7B 
Do. 1MH lit Mb Db ms £U7B 

do. itwt wMnaaBieuH 


Paanen ASH Ito Ui «Wh DUS 
Do. 13ft* Un lit SOW OBI* 

PMlpa Ha 9HH «B*. Cm. m in. -Bii94 

CUTS 

FBMiBIMnATap 

PHMBfamk 0* P( 'pun A37SP 

Oeatt C», PL 4S75p . 

qriehaiOHPLGp 

RSAMdBa.MR.ASp 

Da ttft Of Un In SDOO CBJJO 

nocadMda.10KM.PL9p 

Mb Prmw MM QkUBi Ui 1BBT OL97* 

RBri cap. OK* PI UWp 

Da.5K*2ndPl2jBtt» 


-n»a r -nr w r 

MBbmon Toa M Cm. PL lip 


Whan Comma* 8* cm in Pf 2dp 
Do. 10KH Qa Bat PL &23p 
WebbMqgam A Dufay from. 8ft *>a Pip. 
PtZlp 

Weod»7ft%Can.PL2JS5p _ 
Ntaetabl BMP- SehPm 1887 CMftdO 

HVnm»amai Can «*» ». « «8 p 
r«uda‘fta.ABanWn B Ya« 

Y aldb o Chant 5K Cm PM.TSp 
Vmk WUaaoria SK Db. EiSO 


Hal Mae.™ SH Cm PriTO) 

RMr Pbaa 0 Qan. ka. TBL 4* Dh. U E2O0 

Ftobtnacn Braa CR»daa Ooa* 11* PL 
MMh Poaar 3ft PM Jp 
Da SftftZBBTSp 
Do. 11* Cm. PI itb 
Rapna 11** PL 5.7Sp 


■ Mdoa.7% PL 24*1 

QnanpaiTVAiWiD.Sp 

Owl Unban Shan 3*H Bd Un. In. E2JBTS 

Da 8HH M Un In £8.1878 

aomrmO-lBp 

OR Hdoa. 10HH an PL S29p 
Onmbn Mado 4* Pt 1 Ap 
HaBEriB GJSS* PL 2J1Sp 
HbMMMKPlUaa 
Hadaporia V» 8* M Db WM BUJO 
)b« ASM Pt 227*. 

Urn tanSB*PL2JB» 

Haris 10* PL Bo 

MBB Cm. 7* ca. C*L BO. 8004 asp 

MbM ML aim Un In WBA £425 

HfegiS MI7* PL243p 

HaoM 4JB* PL 2-1p 

M SK* Un Ln W/» E2.78 

Mb. 18L Odd jMrWKHd.pt ASP 

Jaoay Sac 8* QU ports SLOO 
Jcoa» & SNpmai 4BN « QJBWSO 
K ap n a Cl a p . Y440 
Xaya a- Q a n dorS* Rd. PL Zip 


■ mDAVJULYI 
ASUan-LSSp 
naMdM-22Bp 
Waiiata WWnwrSJB 
MM London Prop*- l-’Bp 
Aiecup 


ntntM Pap. Ob £200 

MnbMpMcnpru* 

APISJp 

MaPropatyldp 

***/ aip Atpmr M* an w kubr 

AoMb Daod 3Jp 

ya* a Maori inp 

Base 7* OtM.PT. ASP 

Babadoa |Bo*t. 08 «** In. 3018 «J5p 

BaingaM* NonCmPTAjnp 

BATBab. lS28p 

BMataL SS2S 

Bmnaa fCnaba) Oc Pt UNb 

Bat— y!2p 


OtLllHKWMMD 
heanamr 8* Sn. PL 2.1p 
BnffnarkM-TM.fi* PL Ct.75 


BanBOmO Raaly AKPtal 898 V800000A 

Da 8H Nt*. 1W7 YBOOQQCLO 

DO. FPN 1887 Yl 1798820 

Tokyo Tananono 7* Bd. (887 VTQOOMd 

Toan CanooSaa 10H* iaMNf.0b.20n 

&2S 

UB kwo. OWM Bd. 1890 88U 


Bnffnarkw.TM.fi* PL «.75 
Burton] 10HM la M« Db 2PM ESJ 
Da Tim ia »8* Or 2018 DL383 
CW8M 8 CaariMoSH* la tSQ Ob J 
£40373 


Da lift* ia Mo Ob 20! 

CMbaiOHHPL&iaajp 

Oartaood Mbnoa M* la MNI Ob waa 

BUTS 

Cbanoa7*PL2ASp 
CtaffarHManwMa Uft* RdDb »O00P 
G&8876 

CMbigton Op 8* Ov Un. uv 1MB MJ? 
Cky 88* Ma. 7ft Du Ih Ui DS« £100 
cartanr 11 * la *«8 ObOOlO BJEO 
Cbriawt 3* fcnt BLflO 
Da 4* kid. £200 

Coat Ram «H* Un in TS»7 1223 
Da 8MH Ui Ln XB/Of £3.78 
Coam Union 8ft* On hd P» *3TBp 


Batnoi OklHW VOX *iai • 
OoldaiVUaRIJBp 


AMraa Naa 'Jlai fcw. TM. Ip 
Bifc a nata BWa.8ory.8b. FfH 2008 2181743 
cam ritiaBMomririM FHM 188 8 C141J 8 
ChabM BMp ScQL Sb. Hfi 1888 E3023246 
CoaanomMII 8a* a AuacMn 10 Ylar Old. 
EM BW *17848 
Fortnum A Maan 88P 

Fraoment EaodM 1343H law*. Ob 280V 
m pu y 

FupM FPN 1887 Y734723J] 

U# Rap. (ri) RW 1888 *S27J 
Kbna KaBaa MMOS 
Mown Omoft* Mr kit Tat 2p 
Orarawa kw. TM 0P3o 

MMW Pmp. SacCfam A1 bb» saa. 

FRN 2038 017*01 
Da Clam A2 040328 
Da data B 080748 

SMana Bank Am 8b Rb. 20X7810233 
Marti krv. Tat aip 


Merit 8H4« PL *7Bp 
ftayrt flkol Oamda HtB- R mo Db 3008 SSBOB 

fed » el SeoMd 8a. A PL *1703126 

DaSecBPl*0i7D 

Da 8a.CS PL 8038873 

Rugby OH Lki Ln *B3BB 6300 

Da 7** Italn TtM8 EK873 

8L AntkOBt TM SM* PI C1437S 

8LDoridakw.lM.3p 

Sanaa Ba*VL2S 

ScMdas BH* Lki Ln Wm EASTS 

Sebroda BpMPd. 1 jp 

BeoMdt Media ■** Uad. 8b Bd. E4O047 


OoncocaaJp 

DMri*a(bp.1JKp 

mdtMob 

Dtmoaafti 

OaSaOJp 

BSpondbTSp 

Bolt »blS* PL 1-5Hp 

8am&7Sp 

MMoan Dadt A Rabaw PL Unfia COM 
n op. r j* ca m n waa &BSp 

ftaOkaanftLSO 

Ramp 

HanAvXflfikMkwi.ip 

Rada OMi fcaTM 4]4* Pap Db C28S 

DafWMoSzSp _ 

P & C daman In*. TM. OJp 
Fcna *79p 
fii n ai aa ^ 


^OMSM* Rap- 


DbCIja 

Da Sft* Parp. Db O JB 
Ob 4* Pap lat M* Db cuo 


Da 4* Pap 2nd M«| Ob e^O) 

Db 8* P*n> Db E2JX) 


DadHPapDbCZOO 

MataASpMoaTfttefSUap 

kMn M. Otp MB« urn* lat M« Ri 2034 

sure 

HamaUk 

MMMRM am 0» In WM «LS7B 


SSffi!SES;%.a B «. 

DOM* Rd Db WB7 E&812S 
HaiunPlaiVIlrEmllai WabrSK DbOJO 

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finai aa sp 

Huam.UftBrtPL2.ip 

Maafr Hobria 4** Ov M Pf 237ft> 


Da7*C*.PL3Jp- 

Ob TT.tSSft fat MR) Ob »5 SABS 

RBaBRAh A TVaoar 42K Cm H SLID 

Da BH 2nd PL 4p 

QBET2SP 

Oran Ena A378p 


MASHKOmml-IRp 

Db otaad Urita i.ta» 

Do MokaoBlkba L.12P 

tadXatt MUa MS* M. Db W»8 «J875 
Da UR* M. Ob 2005 tb1» 

•Da Uftft M. Db 18BSC037B 
Mkl nuaaai! Ufa a 4* Prp Cb POO 
Db5ftPM|L0bC2DP 
Db lift ftt. Db SOtSftfl G&50 
iwroanauttmiap 


« com- *0-18 

Comm-OK** km TM. 3J8p 

CoofcMn 7ft PL 2*0P 

Cmda bd. 34% PL 28Bp 

□a be* PL Up 

DaHcM Hawn Bank Y*28 

Dnba SKsridaa 1*0 

Oead Saa weria Sft 2002 NBb3b 

Dabartana 7H* 2nd Db *8UBB Cams 

DM4£ft1atPL2.1p 

0a&18H2rtPL147ap 

□ancora 8Hft Or M PI 2.13SP 

Oaanak paradem o4 1 3N La 2008 CAAO 
Darby TM 7ft* Ob WOS CUB 
Don flat, lift iaM8.0b20WC&80 
Cartirama Mala 10ft Rd Db *8df87 CL23 
Da 114ft M Db W08 C&BO Db IZftft 
Rd. Ob 2004 B22S CWiU ilt Hlirt I* OBteo 
10 * 2nd ns PL Sp 
Ertnburgh few ITftK Ob 2014 GA7B 
QS3ftPL148p 

Baetric A Oantov Iblft Ob *87102 <SflS 

Bartdiaiap 

B4AP SK Pt 1.78p 

Emaaa Or. fkL PL 3.12BP 

Ermrim 9km 8Mft Ob VM C4426 

EaaMa A Aeanop 3*ft Rd Pf 1 J3p 

OallHft 1M lag fib 2020 1&8» 

EaMaa A Oanarri 1145* laMft. Ob 3018 

Ewarata BntW.&HPl 1J5p 

EpLanda 7WN Or In 2020 CL7S 

FWMty Etta VMim Eoufty kalac LM Un In 


■ THURSDAY JUW 38 

rUrimar Ewopaar adm aw. 7M (Up 
rt aa n dar A Maaarta 8BB3B 
Da ObhCODSp 
M mwrta* Mdga BHft PI U29n 


AM Lml nopa ION* ra MM Ob 38 £3479 
riBarKyana 11KH Db D8 CUTS 

AM Lon. Pmpa 7111ft lat MIB Ob Was 
073 

Angta Ernram Haim I2imu>ln WW 
028 

MriBabTU 

Aadt Hop. 5MH C*. Rd. PL'12U8E9p 

Mow «tk* Pt 227Bp 

Da Mft PL 487Bp 

AmM (CM* Ui In wee 028 

Aran RririMr ASM R* Pt 24Sp 

aaapM M*a 8Kft lat MO Ob TBW7 B4.128 

BacdWI MS* Pt 1428p 

Db Or. PL SA2Sp 
BartnoaMK 1MPL247SP 
Oa 7** IMPtbSKp 
Pa 8ft laPfMi 
Oa 8* 2nd PT4p 


KMnacrtCraana Itit 4K PfEZJB 

Latate Up. Rn. (Jaaayl 8* C*. Cap- Bb 
2005 C4&0 

ImBaoko HMb KM* Itt MNLDb. *94188 


Sooabb Canam bar 4*ft Pt £tJ7B 
SoetWi Mertaga A TM. bi2ft Sbppad ML 
Db. 2028 6000 

SsecMi NataMlTM 8M PT2.1p 
SaaaanSblA 

sm*p (War CMmhD Oft L Db 2012 0.173 
Mp M>wa Ha 8ft Rd. Ob IBBlAS 8400 
8hkaa HghYWaaB STmAw Co* TM 1-3P ' - 
Bknon Eng 8HK Db W87 BL8B 

So^i Sa* IT** lat M« Db 2018 osjees 

Da tatft Ut lit 8008 £3.1879 
Smurtt (JaOaa* 8* Qnao PL 8«2Bp 




FkL 10H* O*. Cap. Bb 8020 


BknMam 21k« 1823 C143 
Oa 3* 1847 Cl AO 
Da 3* 1832 CL80 
Da 3Hft 1846 Cl 48 
Da am Anna son 
DaWHbrAana Sp 
Bbrtban SUM kM. £149 
Da <* Qnaa Db kid £200 
BbrtrA Dacha 80,10 


(hbAoddad 17Jp 

Da Mkft CBl BnL Pt *4378p 

QaaCbmkaSNrtHiOOBp 

OMKoSjataUSp 

QkBrtMaSKPLUSp 


oa ftftft ia aagObaOM £278 
Maw lacTM 43ft CM P14.128P 
RBNfWCN lUn 
OaUHbasfip 

Natort Him Urnna BAaa ARM 1883 *1.87 
Naa Bunarick RaBa^ 4ft Past Oona Db 
£240 

HaacMdaapm-TVnaSim M D.W 

Mmar » Pt L7%» 


OaStfftK irtTfc 
QwMSeudam Or WSJTfip 
(HE 3247 
Hodai Mania ip 
HanaoaUSp 

hSmSoM n&» Cm PL *3790 

HCQ Uoyib kw-TM. OJp 
flMifan T TIi 
HNrinofe kntTM. bap 
I ftbdmm Hdoaftap 
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How Up. 037ft) 

HrtSfkfteUS 

Hudkaen 

HukkaghTkcb 24p 

(AMS 8ft 8b Ck in Mi ffABSnp 

MckBAp 

iirtmrTiii r mi Tr 

Maaorti Marti 4ftft ia PI 1378p 


■ In*. TM£m Cap PI 


Lm(&arv.8ttft Cm. PL 3L275p 

tendon PakHmablOM* laMMOb W 

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fmirtai Urtw 6Wft Ca Ua Ut 20QS £8.126 
MBOMnatCam 8* Or.Un.lA. 1987 £33 
Mmgonam Broraa 8M* PI 2JB7Sp 
Matey lift* Ob 2008 £38975 
Mnrndb lift* Cb W301* £83873 
Maanano Unkraaa 7MK fkL PL 3.7BP 
Matata Moom lOttft ia Mg Db 2020 Eus 


9umtomo Bar* Y*2S 
StankomoTM. A Bari*0 Y*2S 
Sonon Dkiria.Wb SHK Db CUBS 
Da8*Db£230 
SMdBank 8b FTM 2002 929731 


Sake (J) 83* Cm. Pt 3.1 Bp 
1DKY2U 


TDK YZSjO 

Tkkara 113ft 1M Mg Ob 2014 £930 
Tknaria Ba Bftft Ob 2017 843878 
1*0*0 Hundmd Wlr 4ft Db £340 
Tannaaam Om Ptprtna 10ft M Oy Ln W 


Da BM Cm. PI LOSp 
BMCktb73p 
BudyctM kb 23Rs 
Doolar1*33p 

Boaaw A Ma BHft CM. Rd. 1M Pt 13ttp 

Da 7* Cm. Pt 24fip 

Bewimnorth WIOHft Rd Ob <98 fS312S 
Da 12XN Rd Db *95 £0373 
D o n a i a 80.16 


MW Kant Mr 4* Pap Ob E230 
Da 8ft Pam Ob £280 
Oa8XRdObWM£*00 
Md SoUham TWr 3ft* Pap Ob £1.76 
Da SK Pap. Db £230 
aaari3kMBa*Y*2S 
MaoHaa Oab Y4J0 
VRarilkLTbSQ 

Mriynaa fb. 8*N ia M«. Db S019 £93088 
Mom OTonJi low 2nd PC Bp 
MocMaa (* A 3 7* Pt 238p 
Moray HL 4* Ob £230 
TbrtmnuannMaaap 


Rdrttr Eua VMmb Equity I 
2001 06747P 


DacarXTp 
(May U 42ft 1M Pf 21p 
Da 42ft 2nd Pt 2-1p 
Da 8ft 2nd PL 23p 
HanffgAmir. kwSft PIC1JB 
Da 7ft Ua Lb 1989 £330 
n arnki B qa m rtkx aa kw. TM 


fkrtwcuqn Harm 03p 

Da2DftP£1p 

NBSYU0 

Nt*mlnd.7ftlMPL24Sp 
Da ON 2nd PL 23p 


T A N lift* Db WOO ES37S 

TboM 4Mft Pap. Ob £2379 

Tomy hda V33Q 

Tcahta Y1L00 

Tbwn Ogm Saa 13p 

Oa Oft Cb Un. In. WOO 0)30 

TbyoTit Y330 

TMriaa Hm 3379ft Cm PI 22879P 
Da 7* Un. Db 33p 
Da KMft Un Ln W06 Cs.126 
Ttammrt Da* 4.7ft Cm PT 235p 
Da BHft Un. lit 1888A4 £3376 
Ob Bftft Ub Lb 198338 £4129 
TR Cby of Leaden 11MM Ob 2014 £949 
TP Tech. Stprl PL 8.100704P 
DaU*a124B2B18p 

7h>ek Radng RM 1987 £73334 

TSBRkpHM £148.15 

UK PlftV 8H* lki La EOQMM 0429 


Bridcn BH^m P( 133p 
Mad Wk 4ft Ccm Ob £240 
Da B3K Rd Db 198B RUB 
Da 104* RdDb 200002 £S30 
ML Aamm c* m Prsjnp 


Afamyfiftpt 145P 

Nerti^mtWfe'1D3ft Rd Db 1893 £3.18 


Marti Bam* War 8ft Ob £230 

se.MNWDB'Mmeut 


Db Bftft W DB V4M £448 
CWhan 4ft Ob CSLOO 


PAOsSft Rd.Pt 53p 
Oa 846ft Cr Rd PTA378P 
Paortart 134p 
PapaudlQp 
Parry Up- 420p 
H— S rt N r Mp . 

PHanarT.sfip 

PcrtdaiajSp 

DaB*PL2.1p 

RnofLen Aadrorlk’Sft A WBfMD 
PowaB Dirikyn 4KK Pf033128p 
PSfTBft Pt 4p 
fk a B y a a ia ma I33p 


Sarih wababan s« Cam. £130 
Southend Hap SKN CaRO Pf 2JBp 
□a 8* G*. Un. In- 2020 £440 
Saab 6M. waa «dga3S8R 

Da 9ft FW Pf W3000 43p 

Seatfi SW* Mtr 3ft* Perm DbEJJS 
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DaSft PaonDb££80 
Db BH* FMDb W5000 D43BS 
a»i ABac e93p 
UnMandOftApMetSO 
Da 4ftft Am*. C22S 

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Marne SH* £145 
Sjribe-Plokaart 1330 
TkvtarNtlamaREp 
Timor VMM* Ip 
Tdaneoblp 
TkMaSSp 

■RmVMeyk warn 4ft Db£Z40 
Da 83* Db £1-76 
Da 4M kid. Ob £240 
Da 4* IM Db f8« £230. 

Da S» M. Db £230 
Da 5ft kid. Db PM) £230 
DaiOKfkLOb W8BCS40 

THney DoUpm 223p 

1VmiM0ai30. 

T eadriemmUp 

TaaMaaOKRA.PL8.18Sp 

TangaaMMLRELSB 

Tbea Kanrtay 8*K M I388p 

Hade hdatffky OOp 

TRIkrUaUnalM. LNp 

TWeroaBp 

UK away 13^7 

UMCbam48p 

I an teblb 

UNL Narampem 143p 

VhianBJp 

Wabag («N WP 

Vfanfla Skaoya Sp 

MataBkfeaBaanaSJp 

Wmamtl37Bp 

Waa Hata «tt 4ft Db Pap £240 

□a SW Peip. Db £230 

Db f T3M RdOb WB7CM0 

WWt Kart WIT 12** RdDb WB6GB49 

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HBtan (CM*«%(23Bp 


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VbadMB A Bmt DtarieMrim wma 7HW 


MaB 08 ft£l 3 D 
ReddB AOeknatO* PL 1480 
Rnemd H fcfaa. 2 43p 
Ranold SftPL 2-Tp 


BriL A Am F*m 83p 
BrtBW m 848* aw Pf 43780 
Da B3N Cm. PL 44Bp 

jaSlk i 

Da 7ft Or Un Ln W87 £340 

cagay A Erkmmoa Rrtaqr 4* Cm. Db 

£240 

CdorUbBAp 

Cat Ptefle 4ft Pap Ccm Ob £240 


Tin -~|- 1 

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Da Oft PL 3.19p 

4ahnewn Up. Ip 


CbRAPtSJSp 


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Da 7ft Cm.PL 24Sp 


Da7ftCrtPL24Sp 
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RA 88080173 


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Marti Bert WSfttftfld Ob 2012 B37S 

Da 18* Rd Ob 2003 £840 

Da 123ft Rd Db WB7 £8.18 

NortUHiTabcern JQ40 

North a Bntfaid bub. Say. 12*N 

PamMAng £83.123 


IMgaki 6Hft Un in W97 £333 
U 43ft Cm P» Alp 

Da 63ft Cm. PT.2M 

WUBCNBhe 8Hft CmRdPf 2008 LIRp 

Wttan SSK PL Sp 

IMS Fwgo R0. Art* «L »»a. 2000 84349 
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waa ibid ws 4* Pam Db £240 


Capld Indi Or Rd Pt 0MB 4p 

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Can*aM00i2p 

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laada Gam 2ft* Rd. «36 
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laaMnd kw IIHft Ob 2010 £8326. 
Loom Ma. Zip 
MAI Cm. PL 136l7Blp 
MapnahOLlp 


Caanby Omudb 238p 
Dae Qaapa 8HH 6n H 14 


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Sarny Hoad rift ittMft. Pam- Db.czoo 
8aroy Tlaam rift ia M0- Prnp. Db £340 
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Da'IOft Rd Db WBB £940 
Da 113* Rd Db WB7 £340 
Da 18K Rd Db *84 CBfl] 

Tbano A CBk Bmw 3Hft MA MB Db £149 


■ SATURDAY JULY >. 

Mhb 8 m. A Om TM. Bftft Db 2189 


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Mdi BHft Olt PL 2D0V1S 43280 
BmK ML BH Om PL 4*p 
UMrti PotyBana Indb 914ft 
Cm.Pt 4asap 
MM RdMfana Inda 8Hft 
On. PL462fip 

Tknmb Ba kw. TkL 42* Cm. PL Zip 


UK COMPANIES 


■ TODAY 

COMPANY MEE7MS 


Canbridga RaaA EniaU, MUdaaak. 

1240 

Rmm HMBb. 18 Hope BlmaL CfarioOt 
9qUNm.Erbba fttH.00 _ 

^ OiartanwX)mu«ffea ,, |bl. MoargnT*'' 

Ptaca. EC, tzaa 

Umdon A Omw PMehL Fmamarit RsonL 
WMnan'M, 18 SI May a HH. EjC. 

1130 


I Inc. A C*i kntTM. 


Hm, 188 Cmmarid snat LdOi, EdWnaftb 
1240 

WPP Omup. Rhar Roora Tba bamy Held. 

The BhanA WC. 1240 


BOARD MEETWQS: 


O0MHWYMEETHG& 

Abkua Maw Thai k i ik ■ r » Traab 88 
Ctartahouaa Beaat. &C, 

1230 

Aioaftm MA, 200 AWamam flkaet EC. 
1Z0Q 

Brtden Eabda 3M4 Sy PfaBK E41. 

1Z0S 

Carte A Wkiliu , tt oarwi rt Houaa Hotel 

Pak Lana WL. 1140 

Crtrd Snap. 188 aWnpagrta EC, 

1030 

CampBlar People Umov Victory Horaa 7 

SriaenWAE ? 103g 

HaA 9 U*» Trtrty La* EC, 
r*> nr^ 

Pammal Aaaaa Ttaat, 1 CbataBa SAM* 


Er»«urt\ 1Z30 

Pl o wm en The n inety; eWiwoa au BBt . tc. 
1230 

8ama The larrten Manus HoaL Pd a Bke at 
MU1Q4B 

Tina ProducM, 7Iw Hkctuy Norti, Com24i 

amot w.8430 

Worm M»ia>aaHl—L 88 Omtahoua* 

8ma.E4L.1ZI0 


. Mdaen da b CWdat 2848 Iba 


i HwriBiuera, Ha Pakpiw Hold. 


BOARD MSIMOU 


COMPANY kSIMOn 

Abbott Had Yli tan. The Lanadiaatfk 

1 Lanert xrougfa Pb cg & W, 1140 

SB OWaftojaa Start. EC. 

030 

BET, Pat Lam HoW. Pteoarty, W„ 

1140 

0Mpr Omen 7I» MMrtee HdMl A88 Lam 
CarSfLiaaO 

EdHbmfti bawbaadfteet. Cdedcrtai Had. 
tdntrrgn, TZQQ 

rkmoeea Ml IB0M. The wamae* Hrt. 

18 S Mary st HB. E4X. 1130 

PMey ti n e m> , The CPngow fkryel ConernT 

HR. 28aartdd8 flaea. Oammr.lZia 

IT i iea ,Q " - — 

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MerauryAsaaka Ibearart AngMIQg 


8L Domtabaa. Ma SjQOlocd 9m* Fkab. 

f* i ii ML^dmaa* HaiBUrtaTaaky lang A lmrt iii Sm rt r l 

EC, 12.00 . Aw*a 


COMPANY MBETMOS: 

Aocan cmopular Unear Tla UnRartft Cam* 
MB Lam. canMdoa 1040 


Ham. 18-18 Monument BbaaL EC, 240 
Ortaea Um* En^rii SpadBio Udon Wald 

Haedquartare. 87 Chariea StraaL W, 

1240 

IftkriaM kaaalaardTnat The Dee Hama 
HocaL ROM OrtenMPK. 1230 . 

HmhmiBLTT. Naa Dmad area HouagNea> 
head SbaaL EC, 1030 • *. i.‘ 

j u te j m eartraa rn mA BB CbaMdan a e Bmat 
EC, 1230 


BOARD MEETWaS: 


CarbrUoaKLOD 
lertwijedbrUklNNkadltiaNR 
Wemiou Road. HE. izoo 
Pah* ParfMa 1 paanoartr flow. £t Ml. 

EC, KL40 *iiSsl .art. rjf5- . 


lift I ii i Oar ~*i T*i -|a — * - T. "*~0 P Warn fkrir. UrrtrtpM 1140 . 

E4L.T2/0 Bodrartrteal hraaaaoa Ortoa Baadort 

YMbfteaianaia.lraatdTiiaa.YMk.tt40 Houaa, UwaafdcRond. D b w oaa f a r. 


■ TUummu’ 


Throgmorton PL Inc. Tat 


BOARD LEEIMQ8: 


Horn* Pnaarriet Hart, akiuaeabi. 1Z0D 


Battin Mia aOam.E4L.330 

9ma 08 Baaha* Tim ItacBM a t 
North Daadda HoaA Abadien. 1ZD0 
Yortdyrta MoertnokABR. Mm Aft, 
Hu diart IA 1130 


■ RdDAY JULY 1 

CDNMANYMSnNOa: 

' ftaertl Oaa. fBBt Bobjph I 

830 - 


Plana iMac fHphrta art aoooMda am not 
nonmPye a ldri e art ap pro A n ad | Mcweaka 
atwlfa bead maakft to apprme Oa 


CONFERENCES & EXHIBITIONS 


CONTRACTS & TENDERS 


JULY 1 -Z 7-8 

TIE LIMITED 


THE LIMITED LIABILITY 
COMPANY ("LUC) -AN 
N7EHNATX7NAL PBISPECnvE 
Tbii program both anafyaea *o LLC form 
of Immi nent otcanbaiiDa aadplaoca it tan 
mtematiasal context Spooken are from 
Europe and the United Siam. London 
luncheon apeakcr is G^A. KcntfUW, 
Chief Cashier, Baek of Eoglaad on 
Guidance Notes far Investment Business - 
Money Laundering. 
rvy ffr» &*IA 3 ft wriwry 
Tel: 071 -487 4444 phs 071 4874480 

LONDON/MONACO 


JULY 6 

SECOND CITY OF LONDON 
DERIVATIVES CONFERENCE 
8aa ken. regulators and users discuss 
so pet rim, ap t d adequacy, bbw product 
devofapmenr aad profatanv ta the mtheca 
Spooaor cd by CSH, Tahai Bask Europe, 
Anfi ur iwMi PtadriSeUsaad fwiwi i 
Risk Syxtena. Daeid Muffins Keynotes. 
Details from: Chyfrnum Ud 
Tot 0225 466744 Rue 0225 44290J 

LONDON 


JULY 15 

SAUDI ARABIA 

CBI ouetaeDcc, ta maoriarion with the 
Saudi Bdtisii Bank, bongs tegdher experts 
from a aide oogo ct dfadpfiBos » emtae 
trade, iuwrtmirt and aamoeaoppo rtB i iff i n 
Speakers ia cl ode Douglas Hogg and 
Abdallah Mbagh. 

Oootacc Nkxda Martin, CBI Goafoeaces 
TeL 071 379 7400 Fax: 071 4973646 

LONDON 


SEPTEMBER 27 
CIVIL JUSTICE ON TRIAL 
Vboue: taw Tempta This iuiputan t one 
day event has a prestigious panel of 
sprahmind wfll bs chaired by: 

The m Hfd Locd Woolf of Bamea 
Rodger Pamma, Dcmk Wheatley QC 
Hilary BEaObron QC 

For dot ails contact International 
P rofirt ai nntl Co nfer tncta Ltd, 

Ikk 071 233 7733 

LONDON 


SUPPLY OF TELEPHONE SETS FOR HTC 

Preqaallfication Notice to Prospective Suppliers 


JULY 4 

NAVtiATMGTHEMORMATKM 

SUPBHGNWAY 

Media conversance and your 

marketing sfralagy 

This unferenCQ will examine the policy 

taqilicaiians. die battle far control rod the 

■igsi&asec far tuBtahtg sad advertising. 

Arc you ready 10 Interact with the 

consumer? 

Contact Hick Janet. Marketing Week 
Coaicrences ' 

Tel: 071 434 3711 Fax: 071 2878106 

LONDON 


JULY 6 & 7 

FT INTERNATIONAL EQUITY 
MARKETS 

Arranged by the FT and the Geotee far the 
Study of Financial Innovation. The tins ia 
to provide s high-level forum foe stock 
tcpdtfocSu — if pr* 

and taeesam » debate the etotattat sod 
ftrtnre iBiium c of the international equity 


Td: 081 673 9000 Fax: OH 673 U35 

LONDON 


JULY 4 & 14 


STRATEGIC PROCUREMENT IN 
THE 1990K Concepts & Casas 
7Vn Jinked workshop* rinqati to expbxc 
leading edge thinking about Strofegie 
Procutcmem. Each event will combine tea 
work of senior practitioners and loading 
academic* to mix fhadtmeatai ooocqxs wfcfc 
pnetke. They aae bneaded to act an departing 
point for new pmdmsiag {bran. 

Contact: The Contracts A Procurement 
Research Unit. University ofBamfaghkm 
Teh 021 414 3221 Fax: 021 4143217 

BATH/BIRMINGHAM 


JULY 7 

UK ECONOMIC PROSPECTS 
CBI conf er ence, in a a a octarinn with Dow 
Jones Tolerate, for Cassse d ir e cron sod 
pfannea brings toother leadag experts to 
eonskter econooic pertemanos and oudook 
far UK and Enrops ta the atwf and nsedfaoi 
term. 

Oa nrncr S a ndra Aldred. CTI Cn nfcieocns 
Tut 071 379 7400 Fax 071 497 3646 
LONDON 


JULY 21 

PRIVATISATION - MAINTAMWG 
THEMOIKNTUM 
Otftmteed by the Cterizc far Policy SoxSea 
A conference ffu a iu isg the psivalisadfla 
record so for, fotnre privaiuation 
Opportunities in the UK A Europe, 
regulatory systems and foreign 
opportunities for UK advisers sad 
investors. Speakers include Michael 
Hrortrifm A Stephen Doncfl. Spocaored by 
NbdearEfaetria 
Contact: Omagh Goodman, 

The W ata ftum Con fere nc e Ca 
TkL 071 730 0410 fhc 071 730 0460 

LONDON 


OCTOBER 11 

EXntACTMG CASH FROM THE 
UNQUOTED COMPANY 

This timely conference wffl giro expert 
piib i re on methods of company vai iu J*^ 
Dotations, trade sales and tiro company 
buying it* own share* The speakers wUi 
analyse the complex legal and tax 
implications, the latest technique* and 
p fe nn in g qp p o ui n iiite a awfcMt 
Cortack Kale Roberts, iBCLegd Som&c* 
Tck 071 637 4383 Foe 071 6313214 

GLASGOW 


The Hungarian Telecommunications Co. Lid. Is Id issue a tender for limited competition of potential suppliers for the 
delivery of telephone set families required in the coming two years. The telephone set family will consist of basic set, 
premium set and comfort set. Besides the telephone set family the bidders can submit offers for answering sets separately. 
Two suppliers wfll be selected from among the qualified bidders invited by HTC to participate in a tender planned to be 
issued in the near future. 


After a preliminary selection the best evaluated bidders of the forthcoming limited competition wfll be requested to submit 
ttnj r sample telephone sets for examination and testing by RFC. As a result of the detailed evaluation two winner suppliers 
will have the rig ht to delivery the required telephone sets for a period of two years in the frame of a limited annual 
rampffritifin The best evaluated bidder wfll supply a p pr oximately 60-70 per cent while the second best evaluated bidder will 
supply app ro xim ately 30-40 per cent of the required quantities in the first year. The two suppliers will compete again for the 
supply of the quantities required for the second year. 

The tender will be issued for the following quantities by telephone set categories: 


OCTOBER 20 

USBiG THE YELUDW BOOKM A 
WIDER CONTEXT: An Advanced 
QuMb id Hm Listing Ridas and 


The telephone set family: 


JULY 5A 

INTRODUCTION TO FOREIGN 
EXCHANGE AND MONEY 
MARKETS 

Highly participative training coarse 
wwh| f n dl ii o nrt FX rod money —ten 
festering W1NDEAL n realistic PC bated 
dealing aim olai Lon. For Corporate 
treasurers, bank dealers, marketing 
executive*, financial controllers, systems 
rod support petmaeL £480 + VAT. 
LywMdDevid international Ltd. 

TeL 0959 365820 Fix: 0939 565821 

LONDON 


JULY 7 

THE OWNERSHIP OF REALr 
TIME DATA IN THE RNANCAL 
MARKETS 

Afternoon tan on practical end legal 
considerations underlying the use Of 
Maaocia] electronic trading data. Who 
owna (be dm? Who should be p a y ta g for 
whal when and hour modi? ta copy ri ght 
applicable? Speakers from exchangee, 

f*Vh*bn« y ynd 

Ou ^i F a wi GfOBp 

TeU 081 743 8787 

LONDON 


SEPTBABBU4&15 
FT NUCLEAR INDUSTRY 
Ibis high-level forum wfll e x a mine the 
outlook for nuclear power in North 
America sad Western Europe, MscMin g 
the impact of current government 
morato ri a and review growth potential ta 
the Arishfodfic region. 

EnqtibiaK Financial Times 

TeL 081 673 9000 Fax: 08T 673 1335 

LONDON 






How LSE works in practice; listing 
particular*; releasing and disclosing 
information; financial repotting; model 
c o de; spoosms; role of Isobti; day ta life of 
Company Secretary. C7U 5J hours. 

Cbotecc Kay DMtam. BBC 
TeL 071 637 4383 ftucOTl 6313214 

LONDON 


flash, adjustable ringer volume) 


390,000 


10 numbers, pulse/tone conversion) 


mode, memory for 20 numbers, bold, mute) 


INTERNATIONAL 


SEPTEMBER 21 &22 
FT RETAILING TOWARDS 2000 
This meeting will debito the opportoaidea 
and challenge* taring the retail Industry, 
roos i d o ring both current iasoea rod feiare 
trends. 

Enquiries: HasatialTtmta 

TeL 081 673 9000 Am: 081 673 1335 

LONDON 


JULY 5 

CROSS-BORDER TAX A 
FINANCIAL ISSUES FOR 1NTL 
BANKS A SECURITY HOUSES 
Ortmfcqwkr tax coBscq ue oc ea : Derivative 
Financial Product*, later-branch 
transactions; Transfer Pricing 
issueafDadhig Activities. Advance Pridng 
Agreement* for fen Banka A panel of 
U.S. A European speakers including 
former i fi iectot of APA program. IBS and 
representatives of OECD, French ft UK. 


Only those bidders are allowed to participate in tins pre-qualification, who cover all the above listed categories with their 
telephone set family of identical design, components and units. 




:SS33ffi 




-i .■©IvS' • . .*■« 


The cvahiatkm for the answering sets will be done separately. • ... 

The telephone sets will be mdered qoarterfy. BTC will be allowed to adjust the above indicated quantities up to plus-minus 20 per 

oent- - 


^JLY5-7 

EDUCATION, TRAINING AND 
PERSONNEL DEVELOPMENT 
EXHtBmON 

HALL 6. NEC 

Britain's premier professional training 
even, catroqg for afl year nataing needa 
Free entnmee, fine catalogue, free perioag- 
Tredc only. Tuesday. SOU 
Wednesday, 6th Inly • 10:00 • 17:00, 
HMfsday.?di July- lfcOO- 1&00 
Oigntaed bjr BtiMcx 

BIRMINGHAM 


JULY 11 

KAZAKHSTAN 

CBt/fafematieoai Tte ft brettnm Cata 
ConTeronce provides comprehensive 
pmgiannan . tadw S ng Senior hSrima rod 

company case Hatties, oq ernrert e conran k - . 
tax and legal haiuewutk o amao node rod 
taeroet 

Gaatnet Weal* Mtitm. CB7 Caa&reaeea 
Tek 071 379 7400 Fie 071 497 3646 

LONDON 


SEPTEMBER 22 
PROFIT RELATED PAY 
This conference examines tiro practical 
aspects of ta uMfoc fa g. taiplrnw a riag and 

ri rat jwlw g - « i« wA4 pilfc j l h l w l iWiiw 

Topia tadude a review of whether PRP b 
right for x company, tiro design process, 
employment law issues and a practical 
snalyri* by Severn ^ Trert FCC 
Oantacc Erie Ktaaoe. IBC LegriSbafira 
Td: 071 M7 4383 Fax: 071 6313214 

LONDON 


CtereeHs AariMtlte faataebfoqe 
Tet 444 825 760 901 Roc +44 825 760 903 

PARIS 


Telephone set mauufocturers who wish to be considered for prequalificatioa for the above e x p l ained tender are invited to 
submit a capability statement containing: 


JULY 6 

CONSTRUCTION SAFETY 
REGULATIONS 

IbUdtji CBI ewwiiw with expert »[» *" « 
boa Government tad industry, provides 
I Inc -managers rcspouriMe for Health and 
safely wife Information and guidance eu 
requRmeuteoi new rogriationt. 

Contact: Georgina Kingaby, CBI 
Cooferofices 

Td: 071 379 7400 Fax 071 *973646 

LONDON 


JULY 13 

BFECIIVE UTUTY REGULATION 
The Accounting Requirements 

CRMCAEW Seanoar adftra» tfac fans oa 
which financial information should be 
collected and whether the btfotmadoa is 
safCricm for regulatory derision making 
S pe aker s taehide Sfr Btyan Qnbctg, Office 
of Fair Ttadhig and Fwfca ao r lotas Kay, 

L o nd O B Ri»weu^ n 

CMaaet Lei^t Sykes. OH 

Td: 071893 8833 Fax: 071 895 8835 

LONDON 


SEPTStiBER 22 
ELSKOTTS OF REGULATION 
As i rtuwta aoiy coupe cove ring teg ni a noii 
■toes is ibe ntilitia and odxraeriM sad 
demands bo prior kaow ledge. Topics 
tadsde: icai« for Rgotetios; evataatka; 
sni jiim, ra rfn m Ni i w it; pHer cnonris. enn 
of capital; asset valuarion; quality 


SEPTEMBER 27-29 
DAJDSM EUROPE 94 
Competition is comblsatioa wltfa open 
aoccso wB foroo BtiGtks to ianoduce usore 
advanced technologies sack as: 
ITIDA/DSM/SCADA/AMIFM/GIS/AMR 

At dtis conference ft c aW il tiu n the latest 
dcvclopnre s a wffl be d herosed and shown 
by the major companies sad util idea High 
IcreL 

Ccaacc PcraM'efl C&E 
Pbooc *31-30-650963 
FaxT31-3UtfQ528 

PARIS 


foe ' Mhnmum annual tnmover. an eqnr^aleat of 6 million USD at least 20 

/v, H>a ny t on A ftnanreal etntements far tiro lag 3 years. ptt of wtnefa is earned finom tiro manxifoctnre mid sales oflclqjboxje sets. 

5l teSg n f p nwtaw Merchandisi n g of at least 50,000 pcs of telephone sets as an annual 

customers attached. avenge daring the last 3 yeats. 


At least 1 authority. 


which have approved the offered telephone sets. 


Farther ddsib are avaflabie from: Short 

CoortcS Office, LSE - 

Tek 071 955 7227 tr hoc 071 953 7676 

LONDON 


SEPTEMBB129A30 
FT INTERNATIONAL BANKING 
The con fere nce wilt provide a forum to 
(ta outlook for in ifa mwC 

1990s sod eddresa a wide ran ge of bsses 
of eurresi eoaoen to the international 
beakrogasamsaty. 

Pw yii i inc ; W i an f h l Taiw 

Ttt 081 673 9000 Fas 081 673 1335 

MADRID 


Technical brocimies wilb colour photos and main 

for 


Up-to-date construction principles aesthetic and homogeneous design 


Prequalificalioa materials shall be sent, by July 22nd, 1994 to the following address: 


INTELTRADE Co. Ltd. 

Mr Tam^s Vincze, Sales Executive 


TO ADVERTISE IN THIS SECTION PLEASE CALL JANET KELLOCK ON 071-873 3503 


BUDAPEST 

Medve d. 2539, 1027 HUNGARY 

Tel: +361-202^883 Fa*s +361-201-0017HW08 


s 









GS300. I £400. 


It's quiet in a Lexus LS400. Virtually all 
noise has been designed out. 

For instance, steel and resin ‘noise sand- 
wiches T blanket the cabin. The drive train 
is in one straight line to reduce vibration. 
The engine is a smooth 4.0 litre V8. 

In fact, you could hear a pin drop, if it 
weren’t for the deep pile carpet. 

But what’s left is a silence no ordinary 


sound system could cope with. So Lexus 
created a system uniquely appropriate to 
the LS400. An ideal sound field ensures 
that, wherever you sit in the LS400 cabin, 
von hear the same rich sound quality. 

At the corners of this field are seven ■ 
speakers. Two dome tweeters for high 
sounds, four full range speakers and ah . 
eight inch subwoofer for a fuller bass soutid. 

The system produces . 180 watts 
maximum power. (Well, there is a lot of 
silence to fill.) And, as if it isn’t already 


a system to make even audiophiles - 
question their domestic listening arrange- . 
ments, it can be upgraded further. With 
a remote six-disc CD auto-changer. 

But can a car’s sound system ever be 
a reason to buy the 'car? 

Certainly it can if it’s indicative of 
the unheard of lengths the maker has 
gone to in developing the whole car. • \ 
Unfortunately, we can think of only :• 
one car which qualifies. See your Lexus 
dealer for a . sound check. . . * 















[4 


FINANCIAL TIMES MONDAY JUNE 27 1994 


MANAGEMENT 


In search of 
wages that work 

A more subdued and realistic approach to reward 
management is emerging as new pay systems prove 
more complex than predicted, writes David Goodhart 


B ritish companies con- 
tinue to be obsessed 
with their pay systems. 
No fewer than one quar- 
ter of all companies 
changed their reward management 
structures during the past year, 
according to a recent survey of 1,000 
companies. Many large companies 
are settling Into their third-genera- 
tion. performance-related model 
since the early 1980s, with bonus 
schemes and shore options for 
senior executives In a bewildering 
state of permanent revolution. 

Yet there is a more subdued and 
realistic mood among the high 
priests of reward management than 
in the heady days of the 1980s. The 
belief that a company's success 
depends primarily on adopting 
state-of-the-art pay systems is now 
regarded as naive. Motivation is a 
complex thing, and designing pay 
systems is fraught with difficulty. 

“The most ardent supporters of 
performance- related pay recognise 
that it is extraordinarily difficult to 
manage well, 1 * says Vicky Wright, a 
director of Hay Management Con- 
sultants. 

Counted among learning experi- 
ences is a clearing bank which 


based the pay of branch managers 
on the branch performance only to 
discover that cross-referrals to 
other parts of the bank - such as 
investment management - dried up 
because they were not included In 
the performance targets. 

Recent evidence of inappropriate 
insurance policies sold by commis- 
sion-hungry staff is another 
r eminder of the hazards of narrowly 
drawn, individualistic reward 
systems. 

But is the new realism in reward 
management delivering useful 
incremental reform? It has been 
doing so for some time in perfor- 
mance-related pay, where the ten- 
sion between individual perfor- 
mance and group commitment is 
being grappled with. So is the sensi- 
tive link between performance pay 
and appraisal reviews, with assess- 
ment by an d other such 

innovations being tried. 

Some companies are even recog- 
nising that the reason they want 
performance pay is not to distin- 
guish between the good and the 
adequate but to stop giving pay 
rises to the inadequate. Useful 
advances are also being made xu 
skill-based pay and in “gain-shar- 


ing", Incentive pay schemes that 
return the value of specific Improve- 
ments to tiie employees responsible. 

In the more sensitive field of exec- 
utive pay, and especially share 
options, many financial ins t itu tions 
have made dear that they want 
more rigour, but as yet there is lit- 
tle to show for it. 

Herein lies the unresolved 
at the heart of the pay revolution of 
the past decade. Central to that rev- 
olution has been the tearing down 
of national going rates for workers, 
and complex grading systems for 
managers that rewarded inertia and 
length of service as much as perfor- 
mance. In their pl a ce t he “internal 
labour market* has grown in impor- 
tance, based on the premise that 
employers should seek the loyalty 
of employees by rewarding them 
according to individual perfo r ma n c e 
and company performance. 

To the apostles of reform in the 
1980s the rise of the internal labour 
market was not just about improv- 
ing incentives but about transcend- 
ing the historic divide between, 
labour and capital. With more vari- 
able pay. It was argued, the wages 
bill rather than the number of 
employees would move up and 






•• •.v'" 

...» • -a* 1 ••• 


down with the business cycle, 
allowing for a more stable, commit- 
ted employer-employee relationship. 

Similarly, profit-related pay and 
share ownership would spread risk- 
sharing aninn g an employees and 
even between employees and own- 
ers. Company performance might be 
an unpredictable thing but at least 
everyone ■ would be affected in a 

atm flar way. 

The trouble Is that progress 
towards the high commitment com- 
pany has been linked to a large 
increase in income inequality 
within the company. Loosening the 
ties with national bargaining 
systems has handed more power to 
groups at the top of companies who 
have helped themselves to a larger 
share of the cake and undermined 
the belief that everyone is in the 
same boat 

The most outrageous pay rises for 
top executives, running into tens of 
minions of pounds, have beat the 
exception. But, according to Robin 
Harrison of pay analysts fnmmtw 
Data Services, gross pay for chief 
executives has risen, on average 
nearly 600 per cent since 1979, while 
average earnings rose by half that 

This appears to -be more than a 
one-off change In differentials for' 
top executives, whose pay was 
badly squeezed in the 1960s and 
1970s. A typical story in last Mon- 
day's Financial Times revealed that 
John Clarke, chief executive of 
BET, the business services group, 
has received a 30 per cent increase 
in total remuneration, while Sir 
John Egan, chief executive of BAA, 
the airports group, enjoyed a 33 per 
cent rise. Average earnings are now 
rising at 3.75 per cent 

Countless reports have high- 
lighted the tenuous link between 
executive pay rises and medium- 
term company performance. But 
some argue that this misses the 
point Executives of the largest Brit- 
ish raitnpflpfcs are now acquiring 


US-style pay levels (although man- 
agers in general are still at more 
modest European levels) and the 
Justification for such extravagance 
is not motivation of the top execu- 
tive but the healthy scramble it cre- 
ates lower down for the top Job. 

Evidently, many of the reward 
management gums recognise this is 
a weak argument In their book on. 
reward management by Helen Mur- 
lis and Michael Armstrong, qim» of 
the “key issues’* listed at the end is: 
“How do we justify paying vast 
(and, some people may feel, 
obscene) bonuses to our chief execu- 
tives and directors and at the same 
time clamp down on pay Increases 
for the rest of our employees (who 
also contribute)?” 

No one advocates a return to 
incomes policies and leased hand- 
made shirts for senior managers. 
But market forces win hot curb the 
excesses. Companies do not simply 
pay what they can afford, fo a free 
labour market they must roughly 
match what other companies pay, 
whether for clerical workers or 
chief executives. But that does not 
mean that .{foe pay levels set by tbe 
market are immutable. Rghfafl the 
iqarket are a host of cultural fee-, 
toriif otherwise to axjftSftil 
well-known anomalies such as, ‘for 
instance, the fact that engineers 
earn so much less than accoun- 
tants? 

Executive pay is set by executives 
and approved by their boards and 
remuneration committees. When 
political and institutional pressures 
become great enough they will pay 
themselves less. That pressure has 
been rising and will continue to rise 
as recovery brings the usual wor- 
ries about pay rises hi generaL 

The pay revolution has not deliv- 
ered pay discipline or a better 
tradeoff between pay and jobs at 
the macro level. Indeed, the re- 
emergence of “pay drift”, the gap 
between settlements and average 



The pen is mightier than the bonus 


H ave you received a hand- 
written note of appreciation 
from your boss recently? I 
haven't; and I am prepared bo bet 
neither have you. 

Tbe question was put to several 
hundred manages at the Institute 
of Directors the other day by moti- 
vational guru Stuart Levine. It met 
a sea of blank (aces. 

Most executives are too Insecure 
themselves to offer genuine praise 
to others. Those who have been told 
to praise their underlings usually 
mutter a few clumsy words, or send 
on E-mail message. According to 
Levine, who runs the mighty self- 
improvement company Dale Car- 
negie & Associates in the US, a note 
is better than the spoken or the 
electronic word. You can put it on 
your mantelpiece or show It to your 
family. 

1 see his point. I can just imagine 
how nice it would be to receive 
such a letter, how bard it would 
make me work, and how fine it 
would look in my sitting room. 

Yet on closer inspection, these 


notes may not be such a good idea. 
Levine never leaves home without a 
stack of cards in bis pocket ready to 
dash off one to anyone who does 
something right. I fear he may be in 
danger of devaluing his own cur- 
rency: there is only room for so 
many sincere notes of appreciation, 
on the mantelpiece. 

Moreover, herograms suffer from 
the same short-comings as other 
rewards. If you do not get one you 
may feel as though you've been 
punished, and if some people are 
being singled out for gold stars the 
others may feel mutinous. 

In any case praise is only glorious 
if the person it comes from is suit- 
ably senior and well respected. 
There are some people from whom a 
letter of congratulation might be 
more likely to find its way into the 
dustbin than on to the mantelpiece. 

Whatever the shortcomings of 
herograms, they are better - and a 
lot cheaper - than letting money do 
all the talking: 

Nearly every company in the 
western world believes that money 


LUCY 

KELLAWAY 



foot the whole bill, become a 
national hero, and still have £lQm 
left over for himself. 


motivates people, despite a growing 
weight ctf evidence to the contrary. 
They feel that if only they can come 
up with the perfect performance-re- 
lated pay scheme and share 
bonuses, they will have a tip-top 
management team, and a gung-ho 
workforce. 

But take that argument to its 
extreme, and you get the kind of 
sum that has just been awarded to 
Jim Fifield, Thom EMT& music 
chief. His recently announced 
£i&5m package Is ma iig up of every 
kind of bonus, option, free share 
deal aTM* all the other gimminim so 
highly recommended by pay consul- 
tants. 

I wonder how many millions the 


company could have saved by sim- 
ply writing to this ntan and telling 
him be was doing a great job. 


Which brings me to tbe perfect solu- 
tion to the rail strike. 

The cost of settling it is about 
£3.4m a year (baaed on a 5.7 per 
cent rise for 4,600 signalmen now 
earning about £13900). As neither 
RaHtrack nor the government feel 
like paying that, Britain seems des- 
tined to more commuting night- 
mares. Unless, that is, another 
source can be found for the 
money. 

1 would like to volunteer Fifield 
as the answer to a prayer. He could 


The Financial Times, like other 
go-ahead 1990s organisations, has 
introduced a suggestions box 
scheme to tap latent creativity 
of Its staff, 

Here is my idea for making the 
newspaper more profitable - ration, 
it Let it be known that newsagents 
can sell no more than one copy per 
buyer. The fact that nobody in their 
right mind would want more than 
one copy is beside the point tbe 
scarcity is bound to cause a stam- 
pede. . 

The idea is not as fanciful as it 
sounds: it is exactly what Louis 
Vuitton Is doing with Us handbags. 
Last week it casually let sup that 
demand for its products was so 
strong that customers were befog 
restricted to one or at most two 
items each. 

I find tt bard to imagine why any- 
one, even the most hibel-consaous 


Japanese tourist, would want to 
make multiple purchases :of £400 
handbags. However, it there really 
is a shortage, I can't understand 
why Louis Vuitton does not go for 
the classic free market solution and 
raise Its prices. 


Almost as derer Is Vauxhall's lat- 
est marketing wheeze. The car com/ 
parry is promising to hand over a 
cheque .for £500 to every buyer of a 
new Vauxhall Cavalier. I consider 
myself financially literate, I know 
what a discounted cash flow is_ 
and am not frightened of deriva- 
tives. 

But I am as silly about money as 
the next person: I would rather 
have a cheque for £500 having paid 
foil price for the car, than pay £500 
less in the first place. 

There must be another idea for 
tbe FT suggestions betx. WbDe other 
newspapers are dropping their 
prices, we sbonld raise ours to £t, 
and offer readers 35p cash back 
with every purchase. 








x net gr&rtm thh ;r- ... - 



earnings, is often attributed to over- 
generous performance pay. 

However, pay researchers have 
detected finks between the new pay 
systems and rising productivity. 
Saul Estrin of the London Bustness 
School has noted a positive link 
between profit-related pay and both 
produefivity and job creation. He 
also defends the government's tax 
breaks for profit pay. which now 
cover more than one million work- 
era, pointing out that mast compa- 
nies were using profit pay before 
joining the scheme. 

Supporters of the pay revolution 
might argue that it has not yet been 
properly tried. Performance-linked 
pay is said to cover half tbe work- 
force but usually represents only 
part of the annual pay rise.The 
official New Earnings Survey for 
1993 found only 3 per cent of gross 
warning s for non- m^nn al Workers 

came from incentive pay. And Paul 
Gragg of the National Institute for 
Economic and Social Research 
arguds that the performance ele- 
ment for top executives is no 
greater than 20 years ago. 

Indeed, with a pay policy In the 
public sector, 80 per cent of pay 
deals coming in- at inflation or 
abdroi-and a differentials dispute on. 
the rail ways, continuity hi pay set- 
ting seems as evident as change. 


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4 is the difference between 

fSirSaS?™—*" 

-.^At first sight, everythin?. Mr 
, : Span brings you khafcltarown ' 

.^s to deal with "sprains. 

•■ tobagomd EbroAtisT. Nurse 

otters a white power wi t h 


3 


and feverish colds". 

- 5*^ ingredients are almost 
idimtlcal, essentially paracetamol 
fndaspirin. The only real difference 
isNurse Sykes is more stimulating: 
she administers half a mug of 
ccffiae’s worth or caffeine with her 
patokilltts. Both medications are 
erasable in UK pharmacies, along 
itrah anot h e r 70-plus branded 
•headache treatments. Hundreds 
more fill drug store shelves in other 
doirntries: 

• TUie fuzzy-headed can simplify 
the haying decision by staying loyal 

to aue brand. Alternatively they 
can read the side of the pack to 
find out which of the four or five 
possible active ingredients is used. 

-The intelligent pill popper looks 
out for 

e which, after almost a 
of commercialisation, is 
stilt the number one chni^ for 
many. There are three related 
compounds In the aspirin family. 
Acetyls alicylicadd, the nfflrfai 
aspirin, salicylic acid and sodium 
■ salicylate. Each works in. the same 
way y.but acetylsalicyhc add is often 
preferred by dregs manufacturers 
because there may be a slightly 
lower chance of irritating the 
stomach. 

• Paracetamol, called 
acetaminophen or branded Tylenol 
in the US, is as effective as aspirin . 
but without the tendency to irritate 
the stomach. 

• Ibuprofen is a more powerful 
dreg that began to be available 
over-the-counter In early 1980s and 
can be used for relieve menstrual 
and post-operative pain. Its newness 
means that it is not available in 
Greece, Portugal or Norway and 

a handftil rtf o ther m mfaiy i 

• Codeine and dfoydrocodtene, 
are stronger stilL These powerful 
drugs are mildly addictive and so 
not available over-the-counter 
(OTQ) without a prescription in 

a pureJbnn. Even in mixtures with 
aspirin or paracetamol they are 
only available OTC in a some 
countries such as the UK, France, 
Denmark and Canada. They were . 
once used in cough medicines in 
the US, “but people used todrmk 
it all at once," says one dregs 
industry executive. „ vrii/t-i 

• Naproxen. Anew, name. ; . 

available ft twn twynmitii fn thfi; 

U^i^AleiD^A talSefeceititifttiDg ' ■ 
naproxen whida was one of the 
world's biggest sefflng rheumatism 
treatments until its potent: expired • 
last year. The manufacturers say 
the price per dose is “compa rabl e" 
to existing analgetics mu the effect 
lasts far eight to 13 hours; •' 

Other ingredients, suchaa; * 
caffeine, do not ease pain. 

More headache products are 
likely to came onto the OTCmfokat 
in the next few years as 
governments try to shift some of 
the costs of healthcare to the 
consumer. This is likely lead to 
a further proliferation of brand 
names. The clearheaded will stick 
to reading the list of ingredients. 

Daniel (keen. 




Ludntktbgaa 


EATING OUT 


Fine food Bn an . 
awkward shape 

Hilaire,LondonSW7, currently 
snbotees a tot of wbat Is good and 
a httietpf what js awkward about 
limJff ii restaurants, today. 

The good steam directly from 
Bryan. Webbjiamextranety tnforjgd 
Welsh chrf , . and hi« prrtbngiaaHn ’ 
young Staff Tins is obvious from 
a, quick glanc e at the Tnenn 

■1 The t empt ing list for hutch (EDL50 
far typ courses) included chofjjro.,. , 
char-griDfiiLi,. 

tuna with Erencb beans and black 
olives or a jrigeim breast with wild 
muduooins as first courses. Breast 
of free-range chicken with potato 
pancake and tarragon, grilled filleta 
of Doper sole with a beurre None 
and braised pork cheeks with 
mashed potato were three of the 
nine main courses on Offer. 

Dinner is more expensive. Three 
such intricate dfahes as griddled 
scallops with a vegetable rehab, 
a rib eye of beef with shallot and 
t a rragon butter and a white and 
dark chocolate terrine may add 
up.teavqr£90. . • 

Hilaire has managed to stay busy 
in the evenings with a keenly 
priced four course fixed menu at 
£25^0 apd, after 9^0 in the evening, 
a two course post-theatre supper 
mean at £16 (the Albert Hall is 
within walking distance). The wine 
list is well chosen, fairly priced 


mit liylwtoi thw o pagM fif half 

bottles. 

When Shore does disappoint 
it is entirely due to its physical 
structure. Many London 
restaurants do not have the 
advantage, like their counterparts 
in New York or Paris, of being 
situated an the ground floor of 
buildings along wide boulevards 
. or avenues. Instead they are in 
narrow buildings, former 
townhouses, with small frontages 
(Bilane’s is <Hdy'4'metzea wide but 
i|can seat 50). Tables are of,.. . f 


float. 

. A^HIlairetryto book for the 
ground floorbmikrttbo close to 
the door if there is a strong wind 
blowing. D ow n s t air s can be 
clanstrophic with two tables in 
what were coal holes - bint it is 
a particularly usefiil size for a small 
corporate dhmer party. Webb's 
cooking is equally impressive an 
other floor. 

Bdaire, 68 Obi Brampton Boad, 
London SWT 3LQ, tel 071 584 8993. 
Open Mon-Frifitr lunch and dimer, 
Saturday darner. Nearest Tube 
South Kensington. Opposite 
Christie South Kensington and 
dose to the Victoria and Albert, 
National SSstay and Science 
Museums. 

Nicholas Lander 


ex-company car driver? Ton are 
not alone. The new tax regime is 
prompting growing numbers of : 
drivers to consid e r going private, 
particularly if their company car 
is a peek, rather than a tool, of the 
Job. But remember that It is not 
just tiie cost of the car but all the 
pe ri pher als — Hke insu rance — that 
you need to take into account whan 
weighing up your options. 

Young, accident-prone, inner-city 
dwelling drivers at sporty cars 
might find it cost-effective to stick 
with a company car, because their 
insurance premiums cnniH be well 
aver £1^00 a year. 

. Ever more mature drivers of 
standard cars with an unblemished 
driving faistocy can fece unexpected 
problems when buying their own 

fnsnrmca for the first time. Myny 
ins u rers refuse to accept a clean 
c ompany car driving record as 
q ualification for a no-claims hon b5 j 
but they normally accept diyt?””**? 
transferred from other insurers. 

Others only take your record 
into account if you are over a 
certain age - which can be as high 
as 55. And of those offering 
discounts, very few give new 
ex-company car drivers a full 
no - claims bonus, which ram cut 
premiums by up to 65 per cent if 
you have been accident-free for 
four or five years. 

Far 'example. Direct T.tne, the 
largest direct insurer, earlier this 
year introduced a no-daims 
discount for ex-company car drivers 
- but only aver the age of 30, and 
only up to a wnHrhmwn of 60 per 
emit, rather than the company's 
usual 65 per cent maximum. 

Althoug h the recent trend in 
motor^nsurance has been towards 
direct telephone-based insurers, 
driven going it alone for the first 
time could be well advised to talk 
to a broker, who may know which 
insurers are sympathetic, as well 
as calling a few insurers direct. 

As proof of your driving record, 

ynn will ngimTly luwl aw nffirial 

letter from your employer, ttem gh 
a few insurers ask far a declaration 
from the company's insurer. 

Of course, a no-claims bonus is 
only worth having if it makes the 
eventual premium cheaper than 
the alternatives. Simon Ward, of 
telephone broker Telesure, says 





that Insurers who do not give 
ex-company car drivers immediate 

Twvffahrwi discounts ram unnWhnpa 

still be cheaper - but this is not 
likely in the majority of cases. 

So before launching into a recital 
of all your details over the phone 
to an insurer, it is worth asking 
at the o»fe wt what their attitude 
is to accident-free farmer company 
car drivers. 

Bethan Button 


STYLE 

Some like it hot 
but It’s lovely in a 
cold climate 

To sunny Roms from drizzly 
Heathrow. In these days of 
Euro-travel, such a hop for a day's 
business is a regular possfldOty. 
Hie destinations may vary but the 
fiMihig, us e r- friendl y 
which doesn’t involve a suitcase 
of changes, is an important 

ranUMiwwtinffi 

This is where the cashmere 
investment makes the soundest 
sense. Warm when you leave from 
a chiUy airport meariy morning, 
appropriate for a stratum meeting 
and glamorous enough for an 
evening date. The right cashmoo 
sweater even tooiks good-thrown, 
carelessly round the shoulders as 
ashawL 

This season the choice of colour 

0 m f . . 

READIMG'MAtTER 


is simple. Cashmere is at its most 
luxurious in shades of beige, ecru, 
cream or biscuit. AH these work 
with the basics - navy, black, 
brown or grey - or even with more 
beige, white or cream if the film 
star entrance is what you're after. 

The shape to choose? Try the 
re-vamped twinset last seen in 
Audrey Hepburn films with, its prim 

“Htflp pmtigan OVCBT a matohfngr 

roandrnecked shape. Fashion buffs 
win wear them slant and small, 

Ww thi» my> hy TffE (pronounced 

SAT) in silk and rashmar p mix £139 

at for the cardigan and 2105 for 
the cutaway-sleeved top underneath 

(Hartley Nichols. Liberty ’s. Selfridges 

and Harrods). 

At Scotch House you will find 
a more conventional design at £285 
for 100 per rant cream cashmere. 
But they do have a sweet cropped 
ver sio n in lambswool in their 
Hopscotch range. 


Easier on the silhouette is the 
loose, fingertip-length tunic-shape 
available at Pringle (in Hebridean 
cashmere for £190) and at 
Baliantyne (in two-ply. ribbed 
cotton/cashmere for £160), 253a New 
Band Street 

The gingte ply cashmere tunic 
with side slits, at £235, is a 
bestseller at N. Peal in Burlington 
Arcade and the more expensive 
ribbed equivalent had to be brought 
bade into the range due to its 
popularity. 

Women have discovered that 
the tunic shape works equally 
effectively with a skirt (whatever 
length you're wearing) or trousers. 
Cut like fabric, it Is a sweater with 
none of the breakfast TV presenter 
connotations. 


Kathy Phillips, beauty director 
of Taller 


Lessons from 
within Toshiba 

Alchemy of a Leader, John £ 
Rehfeld, Mm WSey & Sons, S2K9S. 

Fashionable as it has become for 
authors to point to Japanese 
tradition and the Bushido, the “ way 
of the warrior”, for bandy, if vague, 
Hp« nn prjffis m anageme nt ™ ftp 
modem Western office, lessons 
are better learned from the 
manoeuvring in the trenches of 
Toshiba. 

The b or r owin g of Japanese 
techniques is a modem role 
reversal, given that the ait of 
borrowing, whether it be Chinese 
as a written language or a US 




new ftrink tank been 
formed, which will dis- 
cuss not how to combat 
federalism or how to 
house the homeless, but the more 
immediately pressing problem of 
- bow to make tennis more e xc it in g. 

Those who follow Wimbledon 
have become possessed with the 
_Idea that- cmrtesnpoavay'idflyBrs are 
' less I wtH ra Kti ny tiiaiiVhpfr pradeoes- 
sors. Instead of dismissing this 
hbtian with a smart crosS-court vet 
ley,, the tennis authorities have 
been, tossing it back and forth, in a 
poinffess. feeble rally. . 

Very few tennis players are 
regarded as charismatic , when, they 
are at the height of their powers. 
This is true today and has always 
' been true- Only when their talent is 
. in decline, and they start playing in 
a more “entertetiDing" manner, 

; because they have: less to lose by* 
-doing soi or .when they, stop playing 
^ altogether, and memory makes of 
. ? them symbols rf fln&p# riu m w .— 
-- only- then do most : tennis players 
•; acquire charisma ■: ’ ; . ‘ . ; ; 
V^nm-truth iithat whea they w ere 
■playiiig^ Nastase - was a petnlarit 
^ p^n and McEmoe a hysterical' 
^btoly. fbat Bwg was regarded as. a 
; >bo>a and- Connors as a boor/, Nostal- 
gia is : t& strong a forced WimMe- 
as. a^ ^roatim serv^jmd 


SPORT: LAURA THOMPSON 



It’s not tennis 
that’s at fault 


•jr^ipuld exist ^ 
^-ebaractsa Svho iram* ' 


the gesture* into an expression ;0f 
great perscmallly. a . -■ 

TnrrtflpntaTiy 1 i think that they 
have picked a nonstarter with Raf- 
ter, who at his post-match press 
conference revealed a personality 
which could rival Michael Stich’s 
for channlesanass. Perhaps people 
don’t mind that, as long as he is not 
boring. 

L however, ask notiiing of my ten- 
nis players except that they don’t 
behave badly. I would not. have 
minded i£ '.on court, John McEnroe 
had foiled to shout fanny little 
-aside*, (ff vperfbrm Httle jigs, or 
" ^^mnp tiie net, or bug the fine judge, 
as tong as -he bad, kept his abysmal 
temper to . himself. I drat expect 
Alan Shearer to give me a quick 
tapdance after scoring; or Brian 


man’s world, Wimbledon is a wom- 
an’s. For two weeks, women are in 
charge. The men who follow them 
around those green and sunny 
alleys look as quenched as tiie cuck- 
olds in a Restoration, comedy. 

And it is because Wimbled nn is a 
sporting event for people who don’t 
like sport that the entertainment 
factor carries so much weight. 
Unless the crowds have someone to 
prefer, someone to find attractive, 
someone to amuse thegu, they are 
not sufficiently I nte rested in tennis 
to restrain themselves from nipping 
off for a cup of. tea with every 
<4w n ^g B (rf gp rfg . 

But it is quite wrong to take this 
incipient boredom seriously, and 
even more wrong to Invite rsugges- 
tinns on the non^ubject, which ind- 


Is hard to mkterstahd this idea Moore to parade newly-shaved legs dentafiy included the Ideas that 
.UEhai atEiet^ ' who. play tennis * before a brse-out," and I am quite spectators might be allowed to 


-sfiotifr also have to pUsytb'tfae gai- ; happy fra: Pete Sampras to cany on 
lery. Last week, at Wimbledon. I ‘ playing without trying at the same 
'fgatchekr a jnateh between Batzidc ; time to gef hlmadf an Equity card. 


Jeremy 


Bates wins through 


to the fomterwmd on Saturday 


.a-off Sergei Bruguera vdndi 
■.surely contained everything that a 
^temifo£in would want: five sets and 
&to;li6(zre of toughness and brfl- 
4 But no"- this was not 
crowd hafi to care who 
■and-, so from these two app^ 
equapy . personable mm they 
fishicHifld for.aem- 
r& tktmaOe, tundngJSaSer's 
' looks ' those of a sex 
^a ymboli - lnrinteoga faiwn'« fntn fl«rf 
-of a showman and his every fnstisc- 


However, the phenomenon of 
Wimbledon is embraced by people 
who don’t really like spent, but who 
simply like Wimbledon. Most of 
them foe women. Wimbledon takes 
its cue from th& flocks erf schoolgirls 
who mofoi around its sumptuous 
courts looking for someone to 
fancy, and from the neat, flowery 
midd&agcff wxmien who fot primly 
in tea rooms and revel in the tour- " 
nament’s affirmation of English' 
ness. If sport 2$, an the whole, a 


might 

applaud during rallies and to leave 
their seats whenever they wished. 
Why should they do so? They are 
not cfafldreu, to be given a lollipop 
to suck when they don’t get titter 
own way. There is something irrita- 
ting and destructive about a sport- 
ing crowd which has constantly to 
be reminded of how grateful the 
event is for its participation: and 
something misgmdedly humble 
about a sporting event which thinks 
its crowd has the right to behave 
like this. Spectators are important, 
but they are never more important 
than the thing they are watching. 


production line, has been been 
central to Japan’s development. 

Far western managers, the 
challenge is learning from Japanese 
companies without transplanting 
a corpo ra te culture that has a 
worker introduced by company 
name first, fondly name second. 

Given that be is fond of tiie 
“strategic sflences” that punctuate 
Japanese mgnagBmwrf, Rehfeld’ s 
exercise in alchmny begins without 
the characteristic humility of a 
Japanese student before his sensei 
(master). He opens the book with 
talk of “unique” experiences in 
tnanagwnvwit and hie Kirills nf 
synthesis. 

But a touch boastful begin- 
ing becomes a book that does 
get down into the Toshiba 
trenches to sift techniques. 

Having worked at that 
company in the US, 
author is aware that 
with the transplant 
«w»M tho IflrAiain nl 

of rejection, and 

that the style at 
headquarters is not 
necessarily common 
to the large Japanese 
family of 

sub-contractors providing 
the components. 

The most useful 
suggestions are of the 
“getting to know your customer” 
type. Japanese companies are 
relantiess cultivators. If yon have 
taken advantage of the new-found 
freedoms in the Tokyo telecoms 
market to use other than HDD, 
tiie old long-distance telephone 
monopoly, the folks at HDD will 


for positive feedback often lacking 
in a Japanese office. 

Japanese companies are being 
forced to reassess their own 
management styles. Apparently 
conservative companies turned 
speculative in the late 1980s, 
showing the lack of restraint 
generally seen late at night on 


l!I 



persistently come a k noc king, 
offering discounts, note pads and 
good reasons why you should rejoin 
tfaeir plume fold. 

And there are lessons, as Rehfeld 
suggests, in avoiding the “hero” 
culture of tiie west The victories 
should be shared, and the conparate 
wins should be “celebrated an a 
frequent and modest basis”. While 
suggesting that “silence” does have 
benefits, he also points to the need 


Tokyo station platforms when 
well-watered managers are 
stumbling h orn* after an evening 
of cultivation in the corporate 
interest 

And when these Japanese 
managers finally make it home, 
they will find a family less tolerant 
of late-night commitment to the 
company that was justifiable when 
the nation was devoted to “building 
a strong Japan”. The executive 
cited as saying that the company 
“is what allows me to enjoy my 

family and to maintain the 

respect of my family” is in danger 
of bring fired by his family. 

Robert Thomson 



wW b* of pMtfctdw fatmrt to 
law ton, trodon, poB tlcl— owl a0 Involwd to doing te rinow witt 


With a woiMwMa ahUMt— and a m danhfr of over ana mSUoo, tin 
ftancH Ttoaa snvay oa Franco wS ba tha UaM adwrtMng ndtan (or 
aM bMhnaaaa hrianatad h t&a fimoh naifcat 

For an eiltMtal Bynopets and advertWag Information caH Dominic 
Oood In Paris on (D 42 97 06 30 W fax (1) 42 97 00 24 


FT Surveys 


V 




■ " : Tvd!L . 








iJffitfrafy-BrjMei’ -- ■ 




16 


FINANCIAL TIMES MONDAY JUNE 27 1994 


PEOPLE 


Facilitator, not instigator 

Michiyo Nakamoto assesses Keidanren's new leader, Shoichiro Toyoda 


I f there la anything that 
misfit give the unini- 
tiated a clue about the 
new leader of Japan's 
business community, it 
is cleverly hidden behind the 
gold-rimmed spectacles, the 
dull navy suit and blue tie that 
adorn the slightly rotund fig- 
ure of Shoichiro Toyoda, the 
new leader of Japan's largest 
and most powerful business 
group. 

hi the spacious reception 
room of the Keidanren, the 

Federation of Employers Asso- 
ciations, the soft-spoken Toy- 
oda, who is also chairman of 
Toyota, the car company, 
comes across as the typical 
stuffy Japanese bus i n e s sm an. 

But as he reads carefully pre- 
pared answers to questions, 
like a Buddhist monk reciting 
his chant, Toyoda is twiddling 
his thumbs. 

The image bandy befits the 
chairman of Japan’s most pow- 
erful economic organisation 
who is charged with steering 
the Keidanren through one of 
the most uncertain periods in 
its 4Sryear history. 

The old order, in which busi- 
ness, the bureaucracy and poli- 
ticians worked hand-in-hand to 
build Japan into the world’s 
second largest economy, is 
crumbling. A huge political 
realignment is under way with 
politicians under pressure to 
reform their corrupt practices. 
The bureaucracy, which helped, 
form many Japanese industries 
into world leaders, is under 
attack for Its resistance to the 
deregulation intended to create 
a more consumer-oriented 
economy. 

The Japanese business com- 
munity is debilitated by one of 
the most prolonged economic 
downturns in recent history. It 
has been demoralised by the 
punishing surge in the value of 
the yen and frightened by the 
realisation that there are few 
leading lights in industry to 
guide the economy out of 
slump. 

Amid the crumbling political 
and economic order, the Keid- 
anren faces a decline in its 
influence over the nation’s 
development and is searching 
for a new role better suited to 
the changing times. 

Tet it seems unlikely that 
Toyoda will provide the leader- 
ship people in Japan expect to 



come from big business. 
Almost one month into the job, 
he acts like a man who has 
i prgypwtadly found hims elf in 
the spotlight, playing a role 
created for someone else. 

The predominant question in 
the public's mind has been 
whether he can live up to the 
job. Even by his own account, 
he is not endowed with the 
stuff of which leaders are 
made. 

In one of his most revealing 
remarks, the modest Toyoda 
once said of his predecessor 
Gaishi Hiraiwa, former chair- 
man of Tokyo Electric Power, 
“Hiraiwa has the air of the phi- 
losopher. tt takes a focused 
person like Him to serve as 
chairman of Keidanren. I can- 
not devote myself like that 
now or in the future." 

Indeed, until Akio Morita foil 
ill last November, Sony's chair- 
man was thought to be the 
favourite to succeed Hiraiwa. 

It is not that Toyoda lads 


the formal credentials. As 
leader of a corporation with 
glob al o perations , he Has expe- 
rience of the international 
c ommunity and the cosmopoli- 
tan outlook that his predeces- 
sor Hiraiwa felt were key pre- 
requisites for the job. 

After much agonising, Toy- 
oda took responsibility for 
starting up manufacturing 
operations in the US. That he 
achieved that task success- 
fully, to the satisfaction of the 
extremely cautious Toyoda 
dan, is to his credit 

His position at Japan’s larg- 
est vehicle manufacturer 
makes Him particularly vulner- 
able to the controversy - espe- 
cially in the US - over the Jap- 
anese trade deficit and 
Japanese trading practices. 

His family-run automobile 
company gives him clout in 
the domestic b usiness commu- 
nity. bat he is also known to 
be somewhat of a visionary. 
His Idea of building homes 


worthy of a leading economy 
led to the establishment of 
Toyota Home which, despite its 
lacklustre performance, has 
been allowed to «m«img ft 
built up a decent operation in 
the Nagoya area where Toyota 
is based, but cannot compete 
with the larger housebuilders 
with nationwide networks. 

Other relevant experience for 
leading the Keidanren was 
gained when. 

as president of Toyota Motor 
iS p lf is , He oversaw painful 
merger In 1982 of that company 
with Toyota Motor, the manu- 
facturing parent Brin g in g the 
two companies together 
entailed overcoming 
entrenched corporate loyalties 
which Toyoda managed by 
spending a year at the sales 
company before the merger. 

An engineer by training, at 
Nagoya and later Tdhoku Uni- 
versity, he won the prestigious 
Doming prize in 1980 for his 
contribution to quality control 

But to make his mark as the 
Keidanren's chief, Toyoda will 
need to show more detemdiu- 
ti rm wtifl political than he 
Is known for. 

As the leader of an industry 
that is at the centre of US-Jap- 
anese trade tension, his role at 
Keidanren will also be Bcruttn- 
ised more than usual overseas. 

Toyoda believes deregulation 
must be the centrepiece to 
reform in Japan. One of the 
first things he did an assuming 
the Kftidarirep chairmanship 
was to ask Prime Minister 
Hata to cut the number of 
bureaucratic regulations by 
Half in the next five yearn 

Regulation, he argues, gives 
politicians and the bureau- 
cracy too much influence over 
the private sector, which in 
turn is partly responsible for 
“tiie inscrutable administra tive 
guidance and incomprehensi- 
ble practices that receive so 
modi criticism from abroad”. 

Excessive regulation also 
hurts the Japanese consumer, 
he says. It is mainly responsi- 
ble for the huge price differe n- 
tials between Japanese and 
oversees markets and It stifles 
the kind of creativity that is 
needed to give birth to new 
ideas and technology which 
could revitalise the economy. 

“Keidanren la very anxious 
to bring about an environment 
in which the people at large 


x/l 

M 


can truly enjoy the lifestyle of 
a more affluent society." 

The Keidanren last year 
decided to bark its words with 
action; tt stopped its tradition 
of co-ordinating contributions 
from corporations to political 
parties, in particular the Lib- 
eral Democratic Party which, 
until last year, bad ruled 
Japan for 38 years. 

The battle to reduce the 
scope for regulation, in the Jap- 
anese economy, however, will 
not be easily won. The automo- 
bile industry itself, whose 
interests Toyoda will be keen 
to protect, is under pressure to 
ease the rigorous vehicle 
inspection system which has 
long been blamed for making it 
unnecessarily costly to own. a 
vehicle and which benefited 
the industry by encouraging 
car-owners to replace them reg- 
ularly. 

Toyoda is adamant, however, 
thgf the Keidanren is serious 
about deregulation. Tt is true 
that deregulation will cause 
pain when certain industries 
and sectors have to adjust. 
However, there is a consensus 
In the business community 
that deregulation must be vig- 
orously promoted so that con- 
sumers and other citizens can 
benefit” 

That position is a dramatic 
tumround by the organisation 
that has long been one of the 
pillars, together with the politi- 
cians and the bureaucracy, 
that supported Japan Inc. 

“When the economy was stOH 
preoccupied with catching up 
other advanced countries and 
perhaps overtaking them, very 
close relationships between 
politicians, the bureaucracy 
and the business community 
were necessary to increase gen- 
eral standards of living." Toy- 
oda points out 

“But in the future we must 
establish a relationship 
between the three which could 
be characterised by healthy 
tension, so that they will be 
mutually checking on each 
other.” 

That the Keidanren and Jap- 
anese business will be changed 
by the recession, the progress 
of political reform and by pres- 
sure from Japan's trading part- 
ners, is beyond doubt But 
judging by Toyoda’s approach, 
his role will be to facilitate 
rather than instigate, change. 


: 


IN I HL NEWS 


The gospel 
according to 
Philip Morris 

The Marlboro Men have taken 
over at the top of Phffip Morris, 
the US food and tobacco 
giant following last week’s 
resignation of Michael Nffites, 
the eratwtiBe chairman and 
chief executive, writes 
Richard Tomkins. 

The non-smoking Miles, who 
came from the food side of 
the business, seems to have 
done himself few favours with 
his Tow-profile approach to 
the job and even fewer with 
his support for a plan to hive 
off the tobacco operations into 
a separate company - which 
plan was subsequently 
rejected by the board. 

Now Tie has gone, hie job 
has passed to a pair of 
smokers: Geoffrey Bible, the 
new chief executive, who gets 
through a good few Marlboro 
a day, aid WiUtam Murray, a 
more occasional puffer, who 
takes over as chairman. 

Coincidentally, both men 
are Australian, and both - In 
contrast to Mfles - have a 
background in the tobacco 
side of the business, having 
started their careers with Philip 
Morris Europe. 

They have known each other 
for 20 years and seem to get 
on well. Both, too, seem 
determined to take a much 
more aggressive stance In 
promoting Philip Morris’s 
interests. One of toe first 
things they did on taking over 
was to td) the press about 
their plans. They also 
command considerable loyalty 
from the troops; their first 
appearance before employees 
at the New York headquarters 
last week was reportedly 
greeted with a standing 
ovation. 

In their hew capacity as 
job-sharers. Murrey, 58, will 
focus on strategy and ways 
of increasing shareholder 
value, while Bible, 56, gets 
on with running the business. 


Widely regarded as one of 
the tobacco industry's most 
able executives, Bible has a 
reputation for toughness - 
something he is gotog to need 
amid the wave of anti-smoking 
sentiment in the US. 

Where Haumer 
will hang his hat 

It was always dear that 
ageing wundarUrxf Hans 
Haumer would be the first 
to go no matter how the 
battle over control of 
Austria's third largest bank, 
GlroCredft, was settled, 
writes Ian Rodger. The 
question ttat intrigued 
Vienna’s banking community 
after Bank Austria finals 
took over Giro two months 
ago was where to. 

Hawner, 57, an 

accomplished pianist, 

Ingufert ami economist, came 
to Giro bi 1989 with a 
mandate to sort out a bizarre 
problem. Giro's two largest 
shareholders, Bank Austria 
and First Austrian, were also 
two of its largest 
competitors. However, the 
chief executive's ideas were 
too clever by half for most 
of the modest savings 
bankers behind Giro, and 
in the end they (fisHked him 
even more than each other. 

. Now he far off to 
Liechtenstein, as a part-time 
executive d ir ector of the Mg 
BIL GT banking group 
controlled by the 
prindpafity*s royal family. 

No prob le m with squabbling 
shareholders there. He wfll 
also teach a monetary policy 
course at the University of 
Vienna and is setting up a 
financial services 
consultancy - perhaps 
specialising In how to rub 
bankers up the wrong way. 

Abdul’s golden 
investment 

The biggest golden handshake 
in Malaysian corporate history 
Is being given to Abdul Khatid 
Ibrahim, the head of 
Permodalan Nasionai (PNB). 
the national investment 
agency, writes Kleran Cooke. 
Abdul is leaving his post as 
head of PNB to become group 
chief executive of Kumpuian 
Guthrie, the plantations aid 
property company which is 
90 per cent PNB-owned. 

As a parting gift, KhalkJ has 
been allowed to buy 50m 
shares In Guthrie at toe heavily 
discounted price of MS2J50 
($0.97) compared with the 


present market price of around 
M$4. The transaction gives -/ 
the Khafid, 47, a 5 percent 
stake In Guthrie and an 
immediate gam on paper of 
around M$73m. He has also 

been given a three-year option 
to buy a further 15 per cent 
of Guthrie at a price to be 
determined. 

The deal has beat given the 
thumbs-up by both Mahathir 
Mohamad, the Malaysian prime 
minister, aid Anwar Ibrahim, 
the finance minister. 

Market analysts oe seeing 
ft as a somewhat lavish reward 
for Khalld's achievements 
during his- 16 years at PNB. 

In 1981 Khafid organised a ' 

M$1bn ‘dawn raid" on the 
London Stock Exchange, 
wresting control of Guthrie 
from its British shareholders. 

Khafid says he views his 
shareholding in Guthrie as a 
long-term Investment and 
plans to turn the company Into 
a corporation "that wifi 
challenge muftinattonafs in 
Malaysia and elsewhere". 

Ashanti adds 
to its board 

Following the successful 
$1 ,7bn flotation of Ashanti 
Gofdflefds of Ghana on the 
London and Accra stock 
exchanges in April, Sam 
Jonah, chief executive, has 
Greeted two new executive 
positions intended to make 
his board look more like the 
international mining companies 
it Intends to compete with, 
writes Kenneth Gooding. 

Colin Smith has been 
appointed chief operating 
officer and Mark Keattey 
becomes chief financial officer. 

Smith, 57, was formerly a 
director of James Askew 
Associates, a mining 
consultancy. He also held a 
number of other senior 

appointments during aSO-year 
career in the mining Industry, 
inter afia with North Broken 
Hill, CRA, and Hamerstey Iron, 
ail Australian groups. 

He is already well-known 
to Ashanti as he carried out 
an Independent engineer's 
audit for the World Bank’s 
International Finance 
Corporation when the 1FC was 
poised to back Ashanti's plan 
to lift Its output to more than 
1m troy ounces of gold a year. 

Keattey, 36, Is also no 
stranger to Ashanti; he was 
responsible over some years 
lor negotiating loan 
agreements with Ashanti on 
behalf of the IFC where he has 
been tferistona] manager, 
treasury and financial policy. 


CONTRACTS & TENDERS 


CALL FOR TENDERS 

On behalf of the Municipality of Budapest (Hungary) 
the Budapest Metropolitan Property Management Center Co. Ltd. 

hereby invites tenders to purchase property 
in the ninth district of Budapest, 

at9-11 

Kozraktar 

Street 

Located on the Danube bank 

this is the only significantly sized building site In Budapest's downtown area suitable 
for office blocks, hotel etc., 

15708 m 2 area (169,105 square feet) 

with underground garage, eight floors including ground floor and a penthouse. 

The invitation bid is international and public; 

The documentation including the conditions of the competition and technical 
information may be purchased 

between 9.00 am and 12.00 noon 
on work days from July 5 to August 22, 15194 

at the non -re fundable price of 50,000 HUF + 25% VAT, at 

Budapest Metropolitan Property Management Center Co. Ltd. 
23-27 Vfid fit, XU floor, Budapest Xffl, H-1134 Hungary 
Phone: (36-1) 120-2278; 270-0715 
Fax: (36-1) 120-1278 

Tenders must be submitted in person or by post and received before 
August 31, 1994 

Hungarian law requires that we notify bidders that the inviter has foreign trade rights. 


All Advertisement bookings are accepted 
subject to our current Terms and Conditions, 
copies of which are available by writing to 

The Advertisement Production Director 
The Financial Times, One Southwark Bridge 
London SE1 9HL 

Tel: 071 873 3223 Fax: 071 873 3064 


CALI FOR TENDERS MADE FOR CONTRACTING SEA 
TRANSPORT SERVICES OF TOMATOES, CUCUMBERS 
AND OTHER VEGETABLES FROM THE CANARIES 
TO THE UNITED KINGDOM AND EUROPEAN CONTINENT 

A CALL FOR TENDERS is hereby made to contract sea height services to 
transport tomatoes, cucumbers and other vegetables from the Canaries to the 
United Kingdom and European continent during the 1994/1995 export 
compaign. 

Shipping lines can present their offers either at the F-E.D.E.X. Offices in Las 
Palmas de Gran Canaria (Vegetables/fruit Station, "La Luz" Wharf, top floor) or 
at the A.CRT.O. Offices in Santa Cruz de Tenerife (Ribera Wharf). 

The terms of die call can be examined at the above mentioned offices and copies 
of same will be available to the parties interested. 

All tenders must be presented by ELEVEN AJVL on JULY 4TH, 1994 (407.94). 

The offers will be read publicly at the F.E.DJLX- Offices in Las Palmas de Gran 
Canaria at ELEVEN A-M. on JULY 5TH, 1994 (5.07.94). 


LEGAL 

NOTICES 




MEAT PROCESSING INDUSTRY 


EXPRESSEOJNS OF INTOKBST 
VWEO JMAGfi ANALYSIS TOGHNOLOGY 
AiBlnfit's Meat Roenvh Gotpooiton ftWO has dodoped Video Image Analyst 

CVW)iediDok>^»hkli|norttbe*)Jeahe[i*a!nienMitcfcneaiqttaB(yaodyidd 

ofpotBiIrdt p pi fca tHXBgflfaln 
(be food area and In other areas, pstfcnlar devices for ox wfltiln the meat Many 
haw been developed to rbe watting promype Rage. 

These dnios haw ban tested in tmemadonal Add abb andbwe denunstrriedi 


The MRC do* invite expressions tf Interest ton oqpolaifcttvltb ** dSoaemt 

resources to take date tedmobfy Do mate in Aushafia sod flmwgiont *6 vuU. 


\i (Ilk s(. proven (it viio iuiliulc flu-: 


- VhokGnTmAssessmmtUnOwlrichaperatismtbHsiaMgton-flocr 
nmsmtngjUd- ntatai pammtim of iamb caraascs and b&f tides. 

• CbnkrAsstsomrit IMlmmsming meat and fitt colour, 

eye ra axdyWd - related parameters on tfuarttawd berf carcases. 

• Portia* Ataum wrf Quit n w wfnring dliu e iiitoiu , ma st o nd fat colour. 


mprtBngattdJat contati an buBtrUnal portions of tof • 

IXiriogl 9 ?V 95 1 iheMRCw(Uteassi«lnganunte<rfAostralijrainctSiy 
oOMxfe todeawMaa the benefits tf thaednatogy.An innnafiaeopporninl^ 

aisSto supply 1 Sailed nwilfrer of comment praioc^ VIA sysans far use by 


Geoffitey Sbddnuse. Strategic Vefew P? Ud. 
lead 4. 234 Sws« Street, Sidney, NSW.tamaiTttW 
Teh 61-2-263 4355 ftnc 61-2-2834536 


(.'Insi/i,' dale lor Jppliacions July I?. 


1VTON0.3S3P 

THE HIGH OOUKT IRELAND 
Ot THE MATTER OP: 
BDCBBBjnAN TRANSPORT COMPANIES 
UMTTED (IN LIQUIDATION) 

AND IN THE MATTER Of-. 

THE COMPANT ACTS, IMS 
Ttw adartnral CmSnn of toe .bore ume4 
cwpar ’■*■0 by *Lftte of Utdr rupeolva 
nilracu.clafn to hn been mil] tied ro 
iilerm on ihfr debts ire rcqiM m or 
before Iks 9* day of Aipfl 1994 to ***H 
Ibck — b Mri mUtomea sad Iks (p uk s lt nt 
of tfedr dauns for sock cottnetal interest 
(fom toe Iki toy of Saveabtt 1910 of so 
toe dus at dtacbnge of tt«r Rtpse&re dabs) 
ud ike tunes ltd addresses of their 

Solicitors, il soy. to O.U H. Morph, of 

Q otMgb Bmsc, t Lower Kil n yurt Jto»d. 
billntu, Coonty Dahlia. Ireland, Ac 
Official Liqtddsux tt Ike did Canpaay sad 
if so raqnfeed bj aotkjs ia ndtiag tmm toe 
Official LiqtdkHcnf u file mdb AfBdaoUa 

in proof of dsinx a* Ifcej nay be advised and 
to ghe notice of Sag tbueof to As OfBcU. 
Llqaidator and to attend at sock lima sad 
place a* shall be ap ec i fl e d la sack notice at, 
ia defndl ibercoC tiny a>U ba cxeiadod fi<w 
any distributes snds before soeb debts or 
dim mo proved. 

The 6A September 1094 a U o’clock, io the 
faiesooa at toe B rtabt rt Office. An U1 
Obalalgb. Habile 7. Ireland ban been 
e p pohd o d for bearing sod adjodiatiag opaa 
tbenddeUms. 

Deled Ibis 341b toy of lane 1994. 

Alacoqne Ctndna 

BoDtan 


Notice of appafa&MC at 


jMaedwnfec USOta. Trains 

ACS Serines* Centre. Natan of 

cUwIficailwi- 12- Due of appolnfcaeu of 
AtMantoe Rbcbwce 13 Juk 1994. Naas 
of pevftM tftxusJinf ibe AdtoJnborMlvc 
(UtoiecHi Lloyds Saak pic. Joist 
AitemtsKrn RecsKetc EM Shkn (office 
UfcruaateiTCS) S P Hoigsie (office bohta 
mta 7991). Coopm * Ijtenri. K> Box 
iO, OicWd Uoaec, 10 AUrion Place. 
MiUdOne. Tml MEM SBE- 


SUGAR lie INTEGRATED 
INDUSTRIES COMPANY 
"S.IXC." 

12 GAWAD HOSNY SIR. CAIRO/AJLE. 

Fte 3934568/3900509 - Telex: 21193/20906 SJXC. UN 

Announce for the Interaatioxial TENDER no. 2/6 
BeJkas for PUMPS for BEIKAS PROJECTS financed 
by the SAUDI FUND DEVELOPMENT according the 
following: 

1. Offers wifi be received & opened on 24.8.94 at 12 
o'clock Cairo local time. 

2. Tender documents can be obtained from above 
address against a stamped application and paying 
L.E. 1000 for one set to be increased by 1096 in 
case it is requested by MAIL. 

3. Offer should be submitted through registered 
- EGYPTIAN AGENT and accompanied by the 

following: 

a. Original of agency form 14C for review and copy 
of it attached with the offer. 

b. Copy of receipt of purchasing the tender 
documents. 

c. 2% at least (bid bond) unconditional bank 
guarantee issued from a first class b ank and 
endorsed from a first class EGYPTIAN BANK to 
be Increased to 10% in case of awarding 
contract. 

4. Offers not complying strictly with terms will be 
rejected. 


NOTICE OF SALE OF 
HOTEL BUSINESS 

On 20tb Jane 1994 a formal offer to buy, with reference to the 
situation of assets and liabilities as of 31.12.92, was presented 
for 7,000 million Italian lire of the whole estate of the Societk 
AlbergoEl Faro S.p_A-, proprietor of the hotel of the same name 
situated in the Boia di Porto Cantc-Alghero (Sassari). 

Whoever intends to better the offer must do so within the 
deadline of 27th July 1994, according to the procedure and' 
conditions, relative also to the deposiL indicated in the sa le 
procedures which, together with the copy of the offer to he 
bettered, wifi be given - c/o the *Valutaziooe e Cession!" Office 
of SIR Fmauziaria spa in liquidation. Via Grazioli 33. Milan, 
telephone (02) 66220752, fax (02) 64623^9 - to every interested 
party offering the preliminary security requirements. 


PERSONAL 



PUBLIC SPEAKING 

Training and speech-writing by award winning speaker. 
First lesson free. 

Tet (0727) 861133 







TIMES MONDAY JUNE 27 1994 


MEDIA FUTURES 


* mp: 


S 5“,i_*te world’s 

top high-technology 
companies are now 
working on ways to 
put a iugfc-resolu- 
uun, two-hour film on a 3.5 
indi <flsc that you can pop into 
yom: video Walkman or your 
ra ^“inied i a player/comput- 
er/TV/game machine. 

A key element in future mm. 
thnedia systems will be the 
medium itself - the means bv 


Coming soon to a 
tiny disc near you 

Robert Patton looks at new video storage methods 


graphics are stored and 
retrieved. As any computer 
usw knows, graphic data flies 
can get extremely large. Even 
so me t hing as simple as a 8 x 10 
colour portrait fills up tens of 
megabytes. And the same 
motion picture that fits nicely 
on a rental tape is tor too big 
for the largest personal com- 
pute 1 bard discs. 

Hie high-tech industries of 
Japan, battered by the strong 
yen and devastated by plum- 
meting consumer sales are 
looking for their ne yt “kilter' 
product They need 
to succeed the VCR. As the 

chairman of one high-technol- 
ogy company says; “Everyone 
has a VCR... and they never 
wear out." What is needed, 
both as a VCR replacement' 
and a basic element of mn Tfi . 
media systems, is a d ata stor- 
age method that c ombines very "■ 
large size with the breathtak- 
ing data transfer speed 
demanded by both real-time 
video playback and advanced 
3D video games. 

In the last decade compact 
discs, using optical recording 
techniques have completely 
supplanted the needle- and- 
groove recording technology 
that was introduced by Edison 
and survived, admittedly with 
sophisticated enhancements, 
tor most of this century. Those 
same techniques can and have 
been applied to video record- 
ing. But there are problems. 
Pioneer’s laser disc format has 
been on the market for years 
and still provides the only 


alternative to video tape for 
high-resolution recording. But 
laser discs are . large, cumber- 
some and unlike videotape, 
cannot be erased and re-used. 

A consortium of consumer 
electronics makers in Europe 
and Japan, last year developed 
what they call the video CD. 
The same sized as a . compact 
disc, it can play back pre-re- 
corded movies on equipment 
des i gned for it But video CDs 
have their own problems. They 
sacrifice resolution and picture 
quality and require two or 
three discs for a single feature 
film. Unlike videotape, they 
are not rewritable. 

The not-yet-developed, next 
generation video storage 
medium mist meet several 
requirements. In addition, 

. there are features that, , while 
not absolutely awagntig i from a 
technical point of view, may be 
very important from the stand- 
point of marlte success. 

• High resolution. The closer 
we get to the time when cur- 
rent video standards will be 
supplanted by high-definition 
TV, the less likely that the. 
market will be satisfied wlth- 
present standards of quality. 

• High capacity. The largest 
hard disc drives currently 
available for personal comput- 
ers can only store about 15 or 
20 minnteg of high quality 
video even using the latest 
compression methods. 

• High speed. To play back 
foil motion video in real time 
requires more than just the 
capacity to store the data. The 


recorded data must be trans- 
ferred a sufficiently high rate 
of speed. MPEG-2, currently 
the most advanced compres- 
sion standard r e quire s a data 
transfer rate of nearly 10 mega- 
bits per second. 

• Record capability. A major 
reason for the success of video 
tape cassettes is the ability to 
record as wen as play back. 
Most industry watchers agree 
that laser iB«s would have a 
much, larger market share if 
users could record material on 
them. Compact (fiscs replaced 
records, .but have npt replaced 
audio tape cassettes for just 
tins reason. And when Sony 
Corporation launched its mini 
disc (MD) format, it found a 
way to provide the ability to 
record as weRas play back pre- 
rccdhfed/man&aL 
* . ’ f •’ 'V v * 1> 

T hme-ar^curreotly three 
basic' types of optical 
disc. recording technolo- 
gies. The first method, used for 
CDs, pre-recorded MDs and 
lasgr (Hare,' impresses informa- 
tion dn‘*tb' a by burning 
pits intb the recording Surface. 
To gOf an idea of the ’size of 
these phs, imagine s CD Mown 
up to the size of a football field. 
Each pit would then be about 
as large as a grain of sand. 
This .type of disc has several 
advantages. Duplicates be 
stamped out at low cost, roach 
as records used to be pressed. 
The discs are durable and can 
gfrmd up to relatively careless 
hanifitng Capac it y is compara- 
ble to a large hard disc drive. 


CD-ROMs (compact discs used 
as read-only memory) are 
becoming quite popular with 
computer users and software 
vendors. But CDs can only be 
wr i tten cmce; they cannot be 
rerecorded and while more 

than adequate for audio appli- 
cations, they lack, the capacity 
to store and play-back 
foil-length motion pictures on 
a qfng fa fee 

Magneto Optical (MO) discs, 
the second type, use both opti- 
cal »nd ma gnetic recording 
techniques. Erasable and 
rewritable, they offer relatively 
Ugh capacity up to about one- 
- third HwM 1 of a CD. To produce 
MD recorders, Sony foil back 
on this technology. Pre-re- 
corded MDs use the same basic 
technology as CDs. The 
smaller size is achieved by 

mtmg iBH w w n t Standards and 

methods for compressing the 
ifata on the But you can- 
not ease a pre-recorded MD. 
Recordable MDs, even though 
they can be played bade on the 
Hama equipment, u sa MO tech- 
nology. 

The third type is the phase- 
change optical disc which uses 
a laser at varying levels of 
power to alter the structure of 
the recording surface, from ah 
amorphous state to a crystal- 
line state and vice versa. Phase 
whang s dimai are tost and 
recordable, but current phase- 
change disc drives cost about 
five HniA« as much as MO 
drives. 

Matsushita Electric Indus- 
trial CorpL has been supplying 


drives of this type to commav 
cial customers for several 
years and recently announced 
technical improvements that 
could make ft possible to put 6 
gigabytes of data on a single 
52s inch (fisc. Toshiba Corp. 
has no drives of this type on 
the market but last month 
demonstrated a prototype that 
had the capacity of a CD, was 
recordable and erasable and 
could record and play baric 20 
minutes of full-motion video 
with MPEG-2 compression in 
real time. 

Other companies have been 
extending the o ptical <*(«? state 
of the art In the last few weeks. 
IBM Corp. in the OS, demon- 
strated in May an optical disc 
recording system that 
increased capacity tenfold. 
IBM’s approach was direct, it 
simply rranhfoAd tea into 
a composite sandwich. To 
write to or read from a particu- 
lar disc in the sandwich the 
laser’s point of focus is 
changed 

Wbdch technology is going to 
emerge on top of the heap in a 
few years is hard to say. hi 
addition to the basic types out- 
fined above there are Ukriy to 
be advances in technology that 
cut across several categories. A 
number of corporate and uni- 
versity laboratories around the 
world are in a race to develop a 
low-cost, low-power semicon- 
ductor that emits a blue- 
violet beam. Because blue tight 
has a shorter wavelength than 
red. a blue laser could bum 
smaller pits into tits surface of 
a CD. Smaller pits . spaced 
closer together take up less 
space. More pits equals more 
capacity, equals longer record- 
ing Him*- All optical recording 
systems use lasers so a com- 
mercially su cces sful blue 
could increase the capacity of 
almost any optical recording 
system four fold. 

Hitachi researchers just 
reported the results of an 
experiment designed to get 
blue laser results using con- 



ventional red lasers. What the 
experimenters did was force 
light from a red laser through 
an optical fiber with a diame- 
ter that was only a tenth of the 
wavelength of the tight beam. 
A high-tech version of passing 
a camel through the eye of a 
needle, the feat is admittedly 
many years from any practical 
application. But if successfully 
the method could be used to 
carve out pits from the record- 
ing surface of an optical disc 
that are even smaller than pits 
produced by a blue laser. 

In May, Sony announced a 
breakthrough that could 
increase the capacity of any 
optical disc that stores infor- 
mation In the form of pits. In 
principle, what Sony research- 


ers did is simple. Where con- 
ventional CDs vary the size 
and spacing of pits to record 
information. Sony’s experimen- 
tal makes the centreto-centre 
dist a nce between pits constant, 
then varies both the left and 
right edges Independently. 
Because the new scheme 
allows a greater number of 
variations for each pit, it 
allows more information to be 
placed on a disc - at least 
twice as much. 

Another ri gninwmt element 
of future optical storage 
systems for video applications 
is data compression. Although 
data compression algorithms — 
the precise mathematical 
expression of the compression 
scheme - are quite complex, 


the underlying principle is sim- 
ple. Both motion pictures and 
video recordings produce the 
Illusion of motion by present- 
ing a series of still pictures 
(frames) so fast that the 
human eye cannot detect the 
rfiflbrp no fi . But the difference 
between successive frames 
may not be large. Just as ani- 
mated sequences do not 
require a new drawing for each 
frame, compression systems 
allow the recording of frame- to- 
frame nhnngpg. The Idea is not 
to waste disc space on picture 
elements that have not 
changed from one frame to the 
next. MPEG-2 is the most 
advanced current standard, but 
newer methods will soon be 
coming. Stay tuned. 


The all singing, all 
dancing newspaper 


rj-/i U 




By Raymond Snoddy 

One new local newspaper 
produced last week has that 
most traditional of names - 
The Gazette & Herald. But that 
is one of the tow traditional 
things about a very special 
paper, created by a collection 
of editors from the Westmin- 
ster Press regional newspaper 
group, working closely with 
Digithurst, the communica- 
tions research company that 
specialises in multimedia. 

The colour picture of a tzans- ' 
Atlantic yacht on the front 
page, for example, had a rather 
unusual feature - you could 
hear the sound of the waves! 
And when the reader checked 
out the latest pop record charts 
it was possible to click on to 
clips of the actual records 
themselves. 


Naturally when you turned 
to the classified advertising 
section it .was easy to call up 
colour pictures of particular 
cars or houses you were inter- 
ested in buying. All this is pos- 
sible because The Gazette & 
Herald is delivered electrcnidy 
to personal computes using 
ifate broadcast links. 

Using the conventions, and 
to some extent tiie design of an 
orthodox newspaper, the proj- 
ect is probably the most ambi- 
tious trial so tor for an elec- 
tronic newspaper in the UK. 

“Anywhere you can receive 
good quality television you can 
receive this,” says Peter Kru- 
ger, managing director of Digi- 
tixuxst, who has been working 
on digitisation for more than 
a decade.- 

In the experiment, the latest 
news was transmitted by 


modem from the Marlborough 
offices of the Wiltshire Gazette 
St BauM and brought to gether 
with information created by 
popfls at the St John’s School 
in Marlborough. 

The electronic newspaper tri- 
als, are parthf a broader series 
Of advanced cnmummirati nim 
projects run by Dlgithurst hi 
these pr o grammes the Wilt- 
shire school is connected by an 
integrated services digital net- 
work (ISDN) link with the 
Bookholtzberg School in Gan- 
desrkesee, northern Germany. 

Apart from swopping elec- 
tronic newspapers and their 
own magazines, the two 
school s have frwHtifls for video 
conferencing and on-line lan- 
guage translation. The experi- 
mental electronic newspaper 
was produced by Digithurst 
multimedia software. Called 



;S5E 


Superhighway 
push by Europe 



News i nterfa c e: section of the Gazette & Herfcld make-up screen 


PictnraBook, this is already an 
the market The “authoring’ 
system to put together the 
sound, pictures and data costs 
£595, while the special card in 
the PC needed to receive the 
service costs £99. 

Kruger’s other multimedia 
creations in the past have 
ranged from a system for hair- 
dressers, which allows clients 


to try out different styles on 
pictures of themselves, to car 
presentations that enables 
potential customers to 
“explore* a car on screen. 

In the wake of the electronic 
newspaper, Kruger believes 
that commercial versions may 
be no more than three years 
away. 

Meanwhile, he has in his 


company foyer another way of 
keeping up with the news - an 
instantaneous teletext system. 
Digithurst has combined the 
broadcast teletext service with 
the PC and anyone waiting to 
see Kruger can call up the lat- 
est, national and local news, or 
the performance of a particular 
share, simply by touching a 
special screen. 


By Alan Cane 

A group of leading 
Europebased electronics 
manufacturers and institutions 
have formed an asso ciati on 
to promote the development 
>if mn Mmedla fadmn ingiM 
and services. The European 
Multimedia Forum, launched 
late last week, brings together 
compute* manufacturers, 
telecommunications companies 
and publishers in a bid to 
facilitate the exchang e of 
information and the 
development of business 
partnerships. 

The members include the 
Association of Commercial 
Television in Europe. British 
Telecom, Compaq. France 
Telecom, Hewlett Packard, 

ICL, Mercury, Philips, Serna. 
Silicon Graphics and Sony. 

It said: “The forum will 


encourage cross-industry 
synergies and function as an 
interface between business 
and gove rnment . In particular, 
the forum will concentrate on 
the implementation of a 
European Information 
I nfr astr u ct u re (the Europrean 
"superhighway”). 

Formation of the forum 
follows quickly on publication 
of the Bangeroann Report, 
which urged European 
companies to seize the 
opportunities offered by 
multimedia. Membership is 
open to any size of 
organisation interested in 
mul timedia. The annual fee 
is ecuSOO for small companies 
and eculOOO for large 
companies and organisations. 

Afore information from 
Monique Miche. Bates & 
Wadcer, 9 Rue du Momteur. 
B-im Brussels. 


ARCHITECTURE 



T o win a Nobel Prize in any 
field is considered to be the 
ultimate accolade for anyone's 
career. The equivalent award 
in the field of architecture is the Pritz- 
ker Prize, sponsored by the American 
Hyatt Foundation. 

During the last decade ft has hon- 
oured the good and the great of the 
architectural profession. It came as 
something of a surprise when it was 
awarded last week to the relatively 
unknown 50-yearold, French architect, 
Christian de Portzamparc. He is the 
first architect of the post war genera- 
tion to win the prize, and the first 
Frenchman. 

For enthusiasts of the ' relatively 
arcane in contemporary architecture, 
Christian de Portzamparc is already 


Music to the eyes 

Colin Amery on the work of Christian de Portzamparc 


Portzamparc: something of a hero, 


somethin g of a hero, and it is possible 
to bring yourself up to date with his 
relatively small output of work by visit- 
ing ffvesifes in and around Paris. When 
Portzamparc spoke at the prize giving 
ceremony in. Columbus, Indiana he said 
that his “int e rventions” in cities are 
what he regards as his key works. He 
speaks lovingly of cities and the need 
for architects to ubanistically in 
ways that can refashion smTcfvffise our 
cities. 

On tiie Rue Nationals in south east 
Paris he is rehabilitating a series of 
blocks of public housing built in the 
“1960s. These blocks are typical of so 
many that were built at that time - 12 
to 14 storeys of rigfd^and dull 
co nc ret e frame building — Tmi fm - m and 
soulless. jS* “ 

• In Britain and the US {be current 
mood- would -demand that these static- 
.times were demolished. Instead, in 
-Paris, new balconies, white mid yellow 
awnings have been added, together 
'with, sane v new low-rise buihflngs to 
" house a, community centre and a 
-school. : :t 

-Just off the Rue Rationale itself; in 
the 3jtae des HautesFbrmes, Portzam- 
pare has baflt ardies across the street 
to soften, the effect of same housing 
built in 1979,; to a ftem jrt to create an 
seise of an enclave -fhatT$ enhanced by 


marriage of styles - the Portzamparc 
designed Holiday Inn near the same site 
is a sinuous green slab that would look 
very much at home in Miami. 

It is the second phase of the City of 
Music that has just been completed, ft 
comprises an elliptical concert hall 
which has an amazing spiralling lobby 
all round it The rather tough and angu- 
lar en tr an ce facade belles the elegance 
within - the recital rooms have curved 
walls and the ball itself is simple but 
very stylish. 


T he large c o nical recital room 
that looks like a streamlined 
ship’s funnel has a quite 
remarkable interior. The ceil- 
ing soars upwards into the cone shaped 
roof and is panelled with timber in a 
pattern that resembles the roof of the 
Pantheon. It is an almost ritualistic 
space, the omcert platform is like the 
altar and the audience a congregation, 
drawn together by the unexpected inti- 
macy of this large space. 

A very accessible example of bis work 
is the Cafe Beaubourg which adjoins 
the Pompidou Centre. He has installed 
v a sweeping grand staircase - all 1980s - 
and the cafo occupies two large floors 
decorated with murals of Portzamparc’s 
actual designs. Another key public 
bunding where his work cah be seen is 
the addition to the Bourdelle Museum 
which houses a collection of classic af 
sculpture. 

Outside Paris is his School of Dance 
for the Paris Opera at Nanterre - a pair 
of post-modem pavilions. Further afield 
is his apartment block - a square tower 
with a circular roof - in Fuknoha in 

Japan 

What is apparent from all bis bufld- 
rngs is that he Is full of architectural 
ideas. They have not yet gelled into a 
coherent Portzamparc language. His 
work is very hybrid and is still evolv- 
ing. He only opened his office in 1970 
and 24 years is not long in the life of an 
architect Despite this major prize, I 
would say the jury is still out on 
whether he is simply a stylist or 
whether his architecture is of such sig- 
nificance that it will cbanga people’s 
lives. 


1 JffiL 



Farther afield: apamneu. 


. But these minor changes are not a lot 
more significant' than a-toach of lipstick 
on the lined face of an elderly and faded 

Wmufc ; and nwn nnly wiwig li to merit a 

major international prise. 

- It to the few completed P ortz amp arc 
buildings that, justify the prize. The 
(Sty of Music - a conserva t oire in the 
far north east of Paris - is designed by 
Porteamparc as part of the Parc de ia 
Vfflette, one of the last of the Grands 
Projets intended to make Paris the 
cultural' and educational centre of 
Europe. 

This is the best place to see the work 
of this architect. He has adopted a 
hybrid modem style that seems to look 
back to the in its curvlhiiear lan- 
guage and yet it is, tn its random geom- 
etry verymuch influenced by Le Corbu- 
ster. It is a very curious and disturbing 




City of Music: hybrid modern style that seems to look back to the 1930s 













BUSINESS TRAVEL 





BA and TWA fare safe 



Airways amt 
TWA, have 
announced 


between several US c&ies 
and the UK. 

British W rwayrfi offere 
ro p r a — it a 3a pe roai t to 

47 percent reduction an 

normal tares. Reservations 
must be made by rakMgfat 
Monday on both «Mnes. 
Travellers must depart 
between August 1 sod 
September 7, and 
complete tripe by 

September 14. A Saturday 

"W *t*w Is required. 


hHfia bans alcohol 

The b«San government saM 
yesterday It was banning alcohol 

on afl domeatk; ffigffls vvilh. . 

irnmecflate effect because ■■ 
*unkan passengere threatened 


Quoting Civil Aviation Minister 
Ghufam NabiAzad, the PreaS 
T rust o f India said a notification 
banning constmnptioo of Dquor " 
on domestic Rights was being 


“We are ta*fng this step in 
view of the number ot incidents 
reported when passengers had 
become fntaricafied-dti&ig 


safety * A zad said at the end of 
a two-day meeting of his 
ministry officiate. . 


Uifthansa andT Oriy. rights 

Lufthansa supervisory ■ 
board chairman jmrflen 
Weber saU Lufthansa & set 
to make a' request for 
lan c Bim righte at Orfy 
airport, .Parts, for five 
Fr an k fu r t or Hanfch mote*. 
It would be a atuidsl dn a ff 
tire French refused the 
Germans whatifiey had 
.agreed wftb fttefr English 
Mends," ha sakL bi an 
interview with tm Mouths bn 
said that Lufthansa wants 
to focus on Os core air 


of Its 




for cargo 
transport, electronics and 


Ryanroutes 

Ryanair, the fastrgrawing • 
independant Irish airline, Is to 
open a new Tow-fares-na frffls" 
DubfevGatwick route from 
October, with a schedule of 

to six fights per day. Return - 
fares-will start at E60. 

Thofflrfine.has pioneered . . 
tow-cost air travel across the 
Irish Sea end -last month added 
Manchester .and Glasgow 
Prestwick to . its list of UK 
destinations out at Dubfirx. 

• Ay Lkrgus,British Midland, 
■Ryahafir and Virgin are al now 
competing Intensdy for 
business in the Dubfin-London 
air travel market, the second 
busiest in Europe, so travellers 
stnxid Check With each to see ■ 
what special offers are avelE&le. 


RuSSian crfrn© guide, ■ 

The nuMtoig o wiwnBiut 


fluktei!’ fwfore^Rers <m 
how-to avoid crime, . 
warning timn not to deal. • 
with shady busfneasmen 
said aottosu^VRsor' 
drinfcs from strangers. 

* Tte Interior id n fett jradtf 
toapod wt a tesd guMeJ - 
which wdfbesotrtto 
a mb a w a te s, that almost baft 
tbe8<OOQo ff »n ce »aBalMt 
tordgners uncovered over 
thelasf year were the . 
tmiaft.iif Ti ivtei m n f ir i r. ' 
IMyte^'eaihdgHW.. - 
were mwtisinAhttefM. 
five months of this year, 
w^ efedm tfliNmclr - 
Sdwfmrepd&ficatwera " ■ 

todludetf, eSunro MBed. - 



.strike^:- 

A Str&te planned 
for Wednesday : 

■by Brttteft; : 

railway signal . 
staff cook* . . 
severely cffsnxpt.: 
teafti services tot. the Wrd time •„ 
in ae ihartyAreefcs. The staff are 
staging we ektybne daysfrtose- 1 ■; 
diwr acomptexpay and • •. i 
•prodtotMiydeal. Rafttnscic; 
which operates ihai^B .: . 
iWiastnictute has been abla tio 
furv orfy amted.servtoes ckitng - t 
.both of the previous one day 


Uketyiweatfrerin the fesriing busings centres 


Moh 




j>«* .[jBfra'riib* ^ 

« «te- 

- 




r » t 


£** % 37 
■ Paris 2a ; J 


^'swer.' 

tme^duv - 
(mocmMonvaji^Am cwmmk- 



All the fun 
of low fares 

Richard Tomkins explains how 
to track down cheap US flights 






1982=100 ; l; 
150 — 


Consu m e r price Index > 


P ity the US airline 
industry. Hardly a day 
seems to pass without 
news of another US 
carrier slashing fares ou short- 
haul domestic routes in an 
attempt to preserve market 
share from low-cost competi- 
tors. For most airlines, the 
prospect of a decent profit 
looks as Ear away as ever. 

But what is bad news for the 
industry Is good news for the 
cost-conscious business travel- 
ler. Although air fares in the 
US may not have sunk to the 
depths they plumbed in the 
fare war of summer 1992, they 
still represent a bargain. 

How, though, to take advan- 
tage of them? Many must have 
heard about the inroads being 
made into the big US airlines’ 
markets by upstart, low-fare 
carriers with names like Kiwi 
International, UltrAir or 
Republic Air. and wondered 
how to book with them. 

Cut-price fares in the US fall 
into two main categories. The 
seasonal promotions frequently 
offered by big carriers on 
selected routes are almost use- 
less to business travellers, 
because they commonly 
require advance booking and 
Saturday night stay-overs, they 
are ineligible for exchanges or 


refunds, and the number of 
tickets is rationed. But on the 
routes where low-cost carriers 
are In operation, rock-bottom 
fares are a permanent fixture 
on all flights, and rarely carry 
any restrictions. 

Booking with these low-cost 
carriers should be easy. Unlike 
People Express, the low-cost 
US airline of the 1980s that 
tried to save money by cutting 
out the travel agents, nearly 
all today's low-cost carriers are 
on the travel agents' computer 
reservations systems. So theo- 
retically, once inside the US, it 
Is just a matter of finding the 
nearest agent and asking 

Predictably, though, things 
are not always quite that sim- 
ple. So here are a few tips: 

• Travel agents work on com- 
mission, so obviously they 
earn less by selling you a 
cheap ticket than an expensive 
one. The American Society of 
Travel Agents bristles at sug- 
gestions that any of its mem- 
bers would be swayed by such 
considerations but, to be on 
the safe side, deal with a repu- 
table agent and make it clear 
that you are looking for the 
lowest-cost option. 

• The biggest low-cost carrier 
- Southwest Airlines, the one 
that started it all - is not on 



140 


130 


.120 


110 


100 - • 


90 


80 L 


1969 84 85 88 W 88 

Some* «r Tampon An ao rt t B m* 

three of the four big computer 
reservation systems, so some 
travel agents may not automat- 
ically quote its rates. Ask 
whether Southwest Dies the 
route you want and. If you run 
into difficulties, dial Southwest 
direct on 1-80O43S9792. 

• Do not be too surprised if 
there is no low-cost option on 
your chosen route, particularly 
if you are flying in the east 
The really low fares have still 
reached only about 20 per cent 
of domestic routes and most of 
these are in the south and west 


90 M 92 1893 


- though they have begun to 
spread in the east this year. 

• If you know your itinerary 
in advance, check out the bar- 
gains to be had before you 
leave. American Express's air 
fare management unit in New 
York says packages available 
from some US airlines could 
end up much cheaper than get- 
ting a transatlantic flight on a 
big carrier and switching to 
low-cost airlines. It recom- 
mends you consult an experi- 
enced travel agent - like, er, 
American Express. 


The choice of carriers is increasing rapidly, says Victor Mallet 

Variety of voyages to Vietnam 


B ritish Airways has 
become the latest inter- 
national airline to begin 
negotiations for flights to Viet- 
nam- Tbe East-growing Viet- 
namese economy and expand- 
ing tourism industry are 
making it an increasingly 
attractive destination for air 
freight and passenger services. 

BA hopes to start flying 
twice a week between London 
and Ho Chi Minh City, the 
southern commercial centre, in 
the first half of next year. The 
flights may go via Hong Kong, 
rather than more directly 
through Bangkok, to fit in with 
BA's other flight schedules. 

Air France, Lufthansa and 
KLM (all using combination 
Boeing-747s for both passen- 
gers and cargo) already fly 
between western Europe and 
Vietnam, while Vietnam Air- 
lines, the national carrier, 
begins flights to Berlin and 
Paris via Dubai in July. Sev- 



Ho Chi Minh City: BA plans to fly there twice a week from London 


eral Asian air lines fly to Viet- 
nam, while Gulf Air and Emir- 
ates from Abu Dhabi and 
Dubai are expected to start fly- 
ing there soon. 

US airlines are also negotia- 
ting with Vietnamese and US 


authorities for traffic rights. 
There are lm ethnic Vietnam- 
ese living in the US, and travel 
between the two countries is 
increasing following President 
Bill Clinton’s decision in Feb- 
ruary to lift the US economic 


embargo against Vietnam. 

Vietnam’s communist gov- 
ernment is liberalising its air 
transport system, along with 
the rest of the economy. For- 
eign airlines will be able to 
issue their own tickets in Viet- 
nam - previously only three 
airlines were allowed to do so, 
and the rest had to refer cus- 
tomers to Vietnam Airlines. 
The government also plana bo 
end subsidies for Vietnamese 
citizens on domestic flights - 
locals pay less titan half the 
fare cfamged to foreigners. 

Other opportunities have 
also arisen for airlines . Air 
France is leasing; with crews. 
Airbuses and ATR propeller 
aircraft to Vietnam Airlines for 
domestic and international 
flights. And there are plans to 
improve the main airports. The 
government says Tan Son 
Nhat, the busiest airport, 
needs $U9m worth of upgrad- 
ing in the next two decades. 


British Midland, the UK’s 
second hugest scheduled air- 
line, is offering business trav- 
ellers flying from UK regional 
airports to Europe average 
savings of 16 per cent on fall 
club class fares. It has negoti- 
ated a marketing deal with 
three European airlines: Alit- 
alia, Austrian Airlines and 
Iberia of Spain. 

The new initiative, which in 
some cases offers savings of up 
to 22 per cent, allows passen- 
gers to buy special “through 
fares” to 15 European destina- 


Regional savings 

Paul Betts on a UK airline’s initiative 


tions - including Alicante, 
Barcelona, Bilbao, Bologna, 

Madrid . Malag a Milan. P alma , 

Pisa, Rome, Seville, Turin, 
Valencia, Venice and Vienna - 
from five UK regional airports. 
These are Glasgow, Edin- 
burgh, Belfast, Leeds/Bradford 
and Tees&lde. 

The only restriction oh the 
new “through fares” is that 


journeys must be completed 
within three days of depar- 
ture. Normally, a journey from 
a regional UK airport connect- 
ing in Loudon with a flight an 
another airline to a destina- 
tion in Enrope would have two 
separate feres for the different 
legs of the Journey. 

These three-day executive 
retain fares were hxtradoced 


on British Midland's London 
Heathrow services to Europe 
last year, when the airline 
launched its Enrodass, offer- 
ing a flexible range of bosi- 
ness class fares. They have 
now been extended to British 
Midland UK regonal services 
in conjunction with the three 
European airlines. - 
British Midland recently 
formed a ticket code-sharing 
alliance with Austrian Air- 
lines, and is expected to forge 
similar code-sharing agree- 
ments with Alitalia and Iberia. 






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arsnStfot^isy- ceJnbratiqns Of life. . . . 


AMBASSADORS THCKlUB • - ■ " 

Although ^Ownntf, Ms corttrovecsferi 
^tyoadsfifeori-fojttaeXvMtf, fas just . 
■anded feexteridecf West End run, .-■ 

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tQob&ifr' 


TAMQLEWQOD 

The summer 
.-.season at 

TftnQteWDod, in 
the heart of the 
Massachusetts 
eotrrtrysMe, 
bagfir® on Friday 
with the first of a 
series of independence Weekend, 
events featuring Wynton Marsafis, 
UzaMnelfi and Nancf Griffith. 
Tangiewoocfs nawconcert M will' 
be Inaugurated 00 Juiy 7, whan the 
Boston Symphony Orchestra takes 
up resfde«» /or two months of - 
cbooarts. Artists appearing with tha 
orchestra this summer include 
Jessye Homan above), GUon - 
Kroner. Bernard Haitink and Marias 
Jansens. . . 


SADLER'S 
WELLS . 

The Cape 
SaBat-fitxn 
South Africa 
makes its 


debut on* 
Tuesday 
when It 
opens a i 

two- . 4 

MwJr 

nwN 

season 
at Setter's 
Wefts. Rest 


‘Hamlet 1 
■fakavadby 
‘Orpheus’ 
fat Che 

Underworld. 


f. .■■ - s 7/ ■.** -"A 


Warning: music 
can damage 
your health 

Muscle strain, alcoholism and stress-related illnesses 
are afflicting British orchestras, reports Garry Booth 

M usic hath charms the Royal Free Hospital in North for string players) or the Hariri 
to soothe a savage London, runs the performing arts environment 
breast, to soften cttnfc there. He holds one session a Fit orchestras, such as the Eh 
rocks, or bend a month, which Is consistently over- for example have special probler 
knotted oak. said booked and c ur r en tly has a three elbow room beinsr m short sums 


L' * 




M usic hath charms 
to soothe a savage 
breast, to soften 
rocks, or bend a 
knotted oak, said 
Congreve. But it can have the oppo- 
site effect on the player. The pres- 
sures of finding and keeping work 
in music, maintaining tough prac- 
tice regimes and keeping anti-social 
hours can have serious finpiinatinnw 
for the physical and psychological 
health of a p rofession al musician. 

Cast an eye over the orchestra at 
the next concert you go to. Look at 
the strings and pity rite poor viola 
player a questionnaire circulated 
recently among the string players 
in the major orchestras showed that 
80 per cent of viola players suffer 
from upper limb disorders. Many, 
because they usually sit in front of 
the brass, have damaged hearing 
from years spent in the firing line. 
Brass players have their own seri- 
ous (and common) problems, usu- 
ally to do with the embouchure. 
Flayers in their thirties and forties 
often experience inexplicable and 
hardto-cure muscle control difficul- 
ties which make it hard to reach the 
higher notes. 

Look at the soloist: so severe is 
stage fright for 15 per cent of 
orchestral rnm pciwns t hat they rou- 
tinely take beta-blockers to steady 
the hands when performing. In 
every symphony orchestra, an aver- 
age of four members will be fighting 
alcohol dependency, acquired in an 
effort to drown stage fright 
Dr Ian James, a consultant physi- 
cian and clinical pharmacologist at 


the Royal Free Hospital in North 
London, runs the performing arts 
clinic there He holds one session a 
month, which Is consistently over- 
booked and curren tly has a those 
month waiting list. Most of the 
cases he sees, if not directly related 
to "nerves”, are exacerbated by the 
psychological pressures of the job. 
Clearly, worries over funding, the 
threat of mergers and closures and 
changing standards of orchestral 
playing are not helping: “Musicians 
can’t afford to wait for treatment 
They work in a competitive envi- 
ronment and will not t»in> the night 
off for fear of losing their place. 
They Uve in a dosed community, 
practising by day and playing by 

night" 


A helpline set up earlier 
this year by the British 
Performing Arts Medi- 
cine Trust (BPAMT), 
which Dr James helped 
found, takes up to half a dozen calls 
per day from musicians with occu- 
pational health problems. The 
majority of these cabs are from peo- 
ple suffering from muscle pain in 
the wrist, shoulder and fingers. 
Upper limb pain, sometimes inaccu- 
rately referred to as RSI (repetitive 
strain injury), is a common prob- 
lem, especially among string instru- 
mentalists, guitarists smd pianists. 
Dr James believes the causes of 
musculo-skeletal disorders in musi- 
cians have as much to do with tech- 
nique and anxiety as the repetitive 
nature of say, violin playing (sir 
hours practice a day is tire average 



for string players) or the working 
environment 

Fit orchestras, such as the ENO, 
for example have special problems, 
elbow room being in short supply. 
Surprisingly, Dr James does not 
prescribe rest and splints for upper 
limb pain but is more likely to sug- 
gest corrective measures for bad 
posture - the Alexander technique 
or the Feldenkrais method, for 
example. In addition he will fry to 

find the winsp of tyitwIo tonirim v 

incorrect technique, or anxiety are 
likely causes. “But don’t stop 
playing - {day to the point of pais 
every day,” he advises. 

Upper fonb pain is not confined to 
stressed out professionals, however. 
Alex Scott, administrator of the 
BPAMT, is concerned at tire num- 
ber of young musicians and stu- 
dents who seek counselling through 
the helpline: “We encounter tal- 
ented teenagers who are forced by 
parents and teachers to practise too 
long without a break. Apart from 
the direct physical implications of 
playing SO Trmrh, it mpBm that the 
youngster is not doing other exer- 
cise or satisfying other social 
needs.” 

But it is the professionals who 
suffer most for their art And with 
too many musicians chasing too few 
jobs, most are reluctant to take 
their problems to management or 
campaign for better working condi- 
tions. “Concert schedules are partic- 
ularly demanding in tire UK,” says 
Dr James, “Compared to European 
orchestras, cure play twice as many 
concerts but have a quarter erf the 
rehearsal time to get it right If a 
musician can’t withstand that fafad 
of pressure then they’re cot" 

Often, the anxiety is contagious. 
Dr James has found instances of a 
new, dynamic principal joining an 
orchestra whereupon the rank and 
file of the same section, immediately 
succumb to musculoskeletal disor- 
ders. “Similarly, we recently found 
that a group of young sufferers 
coming to tire clinic had tire same 
tutor in common - and he himself 
had a problem with muscle pain 
too," Dr James says. 

Patients contacting the BPAMT 
or attending the performing arts 
clinic are assured co nfidentiali ty 
and wifi benefit from more speci- 
alised knowledge and sympathy 
than a CP can offer. But Scott says 
that increasingly health authorities 
are refusing to pay for extra-con- 
tractual referrals to special clinics 






7£? M 


m 


'|£c«0r ' 1 


like Dr James’s and the trust is 
examining ways of overcoming this 
reluctance. Classical musicians 
employed by the major orchestras 
have a better chance erf specialist 
consultation, thou gh. 

The trust, backed by the Musi- 
cians Union, h«« recruited a net- 
work of 35 volunteer doctors and 
now each orchestra has two special- 
ising doctors assigned to it The 
trust also takes the lead in promo- 
ting better workplace conditions. 
Noise induced deafness among 


brass players and percussionists is 
a prime concern, especially in the 
confines of a pit orchestra. The 
trust Is undertaking research work 
to design an ear protector which 
excludes damaging frequencies 
without impairing the ability to 
Play- 

But it is stress, and its physiologi- 
cal manifestations, which beset the 
majority of professional musicians 
at some time. “The pyschological 
pressures freed by professional 
mumcians have become enormous,” 


Theatre/ Martin Hoyle 

It's a mad, 
mad, Ken 
Campbell 


A mad world, my masters. 
Especially when Ken 
Campbell discourses on it. 
and ranges from drinking 
other people's spinal fluid with 
vodka to get their thoughts (“like 
getting other people's snaps from 
Boots") to quantum physics. To 
judge from Alps ferrous Bruises at 
the Almeida Theatre, Islington, his 
scavengings through the mind's lit- 
ter-clogged laybys are. if anything, 
madder than ever. But there is a 
new gentleness about him. Bursts of 
manic gargoyle glee are undercut 
by almost embarrassed throwaway 
reticence which is just as funny. As 
ever, the apparent red herrings, 
wild geese and shaggy dogs that 
roam the moonstruck prairie of his 
intellect are logically linked and 
neatly come full circle, through 
whatever hoop, U-turn or lateral 
flea-leap on to another juicy subject 
he ftagiiaiiy urges them. 

Campbell has stepped in, follow- 
ing the premature demise of the 
Almeida's previous production. As 
he gracefully puts it, the theatre 
rang him to say: the bollocks we've 
got on at the moment have been 
rumbled.” He speaks about theatre 
- the ait. the craft, the bollocks - 
with brief homage to “tubby and 
caring” Peter Brook (“we miss Jess 
Yates, don't we?”, he adds, wickedly 
inconsequential); a talking dog that 
told “an utterly constructed narra- 
tive of the horror genre” sounding 
like Sir Herbert Beerbohm-Tree; 
and, disre ga rding theatrical super- 
stition, dwells on productions of 
Macbeth he has known. In Stoke-on- 
Trent (1964) he played the Porter as 
if suddenly aware of the audience, 
with an amazement reserved for 
time travellers. He adopted a 
Method approach for Colchester 
(1967), deducing from clues in the 
text that the character or Angus 
was a flatulent dwarf, probably opt- 
ing for bonsai disguise in Burnham 
Wood. I fear he may never be a 
company man as the term is under- 
stood in the Berliner Ensemble. 

But the two hours traffic jam of 
bos stage begins and ends with sci- 
ence. Ejaculating polyfilla canisters 
are to this set what candelabra were 
to Liberace's. Campbell thought- 
fully provides the front row with 
covering in case the spouting sub- 
stance gets into the spectators’ 
pores before hammering a nail into 
the “disenfranchised self' of the 
aerosol and letting it gush. This 
leads easily - as easily as anything 
is led in a Campbell ramble - to the 
space- time continuum. He ends the 
show with physics, his nonsense 
firmly researched, unimpeachable 
authorities quoted (and mocked). 
“I’m not making this up, you 
know,” as comedian Anna Russell 
would reproachfully remark when 
outlining the plot of Wagner's Ring. 
Mad world, mad kings, mad compo- 
sition,' and, thankfully, maddest of 
all is Ken Campbell. 


says Dr Kenneth Lewis, who is 
attapjtflri to the IBO on a voluntary 
basis. More secure than most, the 
L£0 is a happy orchestra he says, 
but still he attends to a string of 
stress-related problems - from 
as thma and difficulties with circu- 
lar breathing to fingers made slip- 
pery with anxious perspiration. 
“The question all musicians ask 
themselves each night, is 'will this 
be my last job?” Dr Lewis says, 
“and that affects both their playing 
and their health.” 


international 

Arts 

GUIDE 


■ BERLIN 

PtuHiarmonie Carlos Kleiber 
conducts the Berlin Philharmonic 
Orchestra in the Federal 
concert tomorrow, feahjnngvwh® 
by Beethoven. Mozart and Brahma. 

Sergiu Commissionaawductetiw 

Berlin Radio Orchestra on Wed m 
works by Berlioz. Saint-S*K£s and 
Mahler, with ce«o so^OJa 
Hamoy and soprano Edith Wiens. 

Rafael FrOhbeckde BWSJ* 

conducts foe Ort ^ t [! e 0 L t S ro 
Deutsche Operon 

?©^^AmwnJoo^3ga Bach 

SSsksst- 

SSSbjflsa 

^ p ^=o/ Jonawn 

SM,iasrtMaiM ,,dBAMW 


staging of foe Nureyev production 
of Glazunov's Raymonds opens 
next Mon. The season runs tffl July 
13 (200 4762/2035 4494} 

Deutsche Oper This week’s 
repertory consists of Don Carlo, 
a Bartok and Schoenberg 
doubte-biH, La boheme and a 
contemporary dance programme 
featuring works by three New York 
choreographers. Gttz Friedrich gives 
a foyer talk tonight about the 
company's work. The season runs 
tffl July 10 (341 024 9) 

SchHer Theater Crazy for You, 
foe musical based on Gershwin’s 
Girl Crazy, runs daily except Mon 
till foe end of July (2548 9241) 


■ NEW YORK 

THEATRE 

• Three Tail Women: a moving, 
poetic play by Edward Albee, 
dominated by foe huge, heroic 
performance of Myra Carter. She, 

Jordan Baker and foe droll and 
delightful Marian Seides represent 
three generations of women trying 
to sort out their pasta 
(Promenade, Broadway at 76fo St, 
239 6200) 

• Angels In America: Tony 
Kushner's two-part epic conjures 
a vision of America at the edge of 
disaster. Part one is Mfltenium 
Approaches, part two Perestroika, 
p/ayad on separate evenings (Watter 

Karc, 219 West 48th St, 239 6200) 

• Four Dogs and a Bone; John 
Patrick Shante/s satiric comedy 
about nxjvie-rriaWng and power 

plays In Hollywood (Lucffle Lortel, 
121 Christopher St, 924 8782) 

• Laughter on the 23rd floor: 

Neil Simon’s 27fo 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 46fo St, 307 4100) 

• The Sisters Rosenswaig. Wendy 
Wasserstein’s most successful play 
to data, a comedy with serious 
undertones about foe reunion in 
London of three American Jewish 
sisters (Ethel Barrymore, 243 West 
47th St, 239 6200) 

• An Inspector Cate: J.& 
Priestley’s 1947 mystery thrffler In 
an award-winning production from 
Britain’s National Theatre, directed 
by Stephen DaJdry (Rpyafe, 242 
West 45th St, 239 6200) 

• Carousel: Nicholas Hytneris 
bold, beautiful National Theatre 
production from London launches 
Rodgers and Hammerstefn towards 
the 21st century (VMan Beaumont, 
Lincoln Center, 239 6200) 

• Tommy: a musical written and 
composed by Pete Townsbend, 
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) 

• Damn Yankees: the big musical 
hit of 1955 is bade in its first 
Broadway revival, with Victor Garber 
as the Devfl and 6ebe Neuwirth 

as Lola. The cfeectar. Jack O'Brien, 
has extensively re-written the story, 
about a baseball ten who sells his 
soul to rescue his favourite team 
from a losing season (Marquis, 
Broadway at 45fo St, 307 410Q) 

• Crazy for You: tire musical 
based on Gershwin’s Girl Crazy 
recently passed its second 
anniversary on Broadway. A 
Wghfljtftf of this gfitzy 
e ntertai n men t is Susan Stromal’s 


choreography (Shubert, 225 
West 44th St. 239 6200 ) 
DANCE/MUSK) 

Avery Ffsher Half The Lincoln 
Center's summer concert series, 
the Mostly Mozart Festival, opens 
on July 5 with a programme 
featuring baritone Thomas Hampson 
in Mozart arias and Shura 
Cherkassky playing Chopin. The 
festival runs tin Aug 20 (875 503(9 
Metropolitan Opera The Royal 
Ballet opens a two-week season 
on July 6 with Anthony DoweH's 
production of The Seeping Beauty. 
Tin season also features 
MacMillan's MayerSng and a mixed 
bin Including Ashton’s A Month in 
the Country. This Is the Royal 
Baiiefs first visit to New York since 
1991 (362 6000) 

JAZZ/CABARET 

• Hig Wights of the JVC jazz 
festival this week include Dick 
Hyman tonight at the Town HaU, 
the Carnegie Hall Jazz Band and 
Lincoln Center Jazz Orchestra 
tomorrow at Avery Fisher HaU, 
pianists Roland Hanna and Barry 

Harris at the Town Hall on Wed, 
and a free late afternoon concert 
at Bryant Park on Thurs featuring 
Mingus Big Band, Chico Freeman 
quintet. Jay Haggard band and the 
trios of two terrific young pianists, 
Cyrus Chestnut and Jadcy 
Terrasson. Guest artists at Carnegie 
Hail and Avery Fisher Hall over foe 
weekend include Gerry Mulligan, 
GBberto Gfl, Caetano VeJoso, Tito 
Puente, David Sanborn and Roimy 
Jordan (Avery Fisher HM: 875 5030. 
Carnegie Halt 247 7800) 

• Sensuous R&B singer 
Cassandra Wilson works her blue 
magic on Wed and Thurs at Bottom 


Line, 15 West 4fo St (228 6300) 

• Singer and pianist Kurt Wleting 
begins a two-month engagement 
tonight at Carlyle Hotel, Madison 
Ave at 76th St (744 1600) 

■ PARIS 

DANCE 

• Paris Opera Ballet has a 
programme of 20th century classics 
tonight and tomorrow at Palais 
Gamier, comprising works by 
Antony Tudor, Paid Taylor and 
Kenneth MacMillan. This is followed 
on Sat by the San Francisco Ballet: 
its week-long residency featues 

two mixed bite, including 
choreographies by Balanchine, Mark 
Moms, Heigl Tomasson and Agnes 
de Mffle (4742 5371) 

• The Nureyev production of La 
Bayad&re is revived on Wed tar 

a two-week run at the Bastffle (4473 
1300) 

• Compagnie Phffippa Genty is 
in residence at Theatre de la Ville 
tBI Thurs (4274 2277) 

OPERA 

Basfffe Carmen runs tin July 23 
with changing casts including Marta 
Senn/Kaforyn Harries/Boatrfee 
Uria-Monzon in the title role, Sergey 
Larin/Alberto Cupido/Daniel 
Galvez-Vaftejo as Don Jose and 
Alan Vembes/GJno Quilica/Hany 
Peelers as Escamillo. Jose- Lute 
Gomez's staging is conducted by 
Serge Baudo/Cyril Dlederich. This 
week's performances are tomorrow 
and Fri (4473 1300) 

Opfrra Contique Roberto Alagna 
and Nuccia Focile head the cast 
ki Gounod's Rom6o et Juliette, 
conducted by Michel Plasson and 
staged by Nicolas Joel. This week's 


performances are tomorrow. Thus 
and Sat with three further 
performances next week (4286 8883) 
Chfrbedet A new production of 
Wagner's Ring has just opened, 

'm a staging by Pierre Strosser 
conducted by Jeffrey Tate. The cast 
Is headed by Robert Hale, Sabine 
Hass and Karen HuffstodL There 
are performances of Das Rhelngold 
on Wed and Sat and Die WalkQre 
on Thurs and Sun. The final two 
parts of the cyde wffl be staged 
in October (4028 2840) 

CONCERTS 

Safie Pteyel Tomorrow: Leif 
Segerstam conducts Orchestra de 
Paris in works by KoechKn, Ravel, 
Aubert and Dukas, with piano soloist 
Claude HeHfer (4561 0630) 
Saint-Denis Tomorrow (Basfflque): 
Jean-Ctaude Casadesus conducts 
Orchestra National de Lille In a 
Mahler programme, with vocal 
soloists Josfr van Dam aid Veronica 
CangemL Thurs: Marek Janowski 
conducts Orchestra Phffliarmonlque 
de Radio France in a Schubert 
programme, with vocal soloists 
including Ufflan Watson, Nathalie 
Stutzmann and Francois Roux. Fri 
(L&gfon cTHomeurj; Dee Dae 
Bridgewater and Harlem Boys Choir 
(4613 1212) 

JAZZ/CABARET 

Janfa Carter, the versatile American 
singer and comedienne, opens a 
two-week residency tomorrow at 
Lionel Hampton Jazz Club. Music 
from 10.30jpm to 2 am (Hotel 
Meridten Paris Etoile, 81 Boulevard 
Gouvion St Cyr, tel 4068 3042) 


ARTS GLIDE 

Monday: Performing arts 
guide city by city. 

Tuesday: Performing arts 
guide city by dty. 

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

European Cable and 
Satellite Business TV 

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

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronews: FT Reports 0745. 
1315, 1545, 1615, 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Supar Channel: FT 
Reports 2230 

Sky News: FT Reports 0430. 
1730; 



20 


PPfATtffTAT. TIMES MONDAY JUNE 27 1994 


Why the dollar 
may be oversold 


P resident BiU Clinton is 
right to argue there is 
something puzzling 
about the degree of 
downward pressure cm the dol- 
lar. Currency crises usually 
erupt when as exchange rate 
has been field at an artificially 
high level tor too long or when 
the economic outlook is 
clouded by same grave imbal- 
ance. Neither condition applies 
in the US today, so the dollar 
may prove more resilient riv* 71 
some “gurus" expect 
By most objective criteria 
the dollar is undervalued 
rather than overvalued, 
absurdly so In the case of the 
yen. And, as Mr Clinton has 
stressed, the economic funda- 
mentals are mostly encourag- 
ing. The US economy has been 
growing since early 1991. Busi- 
nesses are expanding indus- 
trial capacity: gross fixed 
investment rose 12 per cent in 
the year to the first quarter. 
Productivity growth and corpo- 
rate profitability are impres- 
sive. And, although the prices 
of pom e commodities are ris- 
ing, upward pressure mi wages 
and (whinner prices remains 
quite subdued. 

Some investors believe that 
growth prospects are better 
still in Europe and Japan, 
which are only just emerging 
from recession. But recovery in 
these regions could easily fal- 
ter (as happened in the early 
stages of the US upturn), espe- 
cially if the yen and D-mark 
soar to ridiculous levels. Cur- 
rency volatility aside, it is rash 
to assume that returns on. 
investment will exceed those 
in the US, where growth is so 
much better established. 

Pundits in small open econo- 
mies such as the UK under-es- 
timate the US’s ability to ride 
currency storms. The “failure" 
of concerted intervention on 
Friday has not created a 
national crisis, as it might 
have done in Britain. The front 
pages of the Sunday Washing- 
ton Post and New York Times 
contained no reference to the 
dollar. This reflects the instinc- 
tive view of most Americans 
that their economic futures 
will be determined mainly by 
their own efforts in this hemi- 
sphere. There is some concern 
that a failing dollar may push 
up long bond yields and hence 
mortgage rates. But most 
observers here are guessing 



MICHAEL PROWSE 


that, with yields already 4-5 
per cent in real terms, the bulk 
of tiie adjustment has already 
occurred. 

Trade (the average of 
imports and exports) accounts 
tor only about 11 per of US 

natio nal irmmo | and much Of 

that is with Canada and 
Mexico, nations whose curren- 
cies are closely linked to the 
dollar. The US thm thinks and 

acts much as the European 
Union would do if it ever man- 
ages to create a single cur- 
rency. Much of the point of a 
single currency is to prevent 
Europe being buffeted by 
adverse international trends; 
the US has been in that happy 
condition tor 200 years. 

But surely the US is vulnera- 
ble because it is a net interna- 
tional debtor, having run a 
trade deficit for many years? 
This is a small problem. The 
net debt Is still tiny relative to 
tiie size of the US economy. 
The trade deficit has expanded 
shaipiy since last year but tins 
mainly reflects growt h differ- 
entials among the leading 
economies. This year it will 
reach only 2 per cent of GDP, 
tor below the ae par cent peak 
hit in the mid-1960s, and quite 
manageable in a world of 
mobile capital Since US 
exports axe likely to grow rap- 
idly as growth accelerates in 
Japan and Europe, the drfirit 
may shrink next year. 

Markets should also note 
that the Clinton administra- 
tion is. finally, clarifying its 
policy on the dollar. Until 
recently traders assumed that 
if talks on opening the Japa- 
nese market were going hacBy, 
the US would favour a stronger 
yen. as an alternative way of 
squeezing tiie Japanese: Scene- . 
times senior o fficial s directly 
encouraged such an interpreta- 
tion: *Td like to see a stronger 


yen.” Mr Lloyd Rentem the 

Treasury Secretary, told 
reporters at an infamous meet- 
ing at the National Press Club 
last year. 

That kind of rash talk is now 
history. The yen has appreci- 
ated 18 per cent since Mr Clin- 
ton tnnV nfficft — enough for 
anybody. Accordingly, in early 
May, Mr Benlsen said he saw 
“no advantage in an underval- 
ued currency”. Late on Friday 
afternoon, a senior Treasury 
nffiriflt (no for guessing 
whom) took the new policy one 
step further. The Clinton 
administration had intervened 
on Friday, he said, “to demon- 
strate that tt prefers a stronger 
dollar”. Underfiring prmrf, 
he added; “It is our view and 
the GTs that Anther apprecia- 
tion of the mark and yen 
would be counter productive 
tor global recovery.” It is safe 
to assume that Mr Beutsen will 
also soon speak of “pr efe rri n g" 
a stronger dollar. 

The US view is that Friday’s 
intervention did not toil 
because it was intended to 
send a message rather than 
dramatically alter exchange 
rates. The message is that the 
US and its Group of Seven 
partners do not want the dollar 
to toll further. Markets, of 
cofifcse. are at liberty to ignore 
this advice. 

But if they do, US officials 
are unlikely to The US 
lived through an extraordinary 
appreciation of the dollar in 
tiie mid-1980s; it is equally 
capable of liawtKny an erratic 
depredation, indeed some offi- 
cials probably regard depreda- 
tion as the lesser evil as it 
would accelerate the Btrift in 
resources from services to 

wanuftfftny ing 

The Federal Reserve is less 
worried about dollar depreda- 
tion today tiiHTi in the “Garter 
crisis” of late 1970s because 
growth is solid tnflntHnm is 

under much better control. 
There is little chance that the 
Fed wlQ. jack up interest rates 
sharply in order to “defend” 
the currency. That would sim- 
ply play into the hands of spec- 
ulators who would never be 
satisfied. R is likely, instead, to 
focus matoly on the outlook for 
US inflation and growth. Rates 
wffl rise further, but as part of 
the - measured ti ghtening of 
monetary policy underway for 
domestic reasons. 


R arely has there been a 
week in Hong Kong 
which promises so 
much as this one. 
Britain and China may he dose 
to striking two agreements -.. 
on the financing of the colo- 
ny’s new airport and on the 
use of military land after Chi- 
nese sovereignty resumes in - 
1997. These are vital to the wel- 
fare of the colony and its 6m 

frihahtten fa 

In addition, on Wednesday 
Hong Kang's Legislative Cowm- 
en (LegCo) debates Governor 
Chris Patten's plans to 
Increase democracy ahead of 
the transfer and will settle, 
finally, whether to accept his 
proposals tor the last elections 
under British rule, dr adopt a 
watered-down version. 

The juxtaposition of these 
events most be encouraging 
tor Mr Pattm. An agreement 
on the airport used to be 
thought by his critics, to 
depend on Britain capitulating 
cm his political reform pack- 
age. Yet China, which has 
fought hard against the gover- 
nor’s proposals, seems to have 
confounded the experts and 
separated the political and eco- 
nomic 

This apparent change 6f 
heart - though few would be 
more optimistic until the air- 
port and militar y land rivals 

are actually agreed - suggests 
that in the past Britain may 
have misjudged Beijing's strat- 
egy towards Hong Kong. R 
would be fboUdi to hefieve that 
all problems dividing the UK 
«mH rthfna wiTl be miraculously 
solved if agreements over air- 
port fmarw-P nnrl miHtaiy bmH 

are struck. But the official 
advice British ministers were 
used to receiving suggested 
that such deals would have 
been impossible; ministers 
were toM th at China would not 
subordinate political interests 
to Hang Kong's economic can- 
cams. 

Bering's leaders have shown 
themselves to be much more 
pragmatic Qian these advisers 
expected. They realise that in 



in a 


three years they will take 
charge of one of the most 
highly developed economies 
which produces the equivalent 
of a quarter of China’s output 
In a territory just 0.01 per cent 
of the mainland's land 
Beijing knows that manag in g 
the transition will be consider- 
ably more difficult without 
Britain's cooperation. 

R is not surprising, there- 
fore, that China shn nM want to 
see the completion of two 
large, complex civil engineer- 
ing tasks: the con str uction of a 
new inter natio nal airport &t 

Chek Lap Kok to replace Hong 
Kong’s crowded Kai Tak air- 


FOR THE FULLEST 
FLAVOUR OF 
WIMBLEDOIM 



CEE PAGE 330. 

For the next two weeks, the big guns in tennis are gathering 
at the All-England Club. But the best service on any court will 
come from BBC Ceefax. 

A single page number will give you instant access to 
up-to-the-minute scores from every game; to full results and 
details of how the draws are developing; to match reports 
on key contests; to each day's order of play, 
as soon as it's announced; and to ail the news and views 
that matter, from the courts and from behind the scenes. 

In fact, whenever you want a complete Wimbledon 
up-date, Ceefax will serve it to you on a plate. 


EEEFHK 


First with the facts 


Simon Holberton says practicalities are-becoming 
more important in An^o^Chinese talks on Hong Kong 



Artist’s impression of EongKong’s controversial new airport, and, inset, the governor, Chris Patten 


port; and a naval base cm Sto- 
necutters Island, in Victoria 
Harbour whose construction 
depends on a deal over the 
fut ure use of military land. 

Beijing's new enthusiasm far 
a greement no doubt 
helped by the concessions it 
hag won from Britain. 

On the airport project, Bei- 
jing has, during two years of 
negotiations, persuaded the 
Hong Kong government to 
increase the equity it will 
invest in the HK$83.3bn airport; 
and connecting railway project 
from HK$16.4bn to HEJ8fi3hn. 
The remain portion, to be 
financed by long term borrow^ 
mg, has been cut by the corre- 
sponding amount to about 
Hryahn nhina hay been 
determined to minimis e tiie 

amnimt of public debt it Wfll 

inherit in 1997 - so tiie project 
will be financed with a tor 
higher proportion of equity 
than would be considered 
financially prudent in most 
developed countries. 

After a bilateral meeting on 
Friday, tiie British Chinese 
sides Instructed officials to 
draft a detaD ed agreement The 
main sticking point is the fain 
of words China, wffl use to reas- 


sure hflwlrffrQ that IpnfHng to 
tiie airport and railway corpo- 
rations will be secure. There is 
optimism that ag reemen t ran 
be roadbed though ominously 
it is tiie same obstacle that 
Britain tolled to s ur mo unt in 
secret talks with China three 
years ago daring an earlier 
attempt to secure the airport’s 
future.. 

The gains .-Beijing hag made 
in its taTk» with Britain over 

Beijing knows the 
transition will be 
more difficult 
without Britain’s 
co-operation 

military la nd have not been 
made as public. But China jg 
believed to "have forced the 
British, into accepting that a 
larger portion of c u rren t mili- 
tary gttpg ghnnM be transferred 
to the . People’s Liberation 
Army , rather than banded over 
to the Hang Kang government 
far redevelopment 
hi addition, the Hbng Kang 
government will build a -'400 
square metre part off Stonecut- 


ters island for the PLA navy. 

The stalling paint has been a 
apparently technical point: 
whether Britain win agree to 
act as a “guarantor” of the 
project in the extremely 
unlikely event of Legco refus- 
ing to vote the approximately 
HK$&8bn needed to build the 
new base and refurbish other 

militar y friteg that rthfna wffl 

inherit British and Chinese 
officials meet 'again today for 
Anther discussions. The result 
of a long negotiating session 
over the weekend suggested 
the Chinese may have drawn 
back from an early settlement 

With their sense of history, 
the Chinese may anyway wish 
to postpone a deal until at least 
Wednesday when the Black 
Watch l a ghn ai i l of the BrMah 

army “beats the retreat” for 
the last time In Hong Kong, 
marking the end of almost 150 
years in which at least one 
British regiment has been sta- 
tioned in tiie colony. 

That mnid ra<«™ a deal on 

militar y land noinridmg with 

tiie LegCo vote on Mr Batten’s 
democracy legislation. His 
plans would make Legco more 
repr ese nta tive of the colony's 
population. Like the airport 


_ the 

' outcome of tiie vote hangs in 
the balance. Mr Patten's advis- 
ers over the week- 

end that they had only 26 cer- 
tain votes, out of a Legco g 

membership of 60, for his bill - 

although they are confident 
three or four other legislators 
can be pessuaded to vote with 
tiie government 

But the vote may be deter- 
; mined by the tactics Beijing 
adopts. The Liberal Party, 

' which has is members in 
LegCo, has been lobbying inde- 
pendent and pro-China mem- 
bers to support its “middle 
way” - amendments to Mr Pat- 
. tan’s proposals which fellow 
more closely what China is 
»«nww»J to want R suggests, 
for example, that nine new 
constituencies to be created far 
• the 1995 Legco elections, 
flhnuM be restricted to a total 
of 132,000 business voters, 
rather than the ?-3m extra vot- 
. ere who Mr Fatten, wishes to 

The vote could swing against 
Mr Fatten if the three Legco 
representatives allied to Bei- 
jing side with the Liberal Party 
rather than abstaining. The 
signs are that China has yet to 
decide its strategy. 

Mr Tsang Yok-sing, chair- 
man of pro-Beijing Democratic 
Alliance for the Betterment of 
Hong Kong, hints members of 
, the Chinese government are 
divided. “Some believe if we * 
adopt tiie Liberal Party’s pro- 
posals we can have a much 
smoother transfer of power in 
1997,” he says. “The 1995 elec- 
tions would fit in better with 
the Basic Law [Be&mg's mini- 
constitution for the colony] 
than Mr Patten's 1992 propos- 
als. 

“But others think that if 
China takes a positive attitude 
ft could be interpreted that the 
LegCo decision has validity. If 
. China were to accept Legco’s 
vote people would also ques- 
tion the need for Sino-British 
talks in the first place.” So tor 
China has seen LegCo as 
merely an “advisory body” to a 
colonial regime. 

Whatever the result of 
Wednesday's vote ft will mark 
a watershed, finally setting in 
concrete the way politics will 
be conducted in the last three 
years of British rule. While 
rows over Hong Kong’s politi- 
cal development may cloud 
Anglo-Chinese relations from 
tim» to Hwm* they will no Inn- 

ger form a obstacle to tiie prac- 
tical business of transfering 
sovereignty. That bodes well 
far iteaia on the airport and 
military land, even if the con- 
junction of -events this week 
ultimately proves too much for 
China to digest at once. 


LETTERS TO THE EDITOR 


• Number One Southwark B: 

Fax 071 873 5938. Letters transmitted should be deady typed 


London SE1 9HL 

not hand written. Please set tox for finest resolution 


Hats off to 
thinkers 

From Mr Edmond Jackson. 

Sir, If Edward de Bono 
(Letters, June 23) considers 
himself a philosopher, ft is odd 
that he castigates Lucy Kella- 
way*s article (“Put on your 
thinking caps", June 17). 

I certainly did not feel “nan- 
nied” when reading ft; indeed, 
a sense of enlightenment. It 
was good writing because it 
succinctly clarified de Beam’s 
latest thinking fashion, with 
shrew ed scepticism. 

Surely tiie essence of philoso- 
phy is a creative pursuit of 
new ideas - which are then 
criticised vigorously, to alter 
our very p a radi g m s of thought 
In such a contest there is no 
time far personal pride. 

Edward de Bono’s reaction- 
ary tone could imply that he is 
more concerned to defend the 
commercial prospects of his 
“Six Hats” approach, than gen- 
uinely advance understanding. 
This is not good philosophy. Its 
best thinkers have usually 
been absorbed in ideas for 
their own sake, not marketing 
potantiaL 

A reason for reading the FT 
is articles which inform and 
challenge us to think - with- 
out a need for gurus. Hats off 
to Lucy Keflaway! 

Edmond Jackson, 

Cherries, 

Butlers Dene Road, 

WokOngham, 

Surrey CR3 7HB 


Council must be more open 


From David Martin MEP. 

Sir, I sympathise with David 
Gardener's frustration in his 
a t t emp t to gain selected voting 
records of ;the 13 member 
states of the European Union 
CEU unable to provide minis-, 
ters* voting record” June 22). 
The Coimcfl’s new code on 
public access to information 
does not address the issue it 
was established to deal with; 
public alienation from the pro- 
cess of European Union. The 
public are rightly disenchanted 


with such a secret and elitist 
body. 

When Lfaagtrirht brought in 
the new “codecision proce- 
dure" whereby the Commis- 
sion proposals require the 
approval both of the Council 
and of the European parlia- 
ment to become law, tiie Euro- 
pean parliament was happy to 
debate and vote on these issues 
in public. Not so the CounxdL 

Whereas no one is expecting 
that all executive .discussion 
should take place in public, I 


believe that one of the new 
measures brought forward at 
the review of the Treaties in 
1996 should be for the Council 
to meet in public when adopt- 
ing European legislation. The 
Council should also publish 
the results of all its votes. The 
340m people in whose name 
these laws are being made 
deserve nothing less. 

David Martin, 

4 Lottnan Street, 

Dalkeith, 

Midlothian BB32 IDS 


Rare opportunity for WTO to seize 


From Mr Barry L Freeman. 

Sir, You reported that the 
Mexican foreign ministry is 
consulting other governments 
about tiie possibility of Presi- 
dent Salinas getting the top job 
at the incipient World Trade 
Organisation (WTO) (“ Safina s 
may join race to head WTO", 
June 10). On June 15 you 
reported that Germany has 
made a formal bid for the WTO 4 
to move to Bonn (“Bonn* 
offered as base fin: WTO"). 
What is important Is that the. 
WTO be launched as a new and. 
powerful organisation, albeit 
with roots in the General 
Agreement on Tariffs and 
Trade, but not merely as a 
revitalised or remodeled Gait.' 
WTO will commence with 
more than 120 countries and 
will have broad powers to 


maintain and enhance the mul- 
tilateral trading system. Much 
can be learned from the Gatt 
experience over the past 
decades but that most be bal- 
anced fl gntmrf - the fort end pej.' 
ception that t he W TO is' a 
vastly different entity, in mem- 
bership. in powers, and in 
responsibilities. 

The idea of having a former 
bead of state of a major devel- 
oping country which literally 
bet the future of its economy 
on throwing open markets, 
joining Gatt, and welcoming 
import competition and foreign 
investments is a rare opportu- 
nity which should be seized. 
This is no reflection an the 
worth af the announced candi- 
dates who are competent 

However, w** SaBnas candi- 
dacy is an opportunity to be 


seized to reenforce the point 
that the WTO is both new and 
is to be one of the world's most g; 

important organisations. 

As for moving to Bonn, here 
again there is much to be said 
for a new location denoting a 
new organisation. The German 
bid should be seen in that light 
and weighed against the obvi- 
ous conveniences of remaining 
in Geneva where so many 
countries have joint missions 
to the WTO, WTPO, and 
UNCTAD. R inevitably raises 
the question of whether the 
worid needs all of these over- 
lapping organisations if the 
WTO becomes near universal 
in its membership. 

Harry L Freeman, 

27ie Freeman Company, 

4708 Dorset Avenue. 

Maryland 20815, US 


Rail men made outdated pay structure point seven years ago 


From Mr James Knapp. 

Sr, it is ironic that Robert 
Taylor should lead his report 
with a comment from Railtrack 
chairman Robot Horton com- 
plaining about an “outdated 
pay structure" (“ R ailt r ack 
takes Hu* r f n i b to modernisa- 
tion”, June 22). RMT (NOR) 
made this point seven long 
years ago. 

The existing pay structure 
has developed over d e cades. 
BR traditionally preferred to 
pay low basic rates of pay and 
build up earnings by overtime, 
supplements and allowances. 
This was 'because it was 
cheaper to employ labour an 
this basis. 

Incidentally, Robert Taylor 

TnlanriHwahmite onmo riamanbi 

in tire package. Isolation allow: 
ance is paid for isolating cur- 
rent and taking on extra 
responsibility in abnormal 


working conditions, not for 
working in an isolated area. 
But I am surprised that he 

mrritfl to wwmtton that the Orig- 
inal package of measures 
(ind rating the 5.7 per cent with 
strings offer) was a productiv- 
ity deal with a clause commit- 
ting the union to further pro- 
ductivity measures. The 
government with all the inept- 
ness we have now come to 
expect managed to blow the* 
deal out of the water, although' 
I believe it met the criteria ft 
seems so keen to defend. 

Changes in working prac- 
tices are not being opposed by 
RMT, although we have reser- 
vations about same elements 
Railtrack proposes. Job evalua-' 
tion for examtole, is not a pana- 
cea and our experience in 
other parts of tire industry is 
Quit, far from solving prob- 
lems, it creates new ones. 


RMT*s objections to the 
package put by Railtrack at 
A cas are, first ft does not 
address the claim and, second, 
ft is a very poor deal for signal- 
ling grades. Even if we ignore 
past productivity it does not 
recognise new productivity. 

At very best it means an 
average of £4 per week 
increase in gross earnings- The 
reality is Railtra c k cannot 
guarantee any increase for any 
individual because of tire way 
the package has been con- 
structed. Not only is job evalu- 
ation difficult to predict Rail- 
track admits it is not reedy to 
introduce annualised hours. 
Juggling existing monies from 
one pocket to another is not an 
increase .in pay. Furthermore, 
80 per cent of signalling grades 
win be considerably worse off. 

Mr Taylor asserts that RMT 
should have pressed file claim 


more resolutely in the past 
Does he mean that we should 
have taken strike action seven 
years ago as the only way we 
could have forced the issue? 
That is a strange argument for 
the FT to articulate. This dis- 
pute has to be resolved by 
talking to each other. 

As Mr Taylor reveals, the dif- 
ferences behind the rhetoric # 
are not unbridgeable. If the * ' 
gove rn ment leaves negotiators 
fa) settle the issues r ealistically 

we have already proved a deal 
Is possible. Transport secre- 
tary, John MacGregor’s latest 
intervention raises questions 
about his sincerity in seeing 
this straightforward industrial 
dispute resolved. 

James Knapp, 

National Union of Bad, Mari- 
time & Transport Workers 
Unity Bouse, 

Buston Bond, London NWl 




4 


FINANCIAL TIMES MONDAY JUNE 27 1994 


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FINANCIAL TIMES 

Number One Southwark Bridge, London SE1 9HL 
Tei: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Monday June 27 1994 


Europe’s 
Greek farce 


The European Union's weekend 
summit on Corfu was a fiasco 
from which none of the main pro- 
tagonists emerges with much 
credit. Not only did the leaders 
fail in their main task of rtcrnriing 
on a successor to Mr Jacques 
Dolors as European Commission 
president; they ended up in a 
slanging match of a vehemence 
and pettiness to match the worst 
Euro-rows of the mid-1980s. 

German Chancellor Helmut 
Kohl and French President Fran- 
cois Mitterrand must bear some of 
the blame, for attempting to ball- 
doze through their own candidate 
for the Commission post without 
proper prior consultation. Those 
countries which had misgivings 
about the way France and Ger- 
many handled the process ghrmid , 
in fairness to Mr J ohn Major, now 
make their position clear and 
insist on a more genuinely consul- 
tative approach. 

Even so, Mr Major, emerges as a 
sorry figure. By vetoing a candi- 
date agreed by all other U mem- 
ber states, be has once again cast 
himself as the spoiler of European 
politics. Given that he has vowed 
not to back down and that the 
Union cannot depart from its una- 
nimity rule for this appointment, 
he will almost certainly succeed in 
blocking Mr Jean-Luc Dehaene, 
Belgium’s prime minister. But fee 
price, in terms of a further reduc- 
tion in Britain's influence and 
credibility in fee EU, win be high. 

The real mystery is why Mr 
Major chose to behave this way. In 
the weeks before Corfu, it seemed 
that Britain would accept Mr 
Dehaene as a last resort. Mr 


Major’s main purported objection 
to Mr Dehaene - a ftlafm that he 
“represents a tradition of big gov- 
ernment and intervention" - 
seems implausible. The Belgian 
was put forward, not because he 
has strong ideological views, but 
for his reputation as a deal-maker. 

Mr Major’s other argument - 
that he wanted to demonstrate 
disapproval, widely shared by 
other member states, for the way 
in which the decision was being 
handled - strikes a slightly more 
resonant chord. But exercising a 
veto when all others have reached 
a consensus can scarcely be fee 
most effective way to influence 
fee subsequent process. 

Unfortunately, one is forced to 
conclude that fee veto was no 
more than an improvised and 
futile gesture to Tory Eurosceptics 
- fbtfle since no Commission can- 
didate who would Mwnmand a con- 
sensus cm the continent is likely 
to attract their support, and fee 
party’s civil war over Europe can 
now only deepen. 

It falls to Mr Kohl, who takes 
over the EU presidency this Fri- 
day, to pick up the pieces. He has 
called an emergency summit on 
July 15, and it seems likely that 
one or more compromise candi- 
dates will be considered. That 
would be desirable, if only because 
as Mr Tio haanft himgpif recognises, 
to press on would be to risk turn- 
ing a petty personal squabble into 
a crisis. Then, once the process is 
concluded, EU leaders need to 
show that they have learned fee 
lessons of Corfu by resolving 
never again to select a Commis- 
sion president in such a way. 


Work and benefits 


The greatest challenge faring the 
member states of the Organisation 


for Economic Cooperation and 
Development is to expand employ- 
ment opportunities. In most OECD 
countries, unemployment has 
become entrenched at unaccept- 
able levels which waste human 
resources and strain the social 
fabric. Rolling it back should be 
the top priority for governments. 

Welfare states need to be “re-en- 
gineered" so that they do not 
block fee creation of jobs. Much of 
the growth in the labour market is 
in low-paid, part-time and casual 
work. Yet welfare states continue 
to reflect the less flexible working 
patterns of earlier decades. They 
are largely designed to support 
male breadwinners during periods 
of temporary unemployment. 

As a result, benefits are often so 
high that they discourage the 
unemployed from taking low-paid 
work. Any income earned by 
wives is deducted from fee bene- 
fits paid to their h u s b ands. And 
the rates at which benefits are 
withdrawn as Income rises leaves 
those who take part-time work lit- 
tle or no better off. Welfare bene- 
fits thus trap their recipients out- 
side today’s more flexible labour 
markets, rather t han helping them 
back into work. 

The OECD Jobs Study, pub- 
lished earlier this month, set out a 
menu of options for reforming wel- 
fare states to promote employ- 
ment. These included widening 
the gap between benefit levels and 
after-tax earnings, linking benefits 
to participation in programmes for 
getting people back into work and 


earnings supplements for low-paid 
jobs. 

The UK is among the OECD 
members that have gone furthest 
in adopting such policies. But 
much more needs to be done, as a 
recent study from the Labour par- 
ty's Commission on Social Justice 
showed. The bureaucracy involved 
in the social security system dis- 
courages the unemployed from 
faking up the jobs on offer. Those 
who take low-paid jobs must 
endure weeks of financial insecu- 
rity before they receive family 
credit, the in-work income supple- 
ment. And the partners of unem- 
ployed men cannot take any sort 
of work without losing most of 
their earnings in reduced benefits. 

Better administration of benefits 
would help reduce these disincen- 
tives. But the benefits system 
needs to be radically shaken up to 
support people through periods of 
partial employment and low-paid 
work as well as during unemploy- 
ment. The aim should be to ensure 
that those who take any form of 
work enjoy higher incomes. 

The UK government’s decision 
to introduce a new jobseeker’s 
allowance for the unemployed 
from 1996 provides an opportunity 
for such reengineering. Yet as a 
result of a turf war between min- 
isters, responsibility for the new 
allowance is to be divided between 
two government agencies. This 
classic Whitehall compromise - 
complemented by the existing 
three-way split of training respon- 
sibilities - is a missed opportunity 
for which the unemployed will 
pay the price. 


Smashing bargain 


iw much can scientists 
isonably expect taxpayers to 
>nd on mariiinps to investigate 
! innermost secrets of nature - 
i fundamental particles and 
ces feat make up fee universe? 
e US Congress decided last 
tober that Sllbn was too much; 
cancelled the all-American 
perconducting Super Collider 
iter construction in Texas. 

Jow, an irresistible bargain is 
offer $L8bn for a smaller atom- 
asher to be funded by the 
ire industrialised world. That 
ihe price tag on fee Large Had- 
i Collider (LHC) which Cem, 
> European particle physics fab- 
itory, proposes to build in a 27 
jmetre tunnel beneath the Jura 
thills near Geneva. 
Infortunately fee Cem council 
led to give foil approval to fee 
iject last Friday. In a typical 
ro- wrangle, two of the 19 Cern 
mbers. Germany and the Ufo 

eked agreement in an attempt 
extract a larger contribution 
m the host countries. France 
1 Switzerland. But all delegates 
med confident that a conipno- 
« could be reached later this 
n Tner. 

lurope must agree as soon as 
sible, so that Cem fan 
rantage of the SSC s denuse to 
ke the LHC a truly interna- 
aal project. American phya- 
s are particularly keen to nego- 
e entry, so as to make use of 
scientific skills and 
t bad been devoted to fee 
ran project. The level ffU 
itribution suggested in manual 
missions - ^ 00 m. including 


equipment and cash - would sub- 
stantially improve the LHC’s per- 
formance. 

Once the US was involved, it 
would not be difficult for Cem to 
bring in Japan, Canada, Russia, 
India and other non-European 
nations that have expressed inter- 
est in the LHC. It would then 
become the world’s first global sci- 
entific enterprise and a model for 
future collaboration in “big sci- 
ence" projects that are beyond the 
means of even the richest country 
on its ow n. Th e next such fadhty 
might be ITER, fete proposed inter- 
national experiment in fusion 
power. 

The LHC will not match fee 
planned power of the 87km Texan 
mflfhinft But it will still smash 
together atomic particles with 
enough energy to recreate a 
microcosm of the new-bom uni- 
verse a million th of a affltonfe of 
a second after fee Big Bang. 

in that primordial fireball, scien- 
tists believe the “Higgs boson" 
particle held the secret of why 
some things came to weigh so 
mush more than others. The atom 
smasher may recreate this and 
other particles predicted by theory 
but never yet observed. 

These may seem abstruse sub- 
jects - and physicists certainly 
need to make more effort to 
explain their importance to non- 
scientists. But almost everyone is 
interested in the origi n s and 
future of our universe. So the 
world should not hesitate to spend 
a couple of bSlian dollars on a 
machine feat helps us to under- 
stand it. 


21 


Tokyo adjusts to 
tempestuous times 

William Dawkins says the downfall of Tsutomu Hata 
has far reaching implications for Japan and its partners 


ics company. “The collapse of the 



Prime rainfgfar Bata; the end of his rein was inevitable 


J apan's partners could be for- 
given for feeling soma alarm 
that fee world's second larg- 
est economy has just dumped 
its fifth prime minister in five 
years. 

The forced resignation of Mr Tsu- 
tomu Hata. one of Japan’s more 
competent leaders, after just 59 
days in office, has wider interna- 
tional repercussions than the depar- 
ture of his predecessor, Mr Morlhiro 
Hosokawa. 

The downfall of Mr Hata, a victim 
of Japan’s latest series of political 
brawls, makes it possible that 
Japan will, for the second year run- 
ning, snnd a laww duck h «iH of gov- 
ernment to next month’s Group of 
Seven summit in Naples. It is a 
symbol of the new instability of 
what used to be one of the world’s 
most stable political systems. 

Unless Japan’s politicians achieve 
a miracle and pull together a strong 
coalition in the next few days, who- 
ever represents Japan at the G7 will 
lack the authority to deliver a con- 
tribution to solving one of the 
world’s biggest economic difficul- 
ties, fee recent pl unge of the dollar 
to record levels against the yen. 

Whoever holds the precarious top 
job in Tokyo - a caretaker Mr Hata 
or Ms successor - wifl have httle 
rhnncp of obtaining a pre-summit 
resolution of fee dispute with the 
US over bow to curb the huge Japa- 
nese trade surplus. 

Tins increases the risk of another 
surgB of the yen on the foreign 
exchanges this morning, which 
would be an unwelcome blow to 
Japan’s fragile recovery and, as a 
consequence, threaten the economic 
health of its trade partners. 

Already, Mr Koji KaMzawa, for- 
eign minister in fee outgoing gov- 
ernment, hag had to cancel a week- 
end meeting with Mr Mickey 
Kantor. the US trade representative, 
because of fee hanging over his 
short ministerial career. Japanese 
trade negotiators report that it was 
hoffnming hard to matra progress in 
talks with the US last week, 
because of political indecision In 
Tokyo. 

It is cold comfort to Japan’s part- 
ners feat the downfall of Mr Hata's 
g n vp mmpnt fee shortest-lived ninc«» 
1945, was widely expected. The 
weekend’s events were the latest 
stage in a chain reaction started by 
a corruption scandal which precipi- 
tated last summer's downfall of th* 
Liberal Democratic Party, after 38 
years in power. 

Yet wider forces are also at work, 
suggesting that Japan's partners 

ishnnM adjust to fee fact that, it may 
be only at the £ait erf several years 
of wobbly coalition governments. 
The formerly stable structure of 
Japanese power has hwymw unbal- 
anced, argues Mr Kiyoaki tnfenrhi , 
a former ambassador to fee UN who 
is now senior adviser to Matsushita, 
Japan’s largest consumer electron- 


triangle Of politics , b usiness and fee 
bureaucracy is greater than foreign 
observers might think,” he said in 
an interview last week. 

“Now that one dominant party 
has ceased to exist, business no lon- 
ger knows where to go for favours 
and bureaucrats feel there is no 
power centre . . . Ihe whole cement 
of Japanese society has collapsed. 
It’s very read.” 

Japan’s influential bureaucracy 

hag a ttemp ted to fill s oma of fee 

vacuum created by the weak politi- 
cal leadership — and its inflnfrnrp 

may rise as a result of the latest 
government collapse. But not even 
Japan’s civil servants can set the 
political agenda. They would hate 
to be seen trying to do so, jud g in g 
by their hypersensitivity to criti- 
cism by the US and Japanese press. 

Mr Hata’s departure has an air of 
tragi -comedy, which illustrates the 
unbalanced state of fee nation 
described by Mr KikuchL His poli- 
cies and personality are popular 
and all mainstream politicians 
agree that Japan needs a stable gov- 
ernment now more than ever, to 
tackle its domestic economic prob- 
lems, the rise of the yen i*nd Hw> 
North Korean nuclear threat Mr 
Hata is untainted by allegations of 
corruption, imtika his predecessor 
Mr Hosokawa, brought down in 
April by LDP allegations of finan- 
cial impropriety. Mr Hata is. how- 
ever. tainted by his perceived close- 
ness to Mr Ichiro Ozawa, the 
government’s brilliant but unpopu- 
lar backroom strategist 

But for better or worse, the end of 
Mr Hata’s rein was inevitable. The 
LDP and Social Democratic Party, 
the second largest opposition group 
- both criticised for irresponsible 
behaviour in the Japanese press 
yesterday - had repeatedly warned 
they would irnmch a no-confidence 
motion as soon as parliament had 
passed this year's budget Ihe LDP 
saw a chance to return to power, 
while the SDP was partly motivated 
by revenge: the formation, of a cen- 
tre right bloc in the governing coali- 
tion caused the SDP to walk out of 
the Hata government depriving it 
of a majority, just after it was 
formed in April. 

True to its word, the LDP swung 
into attack straight after the budget 


cleared Parliament last Thursday, 
delayed by three months because of 
the wranghngs leading up to Mr 
Hosokawa' s departure. It took less 
than two days, until- Saturday 
morning, for Mr Wafa to discover 
the SDP was aalring an impossible 
price to come back into the coali- 
tion. It wanted Mr Hata’s head, pins 
a watering down of the tax reform 
plans eagerly hoped for by G7 mem- 
bers at fee July 8 summit to stimu- 
late Japan’s economy. 

After a lbhour meeting with Mr 
Ozawa, a pale and exhausted 
looking Mr Hata announced an tele- 
vision that he would step down. 

Japanese business leaders were 
relieved that Mr Hata chose to sac- 
rifice himself and leave it 19 to the 
opposition to form a new govern- 


ment, rather than fight it out in a 
general election. “That was the best 
decision Mr Ffafa could make," said 
Mr Shoichiro Toyoda, chairman pf 
the Kpidamy n amnnmic federation. 
The ensuing one-month election 
campaign would have paralysed 
economic policy, worsening the 
uristinp upheavals on the foreign 
exchanges when the yen’s recent 
rise already threatens a recovery in 
corporate profits. That, said Mr 
Hiroshi Salto, chair man of Nippon 
Steel, would have been the worst 
scenario for Japan. 

A majority of politicians agree 
that now is not the time for an 
election, as shown by a petition 
signed 10 days ago by 306 of the 511 
members of the lower house of Par- 
liament limy share Mr Saito's wor- 


ries. Just as Important, political 
funds are low after last year’s gen- 
eral election and a judicial crack- 
down on corruption. 

An election would have also 
delayed, maybe even prevented, 
plans to introduce a more stable 
and representative political system, 
due to be ready by fee autumn. The 
political reform scheme, supported 
by a powerful younger generation 
of politicians, but strongly opposed 
by the old guard, would encourage 
parties to win votes with policy 
ideas rather than favours. It marks 
a decisive push against the old-style 
backroom deal making feat was 
taking place in Tokyo at the week- 
end, in an attempt to form a new 
government. 

T he four bills needed to 
regulate political fund- 
raising and introduce a 
mix of single seat con- 
stituencies and propor- 
tional representation to replace 
Japan's unique multi-seat districts, 
passed parliament in January, An 
independent panel is now at work 
on the final stage, drawing up new 
constituencies, which could be in 
place by the autumn, unless an 
early general election under fee old 
system intervenes. 

The shape of the new order strug- 
gling to emerge from fee chaos 
depends on whether Japan can form 
a government able to stay in office 
until the new electoral system is in 
place. By yesterday afternoon, the 
signs were feat another unstable 
coalition could emerge in the next 
few days. 

Leaders of the LDP, New Harbin- 
ger Party, a centre-left LDP splinter 
group and the SDP said they might 
form an alliance, which would have 
a roughly 40-seat majority. This 
would be a curious turn of events, 
since the LDP and SDP were respec- 
tively in government and opposition 
for nearly four decades until last 
year. Such a coalition would be just 
as wobbly as the previous two, 
since the SDP*s policies are even 
more distant fee LDP than 

from Mr Hata’s alliance. 

Mr Hata's supporters, meanwhile, 
hinted that his resignation was a 
mere tactical retreat and floated the 
Idea of a new coalition with reform- 
minded members of the SDP and 
LDP. In theory he could become 
prime minister a g ain , following the 
example of former prime minis ter 
Mr Ichiro Hatoyama, who resigned 
anri achieved instant reincarnation 
in 1955. 

Political observers believe several 
general elections, under the new 
system, will be needed before a sta- 
ble two or three party balance 
emerges from the present ever shift- 
ing web of alliances between the 
record 11 parties represented in the 
lower house of parliament. Until 
then, expect fee unexpected from 
Japan. 


Design for an environmental agency 



The recent row 
surrounding Of gas, 
the UK gas industry 
regulator, over 
funding for The 
Energy Saving 

PFR*r>rjjF Trust has 

K&bted a central 

Li£Jl tension at fee heart 

of the government’s environmental 
policy. Having boldly committed the 
Conservative government to 
addressing the environmental 
agenda in 1988, Mrs Thatcher’s gov- 
ernment failed to resolve the prob- 
lem of who should pay the bUL 
Ofgas’s director general, Ms Clare 
Spottiswoode. rightly pointed out to 
the environment select committee 
that it was not her job to raise taxa- 
tion from gas consumers to pay for 
energy efficiency measures: tax. 
and therefore environmental policy, 
was the government’s job, she said. 

Such problems are not confined to 
gas. fan Hyatt, director general of 
Ofwat, fee water industry regulator, 
sees Ids job as being to curb the 
price escalator in water biffs, fit a 
politically brilliant campaign, he 
has out-smarted fee water quality 
regulators, particularly the 


National Rivers Authority, and 

manipnlatod public o pinion through 

his emphasis on the costs (but not 
the benefits) of the water industry’s 
environ mental spending. 

These examples illustrate a core 
problem: fee institutional separa- 
tion of environmental an *i economic 
regulation has left fee balance 
heavily biased against the former. 
Fra - the utilities - which are at the 
centre of environmental pollution - 
the costs of environmental clean- 
ups conflict wife the objective of 
holding down consumers’ bills. 

Fortunately, the government has 
a good opportunity to sort out fee 
current muddle. One commitment 
made as a result erf Mrs Thatcher's 
initiative, included in the 1990 
White Paper, This Common Inheri- 
tance, is the creation of a single 
environmental agency, to bring 
together the various strands of envi- 
ronmental policy under a single 
umbrella to promote integrated pol- 
lution control. That commitment is 
finally coming to fruition: the 
deregulation bill currently going 
through parliament paves the way. 

ahead of primary le gislat ion 

However good the idea in theory, 


its practical effect will depend upon 
its design and the purposes to 
which it is put Initial steps have 
been dogged by Whitehall infight- 
ing, and a battle over jobs and func- 
tions between the pollution regula- 
tors and bodies wife pollution 
responsibilities. 

The real issue, however, is not 
about the precise institutional jig- 
saw. It is about the new agency's 

Fortunately, the 
government has a 
good opportunity to 
sort out the current 
muddle 


rationale: what is it f Or? 

To the traditional environmental 
regulators, the environment agency 
is effectively a “gathered fields” 
exercise, creating an umbrella 
under which technical regulation 
by experts win be coordinated, ft is 
an institutional tidying-up exercise. 
To critics, however, the agency pro- 
vides the opportunity for thorough- 
going reforms of environmental pol- 


icy. Their a genda includes separa- 
tum of regulation from productive 
activities, and adoption of a more 
economic approach to setting tar- 
gets and the use of market instru- 
ments. They see the break-up of the 
NRA through separation of flood-de- 
fence from water quality regulation, 
integration of cost-benefit analysis 
into the current techniques-driven 
rules, and introduction of pollution 
charges and permits. 

The arguments for an environ- 
ment agency based upon sound eco- 
nomic principles go beyond institu- 
tional purity. They offer real hope 
for resolving many current 
impasses. First, the introduction of 
cost-benefit analysis would tackle 
head-on issues raised by Ms Spottis- 
woode and Mr Byatt Cost-benefit 
analysis would help identify 
whether, for example, energy effi- 
ciency schemes were economic in 
the wider sense, once pollution had 
been properly incorporated, rather 
than on merely private calculations. 
Broad attacks on environmental 
concerns by regulators would no 
longer be so crudely effective. 

Second, environmental charges 
would raise revenue. While purists 


argue about primacy of the Trea- 
sury, recent experience indicates 
that government funding for envi- 
ronmental clean-ups is unlikely to 
be forthcoming. To tackle pollution, 
a degree of hypothecation is essen- 
tial. Charges are the mechanism. 

An environmental agency, 
soundly based, with a dear answer 
to those who focus only on the costs 
and with a system of pollution 
charges to support it, is within the 
government’s grasp. But if tradi- 
tionalists stick to their conventional 
tools, if the Treasury stands in the 
way of pollution charges on 
grounds of its unique responsibili- 
ties, and if utility regulators are 
allowed pre-eminence erf costs over 
benefits, then the new agency may 
prove not only a missed opportu- 
nity, but an expensive exercise 
in rearranging the institutional jig- 
saw. 

Dieter Helm 


The author is fellow. New College 
Oxford, and director, Oxford Eco- 
nomic Research Associates 


Observer 


Taxing times 
in Zurich 

■ When last year Switzerland 
finally introduced a value added 
tax, the Swiss government 
naturally took it for granted that 
tiny Liechtenstein would join in. 

Alter all. the postage-stamp 
principality has contentedly 
co-existed in a customs and 
currency union with Switzerland 
since 1923. It also allows the Swiss 
finance ministry to collect die 
existing turnover tax on goods on 
its behalf. 

But the mouse has squeaked 
‘enough’. As a fully-fledged member 
of fee United Nations and the 
European Economic Area - 
Switzerland is neither - 
Liechtenstein feels it is time it 
collected its own taxes. Is this a 
canny of slipping in some 
VAT loopholes, tempting business 
a way from Zurich? 

Not at afi. “We have said our 
VAT will be the same so there will 
be no competitive advantage. We 
think we are a sufficiently 
trustworthy partner for 
Switzerland.” opines a 

T.jpchtwidrin diplomat 

In other words: do not even think 
of putting your armoured bicycles 
on our lawn. 


Gold digger 

■ British inventors, arise - you 


have nothing to lose but your 
overdrafts. 

Sir Anthony Bamford. chairman 
of JCB - manufacturer of the 
ubiquitous yellow earth-digger - 
is considering offering venture 
c a p i t a l to assist British inventors 
and entrepreneurs who need 
hacking for practical, innovative 
projects in desi gn and engineering. 

Sir Anthony, a champion of all 
thing s British, will also plough 
in the considerable back-up skills 
of his company in marketing and 
distribution. He says there is a 
nucleus of knowledge and skin - 
and a modest pot of gold - at JCB. 

All of which might just set a 

young British inventor on the road 
to success - so emulating “Mr JCB/ 
his father Joe Bamford. 


Crunched gears 

■ And now, the end of the road 
for the car that made a Lada feel 
luxurious - the Zaporozhets, the 
box that mobilised Soviet citizenry. 

Ihe last rolls through the factory 
gates an Thursday, 34 years after 
Nikita Khrushchev, who called 
it the “tin can," first gave the 
go-ahead for its mass production 
in the Ukraine. 

Viktor Suzalanko, chief of 
research at the plant is more polite, 
describing it as a “no-frills car,” 
adding feat “style or how much 
ftid it drank was not an issue when 
it was designed. The key question 
was whether it could cope with 
the rotten roads in the Soviet 



TD walk you part of Ibe way home 
and then yon Ye on your own, 
MrUnsworth’ 


Union." 

Foreign competition and inflation 
have hppn fis undoing In 1980 the 
basic model cost 20 times average 
monthly pay. but today it is 87 
times the typical Ukrainian 
monthly salary, equivalent to $870. 

At that price, surely there’s a 
thriving export market somewhere? 


Unfocused 

■ Problems at Cable News 
Network? Ted Turner’s CNN, fee 
24-honr news television station, 
which became required viewing 
during the Gulf War, appears to 


be stru g glin g to retain viewers back 
home. 

Its US audience dropped by some 
25 per cent in the first quarter of 
this year; revenue fell about 7.5 
per coot 

“Than was a slow news 
environment,” says a CNN 
spokesman. So good news is bad 
news? 


Diouf s manna 

■ Ahnost six months after taking 
over as director-general of the UN’s 
largest specialised agency, the 
Rome-based Food and Agriculture 
Organisation, Jacques Diouf has 
just met the press. 

He announced a shake-up for 
the FAO, with plans to winkle out 
200 of the FAO’s L500 Rome-based 

experts from their doles vita, 
shifting them to the capitals — and, 
horror erf horrors, perhaps even 

thB fields - of Africa and Asia. 

Could Diouf be implying some 
criticism of his long-standing 
predecessor, Edouard Saouma? 
flglfPd one diffiden t hark 
Hardly. “I am not here to make 
judgments,” replied Diouf. Not even 
about the sense of keeping the 
remaining L30Q experts beavering 
away in Rome? 


Talent spotted 

■ One more tale to add to fee 
Queens Moat Houses' collection. 
When the bankers to the 


heavily-indebted hotel group were 
scrabbling around fast year 
wondering what to do as deadlines 
approached, they decided In 
desperation to call in an 
accountancy firm specialising in 
corporate breakdowns. 

hnag fao the bankers' horror on 
finding that most of fee experts 
had departed for the Society of 
Practitioners of Insolvency annual 
junket - in Melbourne. 

Fortunately, Alan Griffiths, head 
of “corporate recovery” accountants 
Grant Thornton, was still manning 
his phone. He got the job while 
his competitors got sunburn. 

Barclays, fee lead bank, stresses 
that Griffiths always had been its 
first choice. “We had our fingers 
crossed that he would be there.” 

Of course. 


Own goal 

■ The BBC’s exhausting, sorry 
exhaustive, coverage of the football 
world cup has been interspersed 
with what the corporation calls 
“mood music” which is, it points 
out, “entirely unrelated” to the 
different uatirawl teams. 

That is a relief. 

For the tune that pipes up when 
Camero onian players appear sounds 
very like The lion’, by Senegalese 
singer Yousso NDour. described . 
in the record's sleeve notes as “a 
sprightly, rallying tribute to 
Senegal's national heroes, its soccer 
team.” 

Oh well: big place. Africa. 






22 


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Grand coalition possible in Saxony-Anhalt . Brussels 


THE LEX COLUMN 


Close result forecast 
in German state poll 


By Judy Dempsey In Berlin 

German chancellor Helmut 
Kohl’s Christian Democratic 
party and the opposition Social 
Democratic party were last night 
running neck and neck in the 
first east German state election 
since 1990. 

According to exit polls con- 
ducted by state-run ZDF televi- 
sion, for the election in Saxony- 
Anhalt state, the CDU was edg- 
ing ahead with 3&5 per cent of 
the vote, and the SPD, led by Mr 
Rudolf Scharping, had polled 34.4 
per cent, prompting speculation 
that the two parties might form a 
grand coalition in the state. 

The election is seen as a 
pointer to the remaining state 
elections and to the federal elec- 
tion. on October 16. 

The CDU, which had steadily 
moved up in the state opinion 
polls over the past few weeks, 
had gained 39 per cent in 1990 
and had formed a coalition gov- 
ernment with the Free Demo- 


crats, which, gained 134» per cant 
But last rdght the FDP was 
trailing with less than 4 per cent, 
too low to enter the state parlia- 
ment, leaving the CDU without 
its traditional coalition partner. 

The pressure facing Mr Kohl’s 
CDU, which stall governs three of 
the other eastern states, is 
whether the FDP, its Junior coali- 
tion partner, can recover from 
yesterday's debacle to retain its 
national representation in Octo- 
ber. 

If the e xit polls are confirmed, 
the SPD - whose share of the 
vote yesterday rose 8 percentage 
points compared with 1990, which 
is is seen as a personal success 
for Mr Scharping - is in a posi- 
tion to form either a grand coali- 
tion with the CDU. It may 
Instead seek to open separate 
negotiations with the Bflndis 9 Of 
Greens, the environmental party. 
The (keens’ provisional dare of 
the vote rose to 5.7 per cent from 
&3 per cent in 1990. 

“We will be constructive no 


matter what we decide," said Mr 
Christoph Berager, * the CDU 
prime minister of Saxony-Anhalt 
“We will have to see the final 
results." Mr Bergner is the third 
prime minister since 1990. The 
two previous ministers were 
forced to resign following corrup- 
tion scandals, which tarnished 
the party's Image in the state. 

The SPD’s Mr Reinhard 
HQppner, the opposition leader in 
parliament, said that “if we opt 
for a grand coalition, the talks 
will be very difficult. But the 
SFD are the real winners.” 

A snap opinion poll for ZDF 
last night showed that 24 per 
cent of Saxony-Anhalt voters 
wanted an SPD/Green coalition 
compared to 15 per cent for a 
grand coalition. Only 12 per cent 
wanted a coalition between the 
SFD and the Party of Democratic 
Socialism, the successor to the 
former east German communist 
party, which gained VIA per cent 
of the vote, 5 percentage points 
more than 1990. 


M&S and ABB head list of 
Europe’s respected companies 


By Paul Taylor 

Marks and Spencer, the British 
high street retailer, and Asea 
Brown Boveri, the Swedish-Swiss 
multinational industrial group, 
are the most respected companies 
in Europe, according to a peep 
group poll published today. 

M&S and ABB emerged as the 
clear winners when top execu- 
tives were asked to identify Euro- 
pean companies they most 
respected, in a survey under- 
taken by the financial Times in 
association with Price Water- 
house, the accountants. 

The study, the first of its kind, 
is based on responses to a ques- 
tionnaire sent to almost 2,000 
chairmen, chief executives and 
finance officers from 637 Euro- 
pean companies including the 
largest quoted, state-owned and 
private companies in 17 nations. 


The results provide a fascinat- 
ing insight fnftn geninr manage- 
ment attitudes and tho qualities 
they judge to be important to 
business success in the 1990s. 

Almost all the top 25 compa- 
nies were identified as committed 
to their shareholders, customers, 
and employees. The most fre- 
quently cited attributes across all 
industry sectors were consistent 
growth and long-term profitabil- 
ity, dear policy and objectives 
and high, customer loyalty. 

Conversely, for most respon- 
dents, a commitment to equal 
opportunities, progressive poli- 
cies regarding childcare and a 
strong stance on social issues, 
hardly rated a mention. Perhaps 
more surprisingly, research and 
development and design were 
also low scorers in most sectors. 

Some interesting differences 
also appeared at national level; 


Customer loyalty was rated the 
most Important quality for a suc- 
cessful company in the UK and 
was equal second in Sweden, but 
came lower down for respondents 
in other big European countries. 

Growth and profitability were 
cited as most important by Ger- 
man and French respondents and 
ranked second in the UK and 
Italy, but came eleventh In Spain 
where market leadership in 
terms of products or services and 
displaying a positive manage- 
ment style were rated equal first. 

In the Netherlands the most 
important attribute was judged 
to be satisfied staff - also high on 
the list in France, Germany, Swe- 
den and Belgium. It was not seen 
as being particularly important 
in either foe UK or Italy. 

Customer loyalty and clear 
policy top agenda, Pages 8 and 9 


Japanese parties begin race for power 


Continued from Page 1 

his resignation would create a 
leadership vacuum by assuring 
US president Bill Clinton that 
Japan would push an with talks 
to resolve their trade dispute. 
The government would also con- 
tinue its work on economic 
deregulation and tax reform, 
about which it is due to unveil a 
package of measures tomorrow. 

Leaders of the conservative 
liberal Democratic parly and the 
leftwing SDP, the two largest 
opposition groups, plus foe New 
Harbinger party, a centre-left 
Splinter group from foe LDP, yes- 
terday said they were considering 


an alliance. 

“The opposition owes responsi- 
bility to end the political confu- 
sion,” said Mr Yohel Kono, presi- 
dent of foe LDP, which was in 
power for nearly four decades 
until ft lost a vote of no confi- 
dence last June, thanks to the 
defection of a friction led by Mr 
Hata. 

However, a coalition of the 
LDP and SDP, which for years 
opposed each other, is likely to 
be more fragile than the last gov- 
ernment. 

The SDP was yesterday unde- 
cided on whether to seek to 
rejoin Mr Hata’s camp, two 
months after storming out of the 


coalition, or throw in its lot with 
its framer enemies, the LDP. Mr 
Tomhchi Murayama, SDP chair- 
man, said he would try again to 
form a government with the out- 
going coalition, but was prepared 
to ally with the LDP if this failed. 

Both Mr Murayama and Mr 
Kano were cited as possible can- 
didates for the post of prime min- 
ister. Equally, there was some 
support for reinstating Mr Hata, 
amid speculation that he had 
staged a tactical resignation wtth 
that in mind. Mr Masayoshi Tak- 
emura, head of the New Harbin- 
ger party, said it “would not be 
totally impossible" for Mr Hata to 
become prime minister again. 


I 


FT WEATHER GUIDE 


seeks reply 
by Spain 
in ferry 
dispute 

By Emma Tucker In Brussels and 
Tom Bums In M a ckk i 


Spain must this week respond to 
formal complaints by the Bnro- 
pean Comraissioa that It has dis- 
obeyed the rules and spirit 
enshrined in the European 
Union’s single market in refus- 
ing a UK shipping company 
access to the ferry rente between 
Spain and Morocco. 

The Commission Iw launched 
the first stage of infringement 
proceedings after Spam refused 
to allow Cenargo, the UK ship- 
ping line, to start a car fer r y 
service between ports on the 
southern coast of Spain and 
Nader in Morocco. 

Spain has until Thursday to 
respond to a letter sent three 
weeks ago by the Commission, 
although the Spanish authorities 
were saying before the weekend 
they had not yet heard from 
Brussels. 

The case has been compared to 
the recent, much-publicised Brit 
ish Airways dispute with France 
over access to Oily airport bn 


Under single market regula- 
tions that came into force on 
January 1 1993, a shipowner in 
one ED member state can start a 
service between any other mem- 
ber state and a non-EU country. 

But the Spanish interior minis- 
try has blocked efforts by Cen- 
argo to start a service between 
Spain and Morocco since the UK 
shipping line - its arguments 
now backed by the UK govern- 
ment - identified a gap in the 
North Africa route, used regu- 
larly by thousands of EUhased 
Moroccans. 

When Cenargo tried to sail 
from Nadar to Ahneria in May 
last year, it was prevented from 
docking by aimed Spanish mili- 
tia and naval craft. Subsequent 
attempts by Cenargo to start the 
service to the Spanish ports of 
Malaga and Alicante were also 
frustrated. . 

The interior ministry says nei- 
ther Ahneria, Malaga nor Ali- 
cante has international port sta- 
tus and it is np to Spain to 
decide where its entry points 
should be. It argues that none of 
the parts has the necessary facu- 
lties for customs and Immigra- 
tion. 

Cenargo points out that as late 
as summer 1992, a service oper- 
ated between Malaga and Tan- 
gier In Morocco, and Malaga I 
remains a destination for a num- 
ber of international cruise lines. 

The Spanish state-owned com- 
pany Transmediterranea - now 
being prepared for privatisation 
- has a monopoly on car passen- 
ger ferry services between Spain 
and Morocco east of the straits of 
Gibraltar. AH existing ferry ser- 
vices dock at Mellila, the Span- 
ish enclave on the mainland of 
Morocco, just 5km north of 
Nador. A new service to Nador 
could deprive MelfUa of much of 
its trade. 


1 


Europe today 

High pressure win strengthen over 
the Low Countries promoting sunny 
and dry conditions In a wide area. 
Including Eastern regions of the 
British Isles. In France and Spain 
temperatures will be around 30C. The 
Alps and northern Italy wB have 
thundery showers. Eastern Europe 
will be very warm with sunny spalls 
and isolated showers. Low pressure 
in Northern Europe wfl maka most of 
the region rather humid. North- 
western Europe wtH be cooler with a 
few showers. Western Norway wfl be 
cloudy with rain. 

Five-day forecast 

Western Europe wfl remain very 
warm. On Thursday R wtn be cooler 
but this wffl be followed by another 
warm spoil. Eastern and southern 
Europe wfl remain hot with showers 
in Italy and Greece. As depressions 
move north across Scandtnavta It wffl 
remain unsettled, but In Sweden and 
Finland temperatures win still be 
above 20G. 










\ \\sr- • J ' w T ?5»;5 








Wind apffSIn KPH 




S/tL&fon at 12 GUT. T m n pen t uraa rmrimm fordayt. Foments By Mateo Consult of the Netherianda 



Maximum 

Baipng 

Mr 

33 

Caracas 

tab- 


Cafadus 

Barnet 

fihowsc 

21 

Cardiff 

far 

AbuOhabi 

■un 

44 

Belgrade 

sun 

33 

Casablanca 

*M1 

Accra 

flmnr 

31 

Berlin 

fair 

31 

Chicago 

Mr 

Algtara 

aun 

30 

Bermuda 

Mr 

31 

Cologne 

Mr 

Amsterdam 

fat 

2S 

Bogota 

Mr 

21 

Dakar 

sun 

Athens 

aun 

31 

Bombay 

show 

31 

Data 

fair 

Manta 

fat 

30 

Bounds 

aun 

28 

DaW 

Mr 

B. Aires 

lair 

a 

Budapest 

sun 

34 

Dubai 

sun 

BJicm 

Mr 

25 

C. taper) 

cloudy 

£3 

Dubto 

doudjr 

Bangkok 

fluid 

33 

calm 

sun 

33 

Dubrovnik 

tun 

Borcslona 

sun 

26 

Ops Town 

windy 

12 

Ednburgh 

shower 


Our service starts long before takeoff. 

© Lufthansa 

German Airlines 


S3. 

Kuwait 

L/ngaitt 

Laa Palma* 

Urra 

Uabon 

London 

LuxJbourg 

Lyon 

Madeira 


aun 

SO 

Madrid 

sun 

35 

Rangoon 

Mr 

33 

Majorca 

sun 

2 7 

Reykjavik 

shower 

28 

Malta 

sun 

30 

»0 

sun 

26 

Manchester 

Mr 

23 

Roma 

shower 

22 

M0n*« 

Ihund 

30 

S. Fraoo 

Mr 

28 

Melbourne 

fair 

12 

Seoul 

Mr 

24 

Mexico CUy 

cloudy 

18 

Singapore 

shower 

30 

Miami 

Mr 

32 

Stockholm 

ft* 

31 

MMi 

thund 

25 

Strasbourg 

sun 

28 

Montreal 

Mr 

SB 

Tel Aviv 

Mr 

Mr 

31 

18 

Moscow 

Munch 


23 

32 

tat 

34 

Nairobi 

Mr- 

23 

Tokyo 

sun 

42 

Naples 

fair 

30 

Toronto 

sun 

31 

Nanai 

Mr 

33 

Vancouver 

sun 

2S 

Haw York 

doudy 

29 

Venice 

doufly 

19 

Moo 

shower 

28 

Vienna 

aun 

31 

Moaate 

sun 

33 

wanaw 

Mr 

27 

Oslo 

Mr. 

25 

11— ihjuslj 

wawfwwn 

Mr 

28 

Parts 

sun 

29 

f S-WTunlim 

fYQMIQlXn 

ahmmr 

28 

Perth 

Mr 

17 

Winnipeg 

ft* 

22 

Prague 

fiat r 

33 

Ztxfch 


rair 90 
shower 13 
ctoudy 21 
fair 28 
sun 24 
ctoudy 24 
tab- 30 
Ur 25 
Mr 32 
Mr 16 
sun 32 
tun SO 
shower 26 
ctoudy 24 
fat 21 
fat 29 
fair 33 
ctoudy 31 
fluid 32 
tat 10 
shower 24 

fluid 2V 


Enterprise’s paper tiger 


Decision time is approaching for 
Lasmo shareholders. By Friday they 
must either back the oil explorer's 
contained independence or accept 
Enterprise’s fil.flbn all-paper bid. 
Though the two-month battle has seen 
a welter of accusations, several Issues 
stand oat 

Most important, Enterprise has 
failed to demonstrate, any MiIm value 
from putting the companies together. 
Comments by Mr Graham Hearne, 
riie b r m a h and chief executive, t h g t it 
was necessary to be rate of the “big 
boys” smack of empire building. And 
although it would have been easy to 
criticise Lasmo’s management or 
financial strength last year, such argu- 
ments cany less weight following 
management changes and the recent 






r ' 


It might still be argued that Lasmo 
shareholders are being offered such a 
generous deal that they gjwwifl accept 
Enterprise’s paper regardless of arty 
industrial logic. The is that, ttm 
offer, winch would give Lasmo share- 
holders 4L5 per cent of the combined 
entitir, looks fofr hot not generous. As 
the bid has progressed, perceptions of 
the relative values of the two compa- 
nies have shifted in Lasmo’s favour. 
Investors have become aware of how 
Enterprise's reported profits have 
been, inflated by writing down sharply 
the value of assets it acquired during 
the 1980s. 

A further problem is that, if foe 
merger went ahead, the market could 
be flooded by reams of Enterprise 
paper that nobody particularly wa n ts. 
So Lasmo shareholders who accept the 
bid with foe aim of selling Enterprise 
shares in the aftermarket could 
receive a poor deal. Given the lack of 
industrial logic or sufficiently attrac- 
tive terms. Investors should reject the 


INA 

The Italian treasury must be 
relieved to price INA shares in the 
middle of the Indicated range. Turbu- 
lent financial markets are uncomfort- 
able fra- insurance companies, which 
are priced relative to net assets. In 
addition, to the malaise afflicting inter- 
national TnnrkpfcR, Italian investors 
appear to be losing patience with the 
new govranment of Mr Silvio Berlus- 
coni. At a 13 per cent discount to 
stated net assets, INA looks reason- 
able value against other European 
insurers. But it would be rash to 
expect a windfall profit, at least until 
financial markets recover some poise. 


* iLtfr .a > ;«? seg' ™ • 


The long term case for investing in 
INA rests an the argument that Italy 
is underinsuxed by the standards of 
most industrialised countries. Despite 
the recant setback in the courts, 
reform of the generous state pensions 
system should open the way for pri- 
vate sector providers of savings. Liber 
aUsation of the motor insurance mar- 
ket from July l - premiums have been 
aet by gov e rnment until now - should 
also bring opportunities. 

The question is whether INA can 
capture its fair share of expanding 
markets without losing sight of the 
r ick* its marina share in life insur- 
ance has fallen sharply in recent 
years, although a new banc as surance 
affiance with Banco di Kama should 
stop the rot On the non-life side, INA 
must resist the temptation of an 

Mn prafitflhlp h flttlg far ifn jmnn ai» y with 

General*- If group can mat# Am 
most of its powerful franchise, though, 
the offer price leaves room fin- the 
shares to outperform. 

South Africa 

Two months after its first ail-race elec- 
tions, South Africa is reaping the 
reward in terms of access to Interna- 
tional capital Liberty life, foe coun- 
try’s largest insu rance company, is 
leading the way with a $5Q0m convert- 
ible bond ottering. Smaller debt and 
equity issues are sure to follow. Last 
week's budget included a government 
overseas borrowing target of RL8bn 
(£320m). 

Yet buying ranfl-ri«nonfowta<i assets 
remains diffimit Despite being the 
world’s 19th largest equity market, the 
Johannesburg Stock Rrrhang e is noto- 
riously illiquid thanks to a crrmpTwr 
web of cross-holdings. Until South 
African companies and institutions 
are free to Invest overseas, equities 


will remain gridlocked- The financial 
rand - a closed pool of currency 
throu gh which all inward investment 
must be channelled - is another hur- 
dle. True, foreign investors, enjoy 
ex ceptionally high bond yields 
because the financial rand trades at a 
to the domestic currency. But 
the closed pool restricts liquidity, 
making it difficult to buy and selL 

These factors are likely to limit foe 
Sow of foreign investment in South 
Africa, however promising the eco- 
nomic fundamentals may seem. While 
the discount on the financial rand 
remains bi g fa T the government may be 
too worried about capital flight to 
abolish exchange controls. The danger 
is that the discount will not dose 
because international investors dia tt ke 
dealing in the volatile financial rand. 
Unless the government takes the ini- 
tiative, South Africa could find itself 
locked into a damaging stand-off. . 

Bell Cablemedia 

Bell Cablemedia looks a little fool- 
hardy to be pressing ahead with its 
$1.2 bn flotation given the state of 
flnaTirfai markets. Three other UK 
cable companies - TeleWest, Comcast 
and General Cable - pulled their flota- 
tions last month. But Bell has its own 
special reasons for seeking a listing. 1 
The company, which involves pooling 
the UK cable interests of Bell Canada, j 
Cable & Wireless and Jones Intercable, 
does not yet exist. Its creation is con- I 
tingent on a public flotation. 

One might therefore be forgiven for ! 
expecting the shares to be sold cheap. , 
But, if anything, the price sought 
looks a touch on the high side. Even | 
at the bottom of the pricing range, 
Bell’s franchises are valued at roughly , 
$300 per home. Comcast, which came 
closer to flotation than. TeleWest or 
General Cable, had to pull its offer 
when Investors baulked at a valuation 
not much higher than that - 

Price per home is, of course, only a 1 
crude yardstick and there are. differ- . 
ences between Ben and Comcast Bril, 
for example, controls a greater propor- 
tion of its franchises than Comcast - a 
factor investors rightly appreciate. 
Unfortunately, other factors point in 
Comcast’s favour. In particular, foe 
company has invested proportionately 
more in its franchises than Bell. So it 
is not obvious that Bril deserves a 
premium rating. Given that, the flota- 
tion's success cannot be guaranteed at 
the current pricing range. If it flops, 
the chances of reviving the other three 
flotations will grow even slimmer. 



























li ge r 


Qrolina 

rrOEDERS 


noun 


MARKETS 


n 


Pass 26 


r l 


ECONOMICS NOTEBOOK . 
Faced wttti sharply rising bond 
yields In the woricfs capital 
markets, analysts and 
commentators have revived the 
notion of a global capital shortage. 
There is plenty of evidence. 

Page 26 


FINANCIAL TIMES 


BARR 


Expanding by Contracting 


THIS WEEK 


•URTM DICKSON: 

GLOBAL INVESTOR 
International markets Cape a 
confidence test this week: the 
dollar crisis shows no signs of 
abating and it has pushed -US long 
bond yields, which satthe pace for 
global markets, near the bottom of 
thefr recent tracfing range. 


©THE FINANCIAL TIMES LOOTED 1994 


Italy puts 


Monday June 27 1994 


Tony Walker reports on a growing beer market 

Brewers -mm 


‘prudent price ^ f P r 
on Ina shares - potential 




BONDS: 

The Canadian province of Ontario, one of the 
biggest borrowers In the international bond market; 
<8 forging ahead with its funding prog ramm e for this 
year, having raised C$4bn of Its c$7-7bn . ■ T. 

(US$5. 5bn) requirement Page 28 

EQUITIES: 

This morning, the market win be watehingto see If* 
currency intervention alone can preserve the doftar. 
If. as the stock market believes, only action on 
Interest rates can save the day, then share prices 
wift again be at risk. Page 29 

EMERGING MARKETS: 

Romania is set to become the latest of eastern 
Europe's former Communist states to open s stock 
exchange: Tito HU shows greater commitment to . 
reform by the government Page 27 

CURRENCIES: 

In the fight of the dollar's dismal performance affer 
central bank Intervention to support it last Friday, 
foreign exchange markets wffl be testing the US 
currency's downside this week. 

Page 27 

COMMODITIES: 

First-half sales by De Seers’ Central Selling 
Organ isatiorv which controls 80 per cent of world 
trade In rough diamonds, are reported on 
Wednesday and are widely expected to match or 
even exceed the record $SL54bn in the first eix 
months of 1993. Page 26 

UK COMPANIES: 

BAT Incfotfrfef, the UK tobaccp.and ^ 

group, has warned that its Slbn acquisition of 
American Tobacco ooukJ be jeopardised by the 
increasingly aggressive altitude of the US Food and 
Drug Administration. Page 24 

INTERNATIONAL COMPANIES: • 

Harris Trust, the Chicago-based 8ub8k%ny of Bank 
of Montreal, said It woUd absorb losses of $51 .3m 
on behalf of customers whose money it had 
Invested In unsuitable securities created out of 
mortgage-backed bonds. Page 26 


STATISTICS 


Base landing rates 35 London recant issues 95 

Company mootings 12 London share service. 35-37 

Dividend payments 12 Managed fund service 31-95 

FT-A World Indoes 35 Money mart** .35 

FT Quids to currencies ... 27 New hit bond Issues — -28 
Foreign exchanges 35 Vfarid stock mkt fcvticaa— 30 


By Andrew min Man 

Stares in Ina, Italy’s stale-owned 
insurer, go on sale dads morning 
at L2.400 each, in an inlerra- 
HnmaT public offering winch. wiH 
raise more than L4A00bn 
irmktng it Italy's biggest privati- 
sation. so for. 

It is the first safi-off trader the 
new Italian pw wrmwmt rif-Mr SH- 
vfo Berlusconi. and provides an 
opp ort t m ity to test poKcyfbr the 
larger privatisations afStet, the 

pauy, the' electricity genera- 
tor,. and Eni,; the, energy and 
rhmrriralw grppp, TUrAfy to take 
place over the next; year. 

The Ina price irjUst below the 
middle of die IA200-L2.700 range 
set wheh.fhe privatisation was 
launched a wirmth ago. 

Ministers pressed lor a higher 

prlre, but nffimili! jraidal flmt 

after a week of turbulence on 

TfatKim and wnrlri dwlr maTltrfii 

’ it would be more jjrudent to price 
the issue at the lower end of the 
-range, in line with analysts* 
'.expectations. 

‘ The Treasury, winch owns 160 
per cent of Ina, has Imposed new 
roles for the sale, aimed at giving 
the smallest shareholders a voice 
on the board and limiting the 
ability of a few large investors to 
exercise effective control over the 
newly privatised comp an y . 

The Treasury is selling 51 per 
cent of the insurance company, 
which claims a bigger share of • 
the Italian life and non-fife insur- 
ance market than any of its pri- 
vate-sector rivals. 

The Ina offer can r un until, the 
end of the week, but It could 


j^dose as early as tomorrow night ' 
if demand is strong. Previous^ 

- public offers of shares in the-*’ 

state-owned . 

- IML Credito Italiano, and : 

Wanna Commerciale Tfollana . -* 

have been oversubscribed add' 
(dosed early. Trading in Brit/ 
uTrarwi will begin officially on. ■ 
July a • 

Market wnyHHnw; are ideal 

- for bin's privatisation. Last Motn- - 
.day Italian equity prices fell 1 
nearly 4 per cent, forcing Mediof. 
bating, the Milan momkant hank; ?' 
to postpone its LLSOObn rights^ 


The stock market recovered'- 
later in the week but investors 5 
are still nervous about the gov- • 
emmeaifs economic policy- '1 

However, officials end advisers; 
say initial retail demand for 
shares in the company — parting 
ktrly from gristing policyholders, 
who will receive priority treat' 
mmt - is strong. The interna- 
■ti ftnai tranche of the shares, on 
sate in Europe and the US, is said 
to be three times covered by 
HawwTMi from institutions. 

Shares in other big Italian 
insurers such as Generali aT| «i 
Ras were strong performers after 
the Mawh general ele ction as 
investor s apecnlateti that Mr Ber- 
lusconi would encourage p r i vate 
pensions and stimulate the 
underdeveloped life sector of the 

marlf flt The same shar es slipped 
last week as investors adjusted 
their Italian insurance portfolios 
to prepare fra - the purchase of Ina 
shares. 

Goldman Sachs and IMI of Italy 
are actitig as global coordinators 
of die Jha issue. 


Last week’s tie-up between 
Foster's of Australia and Whee- 
lock of Hong Kon g to se e k joint 
' brewing ventures in China marks 
a new stage in the struggle far 
the country's beer market 
IK, European. Asian and Aus- 
tralasian groups are striving to 
develop brewing and distribution 
networks for their fla gahip 
brands such as Beds, Enin, Fos- 
ter's and Budwaiser as OMn* 
emerges as the potentially big- 
gest international beer market 
Mr Nick Norgard, managing 
director of Foster’s Chi na , was 
euphoric after si gning the agree- 
Urgent with Wheefock, the Hong 
Kon g merchant boose. 

“The China market is growing 
at an enormous rate on an enor- 
mous base," said Foster’s. "In 
1993, it grew by 23m hectolitres 
which is 149 par cent of Austra- 
lia’s entire brewing capacity of 
17m hectolitres. ” 

This explosion explains why 
international brewers are drool- 
ing over China. Anheuser-Busch, 
-the world’s biggest brewer, 
announced earlier this month 
. that it was planning to take over 
The Zbangde brewery in Wuhan 
(adjoint vent u re involving Stexo- 
bnu) as a step towards building 
^ national presence with its Bud 
weiser brand. Foster’s, too, is 
eyeing opportunities in Wuhan as 
part of its strategy to establish 
nationally-accepted brands. 

hi a highly fragmented market 
-■ China boasts some 800, mostly 
tiny, breweries - there are no 
identifiable national brands with 
the' possible excep tion of Tsing- 
tao which 1ms just 25 per cent of 
ftp market National dfamoutiop 
is hampered by a clogged and 



Cj' ii|iihj] n g transport Bjw rimn 
Ms Helena Coles, an invest- 
ment analyst at Ktamwort Ben- 
son in Rung KOng, add: THstri- 
butlon and m a r k et i ng is gning to 
sort the men from the boys. 

fawra HbimimI is pft t gning to 

last forever." 

But at this early stage China’s 
th ir st would seem ntiqtwnfthahlg- 

Average per capita consumption 
is around 8 litres per a nn um com- 
pared with 158 in Germany, 92 in 
the HS, and 50 in Taiwan. 

According to a Klemwort Ben- 
son survey of Asian beverages, 
the Chinn beer market will dou- 
ble by early next century to 
become the biggest in the w arid. 


Growth is rosining at 20 per cent, 
but long-term average growth 
rates of 10 pa- cent are “achiev- 
able". 

Since 1984 China has moved 
from seventh place to second 
hptrirni the US as a beer producer 
with output in 1998 of 12£5m 

famiiM The nnmlipr of breweries 
in Hwt time hag rimiMari Rut fhig 

proliferation of brewers is com- 
ing to an Mid , anfl evidence of a 
shake-out is already surfacing, 
with takeovers of near-bankrupt 
smaller brewers in increasingly 
competitive local markets. 

Mr Norgard said Foster's strat- 
egy was to proceed as quickly as 
Continued on Page 25 


lack tries to limit fears on UK price war 


By Raymond Snoddy in London 

Mr Conrad Black, chairman of The 
Telegraph group, said yesterfcy he hoped 
the drop in profits resulting from the cut 
in the cover price of The Daily Telegraph 
to 30p would be limited to no more than 
£5m to £20m ($15m) in a full year. 

The company cut the price of the week- 
day Daily Telegraph to attack the cut-price 
Times, now at 20p and conceded that the 
move would cost £40m gross in a foil year. 
The admission led last week to a sharp fen 
in The Telegraph share price. Mr Black 
said yesterday he believed as much as 
£2Sm of that could be regained from extra 


revenue, reduction in tax and cost-cutting 
at The Daily Telegraph, which saw its 
circulation fall below lm in April far the 
first time in more than 40 years. 

The company, he said, is also likely to 
hfrnaflt from nonnal growth in the qempa- 
ny*s subsidiaries in Canada and Austrafia. 
“ft’s not progress but we can five with 
that," be said. Sales of The Daily Tele- 
graph have already started to rise s ince 
last week’s price cut, according to Mr 
Black. “The Telegraph was up 90JXX) on 
Friday,” he said. 

Mr Black befiaves the very steep fall in 
his share price from the 587p at which 
Hoffinger sold 12£m Telegraph shares on 


May 19 to institutions to Friday's dosing 
price of 332p was a “ludicrous over-action”. 
He said if the share price did not rise 
when there was evidence of increasing 
sales and reduced costs he would be happy 
to buy the shares back himself. 

Mr Black thought two of the three main 
accusations against him had fallen away. 
One was the “tegakethical question" ova 
the May share sale. The Stock Exchange 
ruled on Friday that there was no connec- 
tion between the sale of the shares and the 
announcement of the price cut 

The second accusation Mr Black believes 
he faces is that he is a co-predata with Mr 
Rupert Murdoch, chairman of The News 


Corporation. A front page editorial In The 
Independent on Saturday, signed by Mr 
Andreas Wlrittam .Smith , the paper’s edi- 
tor, said: “Two right-wing ideologues, 
Rupert Murdoch and Conrad Black, have 
set about destroying the quality newspa- 
per market" Mr Black said that for taking 
action to counter the Murdoch pric&cut- 
ting campaign “Andreas Whtttam Smith 
should embrace me as a brotho". 

It is too early to know if the third accu- 
sation - that Mr Black has simply thrown 
away mUHons of pounds - is correct “If I 
have got it wrong I will acknowledge the 
error publicly. If a policy is migfa»i»m ftm 
we must find another," he conceded. 


KPMG 
discusses 
option to 
incorporate 

By Andrew Jack in London 


KPMG Feat Marwick, erne of the 
UK’s largest accountancy firms 
is considering abandoning its 
traditional partnership st atus in 
favour of incorpo r ation. 

A meeting later this week of 
senior partners will decide 
whether to proceed with plans 
that could lead to it becoming a 
company as soon as this autumn. 

The move would be the first by 
a firm of any size to incorporate, 
although it has been theoreti- 
cally possible by law and under 
prafesstaaal ethical rules for the 
past two years. 

Sources within the firm sug- 
gest that the action has been 
driven primarily as a method of 
protection against the rising 
costs of litigation In respect of 
audit and other clients. 

Incorporation would be 
unlikely to lead to the introduc- 
tion of outside investment or a 
stock market flotation. It would 
almost certainly force public dis- 
closure of the firm’s financial 
performance. 

Accountancy firms are secre- 
tive about their results, reveal- 
ing only thefr billings. KPMG 
showed reported revenue of 
£498m (g757m) last year. 

The firm’s decision to consider 
new options follows radical 
plans for reorganisation bring 
considered by the larger firms In . 
the US, where the scale of the 
UaMBty crisis Is more serious. 

A number of other large UK- 
accountancy and other profes- 
sional firms have discussed 
Incorporation, bnt none is 
brined to have gone as far. 

The 25 “genoal partners" who 
control KPMG wfll meet an Fri- 
day and are expected to consider 
options for the future structure 
of the firm. 

Partnerships have unlimited 
. liability when sued - they can be 
farced to surrender not just the 
firm’s assets snch as buildings, 
but also the personal assets of all 
the partners. 

Most senior staff in an equiva- 
lent limited liability company 
would be protected from such 
claims on thefr personal assets, 
except far those who woe most 
dir ec tl y involved in any negli- 
gent advice far which they were 
bring sued. 

Mr Colin Shannon, head of the 
firm, would not comment pub- 
licly but said: “I believe incorpo- 
ration for both acco un ting and 
other major firms will be 
unavoidable.” 

Background, Page 11 


This week: Company news 



Acceleration to 
break-even point 
may be forecast 

Mr Gianni AgnfiUi, chairman of Flat, 


group, should tell shareholders on 
Thursday that the group expects to 
break even this year at net profit level. 

In May, Fiat revealed the biggest 
loss in its 95-year history - LL783bn 
($Llbn) compared with a net profit 
of L551bn in 1992 - and decided not 
to pay a dividend on ordinary shares 
for the first time since 1947. But 1993 
now appears to have been the low 
point, when deep recessi on in the 
automotive market coincided with 
a historic high of LASOGbn spent on 


and development. 

This year, the group should benefit 
from gradual improvement in its main 
sectors - cars, trucks, and building 
and farm equipment — and especially 
from the success of the Punto range 
of small cars. The Punto leads a whvb 
of new models to be launched in the 

next three years under the group s 
i Alto SnmM brands. 


Restructuring and cost-cutting across 
the group should also help the 
company's profitability, and the 
innovative “integrated" car fimtory 

in southern Italy spearheads a shift 
in Fiat's manufacturing culture, 
according to the group. It remain to 


i wfll be undermined by complacency^ 

as the markri improves Brit n^nwbile 

investors havebeoirewardedwi^ 

SSrirmim nominal share caprtri, to 
LKMJOOtm from L5,0QQbn, beembst 
year’s complex rights issue -wWch 

raised L5,000bn - toe* tte W^any 

up to the limit of its issued share 
capital. However, the group should 
nothsve to draw on the new facility 
in the near fixture. 







RECs 

Not switched on for 
too much brightness 

Seven of the 12 UK regional etectrictty 
companies will be trying to show how 
different they are from each other when 
they report their results this week. 

Their problem is that they will not 
■ want to increase their profits by a 
percentage that is modi larger ftm 
the rest and attract attention from 
consumers and the regulator just ahead 
of the most important review of prices 
they are likely to face. . 

This wffl determine how much the 
companies. can charge customers fa 
distributing-lhrar dectriqfty for the 
five yearafltom next ApriL . 

The companies that have reported 
so far have announced fairly modest 
increases, mostly in the 15 to 20 per . 
cent range. TUs week's seven are 
expected to follow suit. 

Norweb and Seeboard report today. 
Norweb is expected to announce pre-tax 
profits of about £175m (9286m), against 

£L57m. and a dividend ofaboutj&Sft : 
(20p), whereas Seeboard is predicted 
to announce £l25m (£H3m} pretax 
and an 13L6p (10p) dividend. Tomorrow 
Midlands ia forecast at about £200m . 

(067m) and 23p (20p) respectively.. 

On Wednesday Northern should , . , 
announce about £USm (£1 Tiro) and 
24.6P (21.4p) and Eastern aboat £220m . 


Thursday should achieve £H5m (*HHm) : 
and 23Kp (20p). Yorkshire will bring 
the show to a close on Friday with 
about 075m (056m) and 23Ap GQ.4p). 


OTHER COMPANIES 

Delicate moment for 
Ferruzzi-Montedison 

Thp ammal ghurRhfMm rntviHn g of 
M o n tedj ym. ft» Italian tnrtngtrial 
group, is scheduled for tomorrow, and 
the AGM of Ferrmal Kzanriarfa, 
Montedison's holding company, fa 

Wednesday, althoug h both maaHng a 
could slip by24 hours. Shareholders 
will want to hear a progress-report 
about the delicate restructuring of 
Ferruzzi -Mo ntedison, a yea after the 
nearcollapse of the heavily ^debted 
group, and the suicide of ifs chairman, 
MrRaulGanfinL 

■ Adam Opel: General Motors^ German 
subsidiaiy ? will tomorrow hold its 




Efigh an the agenda is finely to be the 
feud with rival VdSmwaggo. ova Mr 
Jose Ignacio Lfipes de Antartfia, the 
forma GM director, wfao defeated to 
VW in March last year. Opd wStalso 
spell out its 1993 results - recent^ 
speculation, suggests that it Vwi 
DMSOQm (|306.7m) test year - mid 
rmrrrmm t rin tindfafin %fir|rf half 

offtfcya*. .^.^4 .. 

-■ Broken BtlP rq^eta r i^ Bs larges 
of Australia’s natural resource^. _ 


earnings mi Friday. Mos£ analysts': 

expect astrtrogpflrfigmmice,^M^ 
s e ntime nt haring been boostadhy fids 
week's robnst production report, 

mwirhig tlmi urnnw-iaannufta tft. 
aid-May. Damesticsteel despatches, 

for example, wereisper cent higher, 




while exported steel from Australia 
rose 19 per cent. Iron, ore and copper 
production also increased sharply, 
and while Australian coal exports were 
slightly Iowa, output from BHFs 
Indonesian coal mines showed a 
marked rise. Estimates fa the after-tax 
profits figure are around AgL25bn 
($9Q0m), compared with A$991m 
(excluding abnormals) last time. 

■ Deutsche Bundespost Telekom: The 
stateowned German 
telecommunications company which 
recently teamed up with Sprint, will 
report its 1998 resets on Friday. The 
company has predlcted-sales of DM58bn 
($85JRm), up from DM54hn the yea 
before, but has warned it will not make 
a profit because of extraordinary items. 
Telekom hopes to become a joint stock 
wi ipi n y in star Tnrmfta, hnt g strike . 

by the postal union has jeopardised 

ft** p-h rarifgatinm thpetebie. ATI now 
bangs an a key parliamentary vote 
on June 29. 


Rialto Homes pic 

£16,000,000 

Term Loan & Revolving Credit Facilities 

Co-ordinated by 

N M Rothschild & Sons Limited 

Debt Providers 

Barclays Ban* PLC National Westminster Bank Pic 

N M Rothschild & Sons Limited The British Linen Bank Limited 


Legal Advisers 


To tbe Borrower 
Timrnss Sainer Dechert 


To the Banks 


Ashurst Morris Crisp 


Comp— 1— hitfaip 

v*m 





Amarican Tobacco 

to 

QkuGnA 

25 

Pbrw 

25 

BAT Industries * ; 


Great Southern 

24 

Pnwldon Gold 

25 

♦ '• * : 

Bank Austria 

25 

HtolaTnm 

25 

Power Corporation 

24 

'4 * • 

Bank of Montreal 

« 

hte. ' •’ 

• 29 

SartoS - 

Sorvtoe Corporeiion 

25 

24 

Brirapiavpl 

24 

haes 

24 

Tbe Telegraph 

23 

Foran'-' 

25 

Laamo 

24 

Yarig 

25 

foam's’- 

28 

Martin Ratal 

24 

Whealock 

23 



N M Rothschild & Sons Limited 

May im 









24 


FINANCIAL TIMES MONDA Y JUNE 27 1994 


COMPANIES AND FINANCE 


American Tobacco acquisition in jeopardy after FDA accusations 

BAT looks again at $lbn deal 


By Paul Abrahams 

BAT Industries, the UK 
tobacco and insurance group, 
yesterday warned that Its $lbn 
(£6Q0m) acquisition of Ameri- 
can Tobacco could be Jeopard- 
ised by the Increasingly aggres- 
sive attitude of the (JS Food 
and Drug Administration. 

The warning fallows accusa- 
tions last week by Mr David 
Kessler, FDA commissioner, 
that a US subsidiary of BAT 
had. secretly developed a form 
of tobacco with high nicotine 
content through genetic engi- 
neering. Mr Kessler's allega- 
tions were part of a campaign 
by the FDA to gain regulatory 
control of the tobacco industry. 


Mr Michael Prideaux, direc- 
tor of public affairs at BAT, 
said: "If the FDA takes control 
of tobacco regulation and 
introduces closet prohibition - 
by stopping the sale of ciga- 
rettes containing nicotine or 
banning cigarettes that gener- 
ate smoke - that could have a 
material impact on the results 
of American Tobacco." 

The contract between BAT 
and American Brands, the 
diversified US owner of Ameri- 
can Tobacco, contains a mate- 
rial adverse change clause, 
according to BAT. This allows 
BAT to cancel the deal - 
though not change the price - 
if the results of American 
Tobacco, the US’s fifth largest 


tobacco group, deteriorate sig- 
nificantly. 

“We will be looking carefully 
at American Tobacco's nest 
fOw quarters, ” said Mr Pri- 
deaux. The deal Is scheduled to 
be concluded by April 1995. 
The acquisition, currently 
being investigated by the Fed- 
eral Trade Commission, would 
increase BAT’S sales by about 
50 per cent, raising its share oF 
the US cigarette market from 
IT per cent to 18 per cent BAT 
is already the US’s third big- 
gest cigarette manufacturer. 

Mr Thomas Sandefur, chair- 
man of BAT'S subsidiary. 
Brown & Williamson Tobacco, 
last week accused Mr Kessler 
of leading "a dangerous cru- 


sade” to advance his “personal 
and political agenda” of ban- 
ning tobacco products. 

“We don’t expect Mr Kessler 
to succeed in his agenda - the 
tobacco industry is already 
tightly regulated. But it’s a 
worrying development,” said 
Mr Prideaux. 

Any attempt to pull out of 
the acquisition would probably 
lead to litigation with Ameri- 
can Brands, he admitted. 

When the deal was 
announced BAT already knew 
the US tobacco market was In 
trouble. Competition has 
become Increasingly fierce 
since Philip Morris, the market 
leader, cut the price of its Marl- 
boro brand last year. 


Enterprise 
and Lasmo 
prepare for 
final phase 

By Robert Corzine 

Enterprise QQ’sEl.Tbn hostile 
bid tor fallow oU explorer 
Lasmo enters Its final phase 
this week as both sides 
prepare their last 
presentations for institutional 
investors tn the UK. 

Mr Graham Hearne, 
Enterprise chairman and Mr 
Joe Darby, Lasmo chief 
executive, spent much of last 
week wmBrig the rounds of 
US investors, who control 
more than 20 per cent of 


Insas to control Power in I£50m deal 


By Paul Taylor 

Malaysia's Insas group will take control of 
Power Corporation, the Republic of 
Ireland-based property development group, 
under the terms of a memorandum of 
understanding agreed by the two compa- 
nies. 

Insas, an investment holding company 
quoted on the Kuala Lumpur stock 
exchange since 1969, has conditionally 
agreed to subscribe I£50m (£49m) for new 
ordinary shares In Power as part of a 
complex capital reconstruction involving a 
placing and open offer. 

The investment is subject to a number 
of conditions Including the completion of 
discussions between Power and Us bank- 
ers over the proposed capital reconstruc- 
tion and the rescheduling of a portion of 
Power’s debts. The proposed reconstruc- 


tion also includes reducing the par value 
of Power's 116m shares tram lQp to 5p. 

Following this, about ibn of new ordi- 
nary shares with 200m detachable war- 
rants will be issued to Insas as part of a 
placing and open offer at a price “that 
would not differ materially from the cur- 
rent market price.” Power's shares closed 
unchanged at 5V4p on Friday. 

Each warrant will entitle the holder to 
subscribe to one new Power share until 
September 30, 2004. 

Power plans to raise up to a further 
I£50m through a simultaneous placing and 
open offer of a similar, number of shares 
and warrants, which wQl be underwritten 
by Credit Lyonnais. 

Insas recently disclosed that it held a 4 
per cent stake in Liberty, the upmarket 
fabric and fashion group, and confirmed 
that it was acting in concert with Mr 


Brian Myerson’s family vehicle - Concerto 
Capital Corporation - which holds a 12.8 
per cent in Liberty. 

Under the terms of the memorandum 
Insas’ 900,000 share stake in Liberty win 
be sold bo Power in exchange tor new 
ordinary shares with warrants worth 
about £4m. 

Once completed, Insas, which plans to 
use part of a planned M$600m (ElfiOm) 
rights issue to finance its investment in 
Power, will hold just less than a 50 per 
cent stake in the Irish group and will gain 
control of the board. Insas’ managing 
director, Mr Thong Kiok Khee, will become 
Power’s chief executive. 

Power intends to use the remaining nash 
from Insas’ subscription and the placing 
and open offer, totalling about lErfom, to 
acquire and develop more shopping cen- 
tres. 


Enterprises’s final all-paper 
offer closes at 1pm on Friday. 
Same institutions are known 
to have made up their mind, 
about the bid. However, It is 
widely expected that big 
sha reho lders, the largest with 
more than 16 per cent of - 
Lasmo shares and 5 per cent 
of Enterprise, will wait until 
Friday morning before 
declaring which side they will . 
support 

Speculation continued at 
the weekend that E nterpri se 
would begin buying Lasmo 
shares this week If it is sot 
confident that it can reach 
the 50 per cent target through 
straight acceptances. 

The company can boy up 
to 10 per cent of Lasmo shares 
in the market It is befieved 
that any such buying would 
include both US and UK 
shareholders tf it materialised. 

See Lex 


SCI bid for Great Southern doomed to failure 


Service Corporation International’s 
hostile bid for funeral operator Great 
Southern Group is doomed to certain 
failure, because of restrictions in the 
Memorandum and Articles of Associa- 
tion of the UK company’s large share- 
holder, writes Simon Davies. 

The restrictions mean that the US 
funeral giant has been forced into a 
tight timeframe, which could consider- 
ably weaken its negotiating position 
assuming that it is prepared to 
increase its bid for Great Southern, as 
expected. 

SCI launched Its offer document last 
Tuesday, offering Great Southern 
shareholders 600p a share, 26 pc cent 
above the pre-bid closing price. 


A separate offer was made to JD 
Field & Sons, the private company con- 
trolled by the Field family, which owns 
66.1 per cent of Great Southern's 
shares. 

SCTs success rested on gaining the 
support of five trusts which control 
dose to 70 per of JD Field, since tile 
company’s five directors immediately 
rejected the bid as “wholly unaccept- 
able”. However, these trusts are legally 
prohibited from accepting the bid 
within the set timeframe, even if they 
could be swayed by SCTs cash. 

Undo' JD Field’s Articles of Associa- 
tion, there is an extraordinarily com- 
plex procedure for any shareholders 
wishing to transfer shares. 


This announcement appears as a matter of record only. 


A firm of accountants has to give an 
estimate of fair value for the shares, 
which can take up to 21 days. The 
shares must then be offered to existing 
shareholders at the agreed price, for a 
minimum of 14 days. 

Finally, the directors have four 
months from the initial announcement 
of a shareholder’s Intention to sell, in 
which they have the right to find an 
alternative buyer for the shares. 

Under the Takeover Code, the cur- 
rent offer for Great Southern can last a 
maximum, of 60 days, and if it lapses, 
SCI will not be able to bid for Great 
Southern until after a year. 

The restrictions on share transfer 
would take JD Field shareholders wefi 


June, 1994 


beyond that time limit. 

JD Field's restrictions on share trans- 
fers can be removed, but this requires 
75 per cent approval from shareholders 
at an extraordinary general meeting. 

Unfortunately for SCI, the directors, 
who have unanimously rejected the 
offer, own 27 per cent of JD Field’s 
shares, making the current offer an 
empty gesture. 

Yesterday Schrodera, which is advis- 
ing SCL confirmed that SCTs directors 
had been aware of the contents of the 
Memorandum and Articles of Associa- 
tion and, “recognised that the only way 
the bid could succeed was with the 
agreement of JD Field, the 56 per cent 
shareholder.’' 


Martin Retail to join 
market with £100m tag 


Dr PC0BF HoHnger 

Martin Retail Group is coming 
to the market in the autumn 
via an institutional placing and 
open offer which is expected to 
vidua tin neighbourhood news- 
agent Cham at about glOOm. 

Although the flotation will 
not raise any money for tire 
group Itself, URG is expected 
to use its quote and the debt- 
free balance sheet to expand 
on the high street and In the 
convenience store sector. At 
least 60 per cent of the shares 
are expected to be placed with 
institutions. 

The notation will mark the 
end of a difficult period for the 
group, which has been owned 
by a consortium of banks for 
more than two years. “We win 
have a more normal share 
ownership structure which will 
allow us to take the group for- 
ward,” said Mr Rob Leak, man- 
aging director. 

After a brief period under 
the ownership of Guinness. 
MRG was sold in 1987 for what 
has since been acknowledged 
as an excessive price to an 
Australian consortium which 
included News International 
and panflda. 

When Paafida collapsed in 
1992, the banks took over Mar- 
tins. Since then, they have left 
the management, led by Atr 
Leak, to expand the product 
range - into spheres such as 



OlhL*MI 

Robert Leak (left) with Garry Hooeyball, finance director (right), 
and Judy Waterman, manageress of the new Epping branch 


off-licences and post offices - 
and roll out a computer system 
which eliminates the need for 
regional managers. 

MRG will come to the mar- 
ket with 766 branches; includ- 
ing the RS McColl chain in 
Scotland, and has capacity in 
its warehouse to take on a fur- 
ther goo. The group Intends to 
expand through acquisition, 
but will focus on developing its 
convenience store concept and 
high street presence. 

MRG has ambitions to take 
on high street giants WH 
Smith and John Menzies. By 


the first frill year of flotation, it 
is expected to add 100 sites. 

Since 1992, MRG has raised 
profits before tax and Interest 
from £6-5m to £llm. Last year 
it generated estimated net cash 
of £5m, after ElOm in capital 
expenditure 

Analysts estimate profits 
will rise by at least 10 per cent 
in the current year. Most 
expect investors to be drawn to 
MRG's growth potential rather 
than its dividend prospects. 

MRG's sponsors are Klein- 
wort Benson, and advisers are 
Barclays de Zoete Wedd. 


CROSS BORDER BMA DEALS 

BtDOER/WVESTQH 

TARGET 

SECTOR 

VALUE 

COMMENT 

Sartofl {Franca) 

Stering WWhrop (US) 

Pharmaceuticals 

El.lbn 

Long awaited 
drugs deal 

Comcast (US) 

Unit of Maclean Hunter 
(Canada) 

Cable TV 

£846(n 

US cable 

Barilo Pacific Timber 
(Indonesia) 

Construction A Supples 
House (Malaysia) 

Timber 

£658m 

Complex cn»»- 
hofcflng deal 

Joint Energy Development 
Investments (US) 

Bridge OH (Australia) 

OU & gas 

El 72m. 

Jed knight In 
bid Dray 

Bums Phflp (toatrata) 

Deutsche Hefeweriro 
(Germany) 

Food 

CSflm 

Continuing 

overseas 

expansion 

BOC (UK) 

Unit ot Engor (S Africa) 

Gas 

21 6m 

Cash deal 

Oawtfl (taM/Hughes 
Network Systems (US) 

Hughes Olivetti Telecom 
(JVJ 

Telecoms 

E2.6m 

Business 
safoRta move 

.Ad Opt (US) 

Unit of Volvo (Sweden) 

Transport 

services 

£2m 

Non-core 

dtopooal 

HamawMan (Canada) 

Unto or Ka (UK) 

Chemicals 

n/a 

Non-cora 

disposal 

AT&T (UsyiMmuroe 
(International) 

Strategic altanca 

Telecoms 

rVa 

Internationa) 
links growing 

■ * - : 1 ■ - _ / 



PEEL HOLDINGS p.l.c. 

£110,000,000 

Revolving Credit Facility 


An evening of music 
In aid of 

The Blackfriars Settlement 

Southwark Cathedral 
Tuesday June 28 1994 

8pm 


Joint Arrangers 

Barclays Syndications Lloyds Bank Capital Markets Group 

Co-Arrangers 

Hill Samuel Bank Limited The Royal Bank of Scotland pic 


Funds provided by 


Barclays Bank PLC 


Lloyds Bank Pic 


Hill Samuel Bank Limited 


Bank of Scotland 


The Royal Bank of Scotland pic 
Gulf International Bank B.S.C. 


With 

The Financial Times Choir 
and Boccas Aperta 


soloists from Glynde.bou.me 
and Scottish National opera 


The programme will include: 
Faurfr Requiem, 

and music by Bizet , Delibes, Offenbach 


Agent 

Lloyds Bank Capital Markets Group 



Tickets £6 from Blackfriars Settlement 
071 - 928-9521 
or on the door 












I 


FINANCIAL TIMES MONDAY JUNE 27 1994 

COMPANIES AND FINANCE 


Harris Trust takes loss 
on mortgage-backed deal 


By Richard Waters 
in New York 

Harris Trust, the 
Chicago-based subsidiary of 
Bank of Montreal, said it 
would absorb losses of S5L3m 
on behalf of customers whose 
money it bad invested In 
unsuitable securities created 
out of mortgage- hacked fawiriq 

The bank's decision, which 
will lead to a $33m post-tax 
loss, echoes moves by some 
Other US hanfce and fund man. 
Afters whose investment strate- 
gies have proved fallible In die 
volatile markets of recent 
mouths. 

Ban kAm erlca recently 
injected $17m into a money 
market mutual fund it runs to 
make up losses which other- 
wise would have been been by 
customers, while Paine Webber 
paid $33m to cover mortgage- 
backed bond lasses on behalf of 
investors in one of its funds. 

The latest losses stem from 
$2.3bn of collateralised xnort- 


Uruguayan 

airline 

privatised 

By John Barham 
in Buenos Abes 

Uruguay has completed its 
first privatisation with the sale 
of 51 per cent of Pluna, its 
national airline, to a consor- 
tium of Argentine and Uru- 
guayan companies 

Mr Juan Piaggio, Pinna's 
president, said the consortium 
paid ftfrn cash and assumed the 
carrier’s liabilities of $20m. 

The consortium is led by the 
Buquebus ferry company, 
which runs passenger services 
between Buenos Aires and 
ports in Uruguay. 

The buyers selected Varig, 
the heavily loss -making private 
Brazilian airline, to operate 
Pluna on a contract for 10 
years. Mr Alberto Fajerman, 
Varig 1 s assistant planning 
director, said the airline will 
take over Pinna's financial and 
commercial management as 
well as operating its aircraft 

Mr Fajernmn said Varig “will 
receive a fixed payment and a 
variable amount" linked to 
Phma’s performance. 


gage obligations (or CMOs) 
which Harris bought on 
of 40 of its pension fund cus- 
tomers. These instruments are 
created out of standard mort- 
gage-backed bonds and com- 
prise a near-gSOObn market in 
the US. 

Harris said the pension 
funds were customers of its 

ctwiritiw; taiifing digyri ff n. Thp 

money used to buy the bonds 
was collateral which had been 

deposited with the bank 
against securities it had lent 
out am behalf of the taxis. 

This money should have 
been invested in safe, 
short-term instruments, the 
hank s aid , «Mtog t hat it fraA 
riftriripri to absorb to 

protect its reputation. The 
money invested in the risky 
bonds represented more than a 
third of the $&7bn in its securi- 
ties igniting portfolio. 

CMOs range in riskiness 
from highly geared instru- 


By NDdd Taft In Sydney 

The West Australian Supreme 
Court has cleared the way for 
Poseidon Gold, part of Mr Rob- 
ert de Crespigny*s Normandy 
Posiedon group, to purchase a 
40 par cent stake in the Bodd- 
ington gold mine fro m Reyn- 
olds Metals. 

The court dismissed a claim 
by Newcrest Mining, which 
has a 20 per cent interest in 
the West Australian Tiring that 
it had certain pre-emptive 
rights over the ralfl Of in te r ast i t 
in the joint venture. 

However, Newcrest is seek- 
ing a stay of proceedings 


By Judy Dempsey bn Beribi 

Foron, the successful east 
German refrigerator company 
has hpm rescued from liquida- 
tion after the Treuhand privati- 
sation agency secured invest- 
ment commitments from the 
London-based East Ge rman 
I Investment Trust fund (EGIT). 


change to standard fixed-in- 
come securities. 

Bank of Montreal said the 
CMOs in the Hams portfolio 
were capped floating-rate notes 
- instruments which pay a 
higher interest rate as market 
rates rise, but only to a certain 
calling 

The losses were caused by 
the sharp fall in loan repay- 
ments by mortgage borrowers 
in the US, Bank of Montreal 
said. As repayments decline, 
the duration of the bonds 
grows longer, hitting their 
value - a trend which has 
caused widespread price falls 
in mortgage-backed bonds. 

The $2.3bn of bonds have 
been taken over by Bank of 
Montreal, which said «t had 
sold $80Qm of holdings in 
recent days. The remainder 
will be held as an investment, 
the hawk said. As a result, the 
bank will not have to mark the 
bands to market, something 
Harris would have had to do 
under US accounting rules. 


“pending consideration of the 
grounds for any appeal". That 
was duly attacked by PosGdd, 
which is therefore unable to 

Complete tto rioal and aatd it 

was “disappointed at tha pros- 
pect of further delay and 
expense". 

The Reynolds/PosGoId deal - 
which involves payment of 
US$U6m plus delivery of 30,000 
ounces of gold over seven 
years - had originally be« due 
to dose in March. 

Thp ruling, if it is upheld, 
may facilitate shall Australia's 

planwad sale nf ite rwatelg inter . 

ests, which include 37.5 per 
cent of the Boddington mine. 


Egit wili hold 47 per cent of 
Foron, and will put up DMUm 
($6.7a) in capital. However, 
the Treuhand, anxious to save 
Foron. one of the region’s most 
innovative companies, has 
agreed to allow Egit to reduce 
its purchase price of Haush- 
altsgerflteservice, which holds 
the majority stake in Foron. 


GiroCredit 
to remain 
independent 
says chief 

By Ian Rodger in Zurich 

GiroCredit, Austria's third 
largest hank, aims to remain 
an independent fare in spite 
of the purchase by Bank Aus- 
tria, the country’s largest, of a 
controlling stake in It two 
months ago. 

Mr Herbert Lugmayr, Giro's 
new chief executive, said the 
bank would co-ordinate its 
activities with Bank Austria 
in a few areas where joint 
efforts were sensible, but 
would pursue its own strate- 
gies in most. 

It was planning a public flo- 
tation of shares within the 
next two years provided its 
earnings improved and divi- 
l deads could be r e sto red. The 
, hawk expected to achieve an 
unchanged Schkbn (SI 77m) 
operating profit this year, he 
said. 

Last February, following a 
two-year tussle between the 
two largest savings banks 
groups. Bank Austria and 
First Austrian, over the futur e 
shape of Giro, Huir Austria 
unilaterally bid for enough 
shares to take its 30 per cent 
stake to a small majority. 

Swim April, when fanfc Aus- 
tria achieved its objective, 
analysis have been wondering 
how this socialist bank would 
treat its traditionally conser- 
vative acquisition. 

Its quick decision to appoint 
Mr Lugmayr as chief executive 
provided few answers. He is a 
socialist and spent most of Us 
career in Zentralsparkas se , 
one of Bank Austria’s prede- 
cessors, before joining Giro’s 
management board in 1988. 

However, Mr Lugmayr said 
in an interview that Giro 
would remain a basically con- 
servative bank. "It will be 
from Rank Aus- 
tria. They have not tried to 
exert pressure.” 

He said the two hawks would 
co-operate mainly in foreign 
business and data pro c essin g. 
Also, Giro’s highly rated capi- 
tal markets dep ar t m ent would 
be merged with Bank Austria 
Investment Rank. 

Giro would then concentrate 
on its core business, supplying 
various financial services to 
its savings bank owners 
throughout Austria. 


meats whose price can move 
quickly as interest rates 

PosGold cleared to buy 
stake in Boddington min e 


Foron rescued from liquidation 


Sanofi shifts centre of gravity 

The drugs group has taken a big strategic step, says John Ridding 


M r Jean-Francois 
Dehecq, chairman of 
Sanofi, the French 
pharmaceuticals group, com- 
pares his company to a locomo- 
tive. After last week's deals, 
which bring it the prescription 
drugs business of Eastman 
Kodak of the US and involve 
the sale of its own bioactivi- 
ties division, the locomotive 
has been firmly shunted 
towards a bew diyrtnaHnn 
“It is a major strategic step,” 
declares Mr Dehecq, arguing 
that the centre of grav ity in 
the company would now shift 
squarely towards pharmaceuti- 
cals. The group’s cosmetics 
division, which include Yves 
Saint Laurent and Yves 
Rocher, will remain a core 
business. But even here, cash- 
flow will be used to help 
finance the company's pharma- 
ceuticals ambitions. 

The bio-activities division, 
until last week the third pole 
of thp company, will be used to 
provide a much quicker source 
of finance. The businesses, 
ranging from food additives to 
veterinary products, will be 
sold to pay the bill for the 
$L68bn acquisition of the pre- 
scription drugs business of 
Sterling Winthrop from RnflaV 
So what lies behind the stra- 
tegic step? Mr Dehecq has long 
expressed a desire to expand in 
the sector and push his group, 
a subsidiary of Elf- Aquitaine, 
the recently -privatised oil com- 
pany, into the r anks of the 
world’s largest pharmaceuti- 
cals groups. This week's deal 
propels SmmB into the top 20 


international drugs mwipanips , 
with annual sales of FFHHSm 
(8570m) and a base in most of 
the world's biggest markets. 

Such ambitions lay behind 
the strategic tie-np with Ster- 
ling Winthrop. Fanned in 1991. 
the alliance; gave inexpensive 
access to markets in the US. 
Mtin America and Asia. Buj 
Kodak's arwireimreHHm t in May 
that it would sell its healthcare 
activities to focus on core busi- 
nesses signalled the end of the 
alliance and gave Sanofi the 
opportunity to go it alone by 
buying parts of its US partner. 

Kodak's decision also gave 
Sanofi a strong bargaining 
position. “Sanofi was effec- 
tively a poison pill in Sterling 
Winthrop because of the all|; 
ance agreements,” says Mf 
Peter Smith!, pharmaceuticals 
analyst at James CapeL 

This helps explain what most 
analysts regard as a good price 
for the acquisition. “The 
amount they pa id was at thp 
lower end of what we were 
expecting,” one. 

But the price will only prove 
reasonable if the logic of the 
deal can be proved. “We are 
making a bet 011 pharmarante - 
cals,” admits Mr Dehecq. 

He believes the odds are 
tilted in his favour because the 
acquisition will expand the 
company's direct presence in 
international markets, from 
the US to south-east Asia, pro- 
vide an outlet for products in 
thp pipeline, and because econ- 
omies will be achieved through 
merging the businesses of San- 
ofi and Sterling Winthrop. 


Results 1991-93 (FFrj 

Total sales 

1993 

1992 

1991 

4&45bn 

43bn 

- 

Net profits 



1993 

1992 

1991 

1.1 Tfan 

1.05bn 

950m 

R&D expenditure 


1993 

1992 

1991 

2L32m 

2to7ba 

1.88ba 

Sales breakdown by dvlslan 1993 

Human heaKhcare: 
BJo-ectnrittes 

FFr24. efen 
FFr11 4bn 


{Inducing Entremont, cheese-making 
activfty. which is not to be sold.) 
Perfumes and beauty FFr14.1 bn 
Source.- Sanofi 


“We will not be a Merck,” 
admits Mr Dehecq, “but we 
wiS have a foot in the door to 

market OUT DOW products.” 

As for cost-savings. Mr 
Dehecq argues that the merg- 
ing of the businesses will pro- 
vide economies not available to 
the Joint venture with Sterling 
Winthrop. Head office func- 
tions ran be combined, as can 
marketing and development 
budgets. 

These synergies, he believes, 
combined with the profits of 
Sanofi’s new businesses will 
soon feed through to the bot- 
tom line. “Earnings per share 
should be 10 to 15 per cent 
higher in 1995 as a result of the 
acquisition”, he estimates. 

Such forecasts should be wel- 
comed at Elf-Aquitaine, Sano- 
fi’s parent which last Friday 


forecast a fall in operating 
profits of up to 20 per cent in 
the first half of the year. 

As with any important stra- 
tegic decision, however, there 
are question marks. In this 
case, many relate to the dispos- 
als necessary to finance the 
deal. 

Mr Philippe J afire, chairman 
of Elf-Aquitaine, has issued 
strict instructions to subsid- 
iaries to the effect that debt 
must not be Increased. Neither 
did Elf want to see its 52 per 
cent stake in Sanofi reduced 
through a capital increase. 

As a result. Mr Dehecq must 
sell assets. He says he is confi- 
dent that buyers will be found 
for the bio-activities division, 
and Sanofi has already been 
contacted by almost a dozen 
potential suitors. 

With a gearing ratio of 20 per 
cent, and net debts of between 
FFr2bn and FFr3bn. a bridging 
loan can be easily arranged, he 
says. 

An additional challenge is 
that Sanofi is far from alone in 
seeking to expand in pharma- 
ceuticals. The plethora of 
recent acquisitions and merg- 
ers in the industry are evi- 
dence of stiff competition in 
the sector. Mr Dehecq argues 
that prescription drugs are not 
exposed to the low price com- 
petition of non-prescription 
over-the-counter drugs and 
that new products over the 
next few years will allow the 
group to expand from its new- 
ly-gained bridgehead. That, 
alone, will determine whether 
Sanofi can stay on track. 


Brewers fight for China’s growing market 


Continued from Page 25 


possible in establishing a 
national brewing network. Fos- 
ter’s last year fo rmed joint ven- 
tures with brewers in Shang- 
hai and in Guangdong 
province. 

Its aim, in alliance with 
Wheel ock, which has experi- 
ence in Chinese p ro p er ty and 
infrastructure, is to develbp 
five regional hubs for produc- 
tion, marketing and distribu- 
tion based on Guangzhou in 
the south; Shanghai and 
Wuhan on the Yangtze; Cheng- 
du/Changqmg in Sichuan prov- 
ince in China's south-west; and 


Beij mg/Tianjin in the north. 

Foster's and Wheelock are 
looking at establishing “green- 
field” breweries in Tianjin, 
Wuhan and Chengdu. Mr Nor- 
gard said it would “depend on 
circumstances” whether timea 
were joint ventures with local 
producers. 

International brewers are 
pursuing widely differing strata 
egies. According to China’s 
Ministry of Light Industry, 
some 30 separate partnership? 
have hppn established with for- 
eign entities. 

There is also Anheuser- 
Busch's 5 per cent stake in 
Tsmgtao, purchased last year 


when the Chinese brewer 
floated on the Hong Ktmg mar - 
ket 

Others seeking to position 
themselves in the market 
wither through joint ventures 
or licensing are Asia Pacific 
Breweries, a venture between 
Fraser and Neave of Singapore 
and Heineken, the Dutch 
b re w e r; San Miguel of the Phi- 
lippines; Becks of Germany; 
Kirin of Japan; Carlsberg of 
Denmark; Pabst Brewing of the 
US; and lion Nathan of New 
Zealand. Notable by their 
absence at this stage are the 
larger UK brewers. 

Hong Kong-listed companies. 


including China Strategic and 
China Resources, are also 
investors In China ventures. 
Mainland-backed China 
Resources has a majority stake 
in a Shenyang brewery in the 
north-east, china Strategic 
has ventures with brewers in 
Bejing and Hangzhou. 

With all this activity it 
would be hard to disagree with 
Klein wort Benson's assessment 
that the beer industry in China 
is “at a crossroads”. The pene- 
tration of foreign beers and 
premium local brands is cer- 
tain to gathpr pace as Chinese 
consumers become more dis- 
cerning and affTiiwnt 


NOTICE OF REDEMPTION 
AT THE OPTION OF THE HOLDERS OF 

Texas Instruments Incorporated 

2%% Convertible Subordinated Debentures due 2002. 


Notice l* hereby given punuanr to die proviriona of the Indenture dated re of September 
29, 1987 (the "Indenture”) tawoi Teat Inuimncna I n co r porated (the ‘Company”) 
and Broken Tnnt Company, at Tim tee, and m accordance with paragraph 4(a) of the 
Tcmc and Conditions the Debentures set faith on the iticnc thereof, due 

1. Each Debenture may be redeemed at ihe option of die holder dtoeof during the 3<V 
dav period beginning on September 29. 1994, in whole or m pare in in c rem ents of S5.000 
at 100 percent of the principal amount to be redeemed plus accrued interest to the 
Redernjxion Ctate; 

2. The Redemption [tare shall be September 29, 1994 unin a (face within die 30day 
period beginning on September 29, 1994 Is specified in die Notice of Redemption « 
Hokfcfi Option given by a holder in one of the paying agent* noted below. 

3. To exercise the option to elect to redeem, a bolder shall, on or before Aupat 29, 
1994 but not prior to July 29. 1994, present its Debcnture(t) written Notice of 
Redemption at Holder's Option substantially in the farm on the reverse thereof duly 
completed (together with all the coupons manning after September 29, 1994) to one of 
die paying again noted below, together with (a) instructions as to die principal amount 
to be redeemed and (b) instructions far the payment thereof, mr bi rirn g instructions In 
accordance with paragraph 2(a) of die Terms ard Co nditi o ns of the HkLuiuau, 

4. Exercise of the option to elect to rede em dull be irrevocable; acventretes* the 
holder dull re tai n the right to convert the rendered Debencurefs) buo Common Stock at 
die Conversion Price of JB2A75, provided diet notice of such eonveokm rebromrisOy in 
the form on the reverse of the Obenture and the holder's nontransfcmWe receipt of 
deposit far such Dtbenrureit) are delivered w die paying agent ahleh farad mch receipt 
on or poor to die close of businen on September 29, 1994- In die event weh Debenture 
arc ccnverted on (but not pnor re) September 29. 1994, such holder d»0 be entitled re 
receive the inrerest payable on such Debentures on such date. 

Surrender of Debentures far redemption may be made at any one of the paying agents 
latcd below. 


• Bankets Trust Company 
Corporate Trust and Agencv Group 
1 Appold Street 
Broodgaie 

London EC2A 2HE 


Swim Bank Corpo rati on 
I Aeachenvoatadt 
CH-400Z Basle 
Sw itz erl an d 


Bonque |"<i«»v* 1 n,wtihn,ii p 
J9 ADee Scheffer 
L-2520 
Luxembourg 



Dared; June 27. 1994 








Mb fen Of •owwlo ttd pomtad ttfomi to ft. 
IK and the mew.it Uurogwatlw. of It. t hird ircc warelvn 
tfBuwmnant, BoStia h do in e wtog rtwngth fa tothi 
report on tte country- 

ZTsc**, »ta«W «™*»* 

or mow Infbnaatloo ort •dftortal cootwt and detail* of 


P«wy Scott blfawYodc 


Tel: 


S mn m WtHt Btmebi tendon 

Pel; [444 71)8734316 Fsc (+44 71) 873 3595 


FT Surveys 


ANGLO AMERICAN CORPORATION 
OF SOUTH AFRICA LIMITED 

(fampmWd ki the Bipdrik of Sooth Ainca) 

Ownpary ItnistnHnaNaOl OPWBfc 


NOTICE TO MEMBERS 


ANNUAL GENERAL MEETING 

Notice Is hereby given that the seventy-seventh annual general meeting of 
members of Anglo American Corporation of South Africa Limited will be 
held at 44 Mam Street Johannesburg on Thursday, 11 August 1994, at 
09.00, for the following business: 

1. To receive and consider the annual financial statements for the yeas 
ended 31 Match 1994. 

2. To elect directors in accordance with the provttiora of the Corporation's 
articles of association. 

3. To consider and. if deemed fit, to pass, with or without m o dific ation, the 
following ordinary 'restitution: That subject to the provisions of die 
Companies Act, 1973, as amended, and the rules and regulations of The 
Johannesburg Stock Exchange, the Directors are hereby authorised to 
allot and Issue in their discretion all the remaining authorised but 
unissued share capital of die Corporation for such purposes as they may 
determine after setting aside so many share* as may be required bo be 
allotted and issued by die Corporation pursuant to dm Share Incentive 

r* -1 m 

X lgil B . 

Holders of share warrants to bearer who wish to attend in person or by 
proxy or to vote at any general meeting of die Corporation must comply 
with die regulations of the Corporation under which share warrants bo 
bearer are issoed. 

A member entitled to attend and vote at die meeting is entitled to appoint a 
pnxey or proxies to attend speak and vote in his stead. A proxy need not be 
a member of die Corporation If required, fanns of proxy are available from 
the Head office and London office of the Corporation. 

By order the Board 
CUMALTBY 
Secretary 
27 June 1994 

Registered and Head Office London Office: 

44 Main Street, 19 Charterhouse Street 

Joh ann esb urg 2001 London EC1N 6QP> 

The ISW amwaf report if being posted to registrant ifmnhoUm today and copits 
ere Bva Sa bfe for holders of s ta rt niuan tg to hearer from the London office. 



All Advertisement 
bookings are accepted 
subject to our current 
Iferms and Conditions, 
copies of which are 
available by writing to 


The Advertisement 
Production Director 
The Financial Times, 
One Southwark Bridge 
London SE1 9HL 
Tel: 0718733223 


Fax: 071873 3064 



Tire ewfoebted buabwM and 
tat* appeal * Ik. Priaolpatty 
be axarobred wttta particular 
ornpkaaH m Baaklftf, Flsaaire 
Boateasa Sorvlcaa and tiM 
raccaaaM Csofomocs tndnaUy. 

phm readers ttde inj mien 

Mnal advwrtMa* mdlm tar aU 

tulNiiM tarolvwd In the 


on (1) 4297 0630 
ar tax (lj 4297 0624 

FT Surveys 


This advertisement is issued in compliance with the regulations of The International Stock Exchange of the United 
Kingdom and the Republic of Ireland Limited (“the London Stock Excbai^c”}. Application has been made to the 
London Stock Exchange for the -yr hole of the ordinary, share capital of Universal Ceramic Materials PLC ("the 
Company”) issued and to be issued pursuant to the Placing to be admitted to the Official List. It is emphasised 
that this advertisement docs not constitute an offer or-invttation to any person to subscribe for or to purchase 
securities. It is expected that dealing in the ordinary shares of Sp each will commence on 30 June 1994. 


/Y/1\AA 

MMTY1 

'W 7 


UNIVERSAL CERAMIC MATERIALS PLC 

(Incorporated In England and Wales under the Companies Acts fMJ to 1989) 

(Registered in England No. 2720770) 

PLACING 

by 

BEESON GREGORY LIMITED 

of 

7,848,839 Ordinary Shares of 5p each 
ai a price of 86p per share 


Share Capital 

immediately foBowbrg the Placing and redemption of the issued preference share capital of the Company 




Issued and 

Authorised 


fuOy paid 

Number Amount 


Number 

Amount 

2SJ77j600 S1M3JMM 

ordinary shares of Sp each 

21JS8JOS 

£1.097.9 10.25 


The Company is a supplier of fused minerals to international markets. 

Copies of the Luting Particulars re la ting to the Company may be obtained during normal burincs;. Sours on any 
weekday (Saturdays and public holidays excepted) from the Company Announcements Office of the London Stock 
Exc h a nge Tower, Cape) Court entrance, off Barth ok> mew *Lanc, London EC2 (for collection only) from the date 
of this notice up to and including 28th June 1994 and from rhe dare of this notice up to and including 1 1th July 
1994 from: 


Bi m b b G regory limited 

The Registry 
Royal Mint Court 
London EON 4EY 
A Member of The Securities 
and Furores Authority Limited 


Harford Registrars 

Harford House 
101-103 Great Portland Street 
London WIN 6BH 


Unh r sr sa l Concur 
MertwrhsbnC 

Doxey Road 
Stafford ST 1 6 1DZ 


27th June 1994 


£75,000,000 

WOOLWICH 

BUILDING S O C I 8 T Y 

9% Fixed Rate/Floating Rate Notes due 1995 


In accordance with the provisions of the Notes, notice Is hereby 
gfven that for the Interest Period tram June 23, 1994 to December 
23, 1994 the Notes wffl carry an Interest Rats of 5.67% per 
annum. The interest payable on the relevant Interest payment date, 
December 23. 1994 twifl be £28.43 per £1,000 principal amouit aid 
- £142.14 pa £5,000 principal amount 

By: Thediaaa Manhattan Bank, fLA. 


London, Agent Bank 
June 27, 1804 


CHASE 


Citicorp Banking Corporation 
U.S. $250,000,000 

Guaranteed Floating Rase Subordinated Capital Notes 
Due July 10, 1997 

Unconditionally O mran t w ri on a Sufo oi dim ted Basis by 

cmcoRPO 

Notice is hereby given iherf tfw Rote of Interest has been fixed at 
5.25% era 
Date, S 
US»1Q, 


June 27 1994 tendon 

By. Q fa*, NA. Qsw Services), Agent Bonk C!TIBAN(& 


the Leeds 


LEE06 PBUiwerr buumq aoccrr 

(IncorpoeatBd In England under the BuBOng Societies Act 1986) 
Issue of up to an abrogate of 

£ 200 , 000,000 

Subordinated Variable Rate Notes 
with a maturity of 12 years 
Notice is hereby given that for tha three months' Interest period 
from June 23, 1994 to September 23, 1994 (92 days) the 
Subonflnat B d Notes will carry an Interest rate of 5-8875%. The 
Interest payable on September 23, 1904 lor the Subordinated Notes 
wiH be £148.40. 

By: The Chase Manhattan Bank, ALA. CHASE 

London, Principal Paying Agent 
June 27, 1994 


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SCHRODER JAPANESE WARRANT FUND LIMITED 

NOTICE AND AGENDA 

NOTICE Is hereby given ihil the Foarth Annual General Meeting of Schroder 
Japanese Warrant Fond IJmiietl will be held at 1030 nun. on 22 July 1994 at Barfield 
House, SL Jnfianta Avenue. Sl Met ten, Guernsey. Channel Islands GY 1 3QL lot the 
purpose or considering and it though fit. passing the following rcsointioos. 

1. To receive and adopt the Report of ihe Director* and the AeeounU for the year 
ended 31 March 1994. 

2. lb ie-etec(Cbopeis& Lytxand as Andiina of the Company. 

3. To authorise the Directors to agree the Auditors' lemuneiatwn. 

4. Ttacouridff Any other Business. 

Registered Office : 

Barfield House, Sl Julian's Avenue By Order of the Bond 

Sl Peter tert Schroder Investment Management [Guernsey) Limited 

Guernsey 

Secretary 

VfnTNG ARRANGEMENTS FOR IPft-IKMUPgRS 

IDR-HoMos who wish to vote must fofluwihe fWoniqg procedure: 

If the IDRs are held in an account with Eoradear or CEDEL, IDR-Holders must 

«™nif until condoaioa of the meeting and specify the manner in which Ihe vote* 
Bnribuabfe te the IDRs should be cast If the IDKi are not held through Eurodear or 
CeJti, IDR-Holders must ensure dial their voting instructions, together with cither 
drear IDRs or Ibetr bank's confirmation or deposit (indndiag IDR serial numbers), 
reach the Depositary at the latest on Jnly 19, 1994 at the address given below (attention 
Securities Department - telephone 322J08B&.42-Klex 217S2 MORBK s) 

Copies of the Annual Report are available from the Company^ registered office and 
the Depositary at the address indicated below. 

Depositary: Morgan Guaranty Trust Company of New York 

35, A terete des Arts, 1040 Brussels 


LOW COST 0S1 044 0111 

SHARE DEALING SERVICE j 

KTtOM £10 !‘ , ;“ 1U , JS : 1 I 

£99 MWIMI'M ON ANY TSJA&K r> 7.") W.' -rfr ) 













FINANCIAL TIMES MONDAY JUNE 27,994 


FINANCIAL I IMIS 


MARKETS 


THIS WEEK 


hi, 


International 
markets fee e a 
serious test of 
confidence this 
week: the dol- 
lar crisis shows 
no signs of 
abating and it 
has now 
pushed US long bond yields, 
which set the pace for global 
markets, very close to the bot- 
tom of their recent trading 
range. A significant downward 
break-out would send fresh 
shock waves through fixed 
Income and equity markets 
around the world. 

The weekend resignation of 
Japanese Prime Minister Bata 
has hardly helped market sta- 
bility. The political turmoil in 
Tokyo is likely to intensify 
pressure on the dollar this 
morning, with traders arguing 
that it will make a US-Japa- 
nese trade agreement much 
harder to achieve. 

This in turn increases the 
likelihood of further rounds of 
concerted central bank inter- 
vention to stabilise the dollar, 
but there is little reason to 
think this will prove any more 
successful than Friday's 
Canute-like failure to stem the 
tide running against the US 
currency. 

Whatever the cause of the 
dollar's weakness (inflation 
worries, the US trade deficit, 
distrust of President Clinton), 
the central message of the mar- 


ket is that the US does not 
offer nearly large enough a 
risk premium to encourage for- 
eign investors to hold Ameri- 


Global Investor / Martin Dickson in New York 


can assets. 

The markets suspect this 
will force the Federal Reserve 
to tighten monetary policy 
ag yrin, either at the nett meet- 
ing of its policy-making com- 
mittee, cm July 5 and 6, or even 
before them 

Irrespective of currency fac- 
tors, the robust (though slow 1 
mg) American economic 
expansion probably Justifies 
another quarter point rise in 
the Fed Funds rate some time 
over the summer, but gradual- 
ism of that order will hardly 
encourage investors to hold 
dollars, while a sharp rise in 
rates would risk damaging the 
economic recovery. 

Last week’s sharp drop in 
bond and equity prices has 
already factored same tighten- 
ing into the US market, but 
that may not prevent further 
market instability if the Fed 
does ad 

The low Tate of US inflation 
may give some underpinning 
to the bond market Although 
Wall Street has been focusing 
anxious attention on. the recent 
sharp increases in commodity 
price indices, the feet is that 
labour costs are a far more 
important component of output 
and they appear to still be well 
under control. 

The equity market, however, 


A green-backed bear 


..Qonpru t “j; 


au ulq i Lylt.I.M ; f.i» 

• wo* 'm ; ■ 80^'tof' to. ■ to&gw; :.tv{jff9< 


looks more vulnerable. Since 
the Fed first tightened in early 
February, the Dow Jones 
Industrial Average has been 
relatively robust, losing less 
than 10 per cent of its value at 
the worst point and trading in 
a drifting, sideways range. 

There has, however, been a 
slight downward bias to file 
movement and last week’s 
near 140-point drop brings file 
average near the bottom of its 


commodities 


Richard Mooney 


Diamond record possible 


First-half sales by De Beers’ 
Central Selling Organisation, 
which controls at least 80 per 
cent of world trade in rough 
(uncut) diamonds, are reported 
on Wednesday and are widely 
expected to match or even 
exceed the record USJ2.54bn 
achieved in the first six 
months of 1998. 

That does not mean, 
however, that the diamond 
market is in sparkling condi- 
tion. De Beers is being pressed 
on two fronts: By its custom- 
ers, who cut and polish gem 
diamonds and by the Russians, 


who supply about 25 per cent 
of the stones that are sold by 
file cartel. 

The big customers are 
complaining that their profit 
margins have been squeezed so 
hard during the past two years 
that they are now practically 

myn-ggistont 

The CSO is to meet a delega- 
tion to discuss these problems. 
The CSO drastically reduced 
the number of diamonds it 
made available at its two most 
recant “sights" or sales, a 
move welcomed by the cutters 
and polishers. 


Meanwhile, difficult negotia- 
tions in Moscow about a new 
contract between Russia and 
the CSO will continue in 
Moscow next month. Some 
Russians are pressing for big 
changes and it is unlikely that 
agreement will be reached 
quickly. 

Mr Mark Cockle, editor of 
CRU International’s Diaman- 
taire newsletter, says: “The 
likely outcome of the talks - 
having to choose between 
terms that threaten to push 
Russia out of the cartel or 
alternatively favour Russia to 


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post-tightening trading range. 
Until now, Investors have 
bought on the dips and priv a te 
individuals have continued to 
be net investors in stock 
mutual funds. 

However, mutual ftmdcash 
inflows dropped last week to 
their lowest level since early 
April, when the market suf- 
fered its only week of net 
redemptions fids year, and fur- 
ther dollar problems will only 


increase the private Investor’s 


If the Dow dips through 
3,600. it could trigger a sharp 
drop in US equities over the 
c oming few weeks, with an 
Inevitable ripple effect around 
the world. The US market cor- 
rection of the past five months 
has yet to produce the kind of 
sharp downward lunge, the 
final s ubmission to the bear, 
which often m afire a turning 


point. Unless the dollar 
bounces, one could be coming. 


■ Mexico . 

Emerging markets wifi take 
their lead this week from Wall 
Street, but Mexico could face 
additional volatility following 
Friday’s resignation of Interior 
minister, Mr Jorge Carpizo 
McGregor, even though this 
was rejected by President Sali- 


. who will bry twist 
Carpzgo’s arm this week. 

Carpizo is the man responsi- 
ble for Mexico’s August 21 
presidential election and his 
departure, complaining that 
“diverse sectors" are trying to 
block his efforts for fair poih 
are bound to throw fresh 
doubts on the validity of the 
country’s electoral processes. 

Some analysts suspect his 
resignation may be linked to 
that of Mr Manuel Camacho 
Solis, who last week stood 
down as the government’s 
peace envoy to Zapatist rebels 
after criticism from Tiding FRI 
presidential candidate Mr 
Ernesto Zedillo. The implica- 
tion is that Camacho allies 
(who may include Carpizo) will 
not support Zedillo’s ca mp a i gn. 

The resignation increases 
the perception of political risk 
in Mexico. The IPC index fell 
55.66 aifier Friday’s news and is 
down 16. per cent on the year. 

Mr Geoffrey Dennis of Bear 
Steams says the country is suf- 
fering from a “buyers* strike", 
with, investors seeing little rea- 
son to buy. 

He thinks . the country 
remains a long-term buy but 
does not rule out further 
short-term weakness. 


■ General Motors 

This week General Motors is 
expected to announce its first 
big shake-up in senior manage- 


the point of antagonising 
South Africa and Botswana 
mining pitere ^ fy — is one De 
Beers' officials want to post- 
pone as long as possible.” 

• On Wednesday the Interna- 
tional Wheat CoandTs anmul 
World Grain Conference will 
be held In London. Speakers 
indude Mr Eugene Mhos, US 
undersecretary of agriculture, 
Mr Zhou MfngGhen, chairman 
of China’s Ceroflfioods, and Mr 
Warren Lavorel, deputy direc- 
tor general of the General 
Agreement on Tariffs, and 
Trade. 


A 


In economics, 
as in other 
walks of life, 
new ideas are 
rare. So it Is 
not surprising 
that faced 
with the 
conundrum of 
sharply rising bond yields in 
the world's capital markets, 
some analysts and commenta- 
tors have revived the notion 
of a global capital shortage. 
The last time the idea did the 
rounds was after the Gulf War 
of 1991, when extravagant esti- 
mates of the costs of rebuild- 
ing Kuwait were thrown 
together with back-of-the-en- 
velqpe calculations of the bill 
for modernising the former 
communist countries of east- 
ern Europe and the Soviet 
Union. 

Talk of a global capital 
shortage was quickly forgot- 
ten as the recession of the 
early 1990s stifled investment 
and fim problems of turning 
former communist countries 
Into market-based economies 
became apparent Last year’s 
speculative bond market boom 
also seemed to indicate that 
funds far investment were not 
in short supply. But as econo- 
mists and analysts seek to 
explain the upwards spike in 
long-term interest rates over 
file past six months, some are 
re-examining the idea that 
capital might be scarce. 

One such economist is Mr 
Peter Warburton of Robert 
Fleming Securities. He 
believes the world experienced 
a bond market bubble in 
1992-93 that obscured a secular 
fell in private and public sec- 
tor savings in the industria- 
lised countries. “It is not that 
we have a capital shortage 
that bflfl happened suddenly", 
he says. 

There is plenty of evidence 
suggesting strong demand for 
capital Only last week, the 
Paris-based Organisation for 
Economic Co-operation and 
Development (OECD) reported 
that the total net resource 
flow from industrialised to 
developing and former com- 
munist countries was a record 
5159 .5bn last year, np from 
$153.2bn in 1992 and higher 


Economics Notebook 


Shortage of 
capital? 





afe A* A-. 

*{■ v yjfctoflfeferf §hd pmsdqm retto f*xV&&at awtoi i foin iq — . 


than the 1991 level of H24bn. 

Global claims on capital 
seem set to grow further. 

• In the industrialised 
world, economic recovery is 
spreading from the 
ArgtoSaxon countries to Ger- 
many, the rest of the Euro- 
pean continent and Japan. 

• Industrial country govern- 
ments are still running large 
budget deficits. 

In its recent World Eco- 
nomic Outlook, the Interna- 
tional Monetary Fund com- 
plained: “Most if not all 
industrial countries felled to 
consolidate their fiscal posi- 
tions adequately in the 1960s 
and entered the 1990s with 
high actual and structural 
budget deficits, high public 
debt bo GDP ratios and consid- 
erable unfunded pension lia- 
bilities.” 

The IMF has forecast that 
the industrial countries’ bud- 
get deficits win fell to 3J5 per 
cent of their gross domestic 
product next year against 42 
per cent. Although an 
improvement, fins would still 
leave the overall budget short- 
fell wen above the 3 per cent 


of GDP deemed prudent for 
European Union countries by 
file authors of the Maastricht 
Treaty and substantially 
higher than the recent low of 
L3 per cent of GDP in 1989. 

• The dynamic newly-indus- 
trialising economies of Asia 
continue to grow robustly 
while other developing 
nations, including China, 
India, Vietnam, Argentina and 
Chile, are expanding rapidly. 
When populous giants such as 
China, India and Indonesia 
stir, the effects in terms of 

flgmanri ran financial resources 

can be great indeed. 

In his recent Hayek memo- 
rial lecture to the Institute of 
Economic Affairs in London, 
Mr Peter Sutherland, the 
director general of the Gen- 
eral Agreement on Tariffs and 
Trade (GATT) pointed out 
that the world’s population is 
set to increase by nearly 2bn 
in the next 20 years. Of these. 
95 per cent would he horn in 
countries other than the 
industrialised member states 
of the OECD. 

“One consequence is that 
between now and the year 


FT-ACTU ARIES WORLD INDICES 


ment since the autumn of 1992, 
when the board ousted Mr Rob- 
ert Stempel and replaced him 
as chief executive with Mr 
jack S mi t h . - -- 

Mr Smith will remain chief 
executive but hand over 
responsibility for GM*s North 
Amer ican vehicle operations to 
young turk Mr Ride Wagoner. 

The handover is a measure 
of how far Mr' Smith has 
turned round GM’s North 
American operations. In the 
first quarter they were more 
than 5500m in fixe' 1 black, 
thanks to. in part, an Improv- 
ing market, which has allowed 
all US car manufacturers to 
cut sales discounts: 

But the distance GM still has 
to go was underlined by a 
report last week from consul- 
tancy Harbour & Associates, 
which estimates it would have 
to cut 20,000 Jobs to become as 
efficient as Ford. 

GM shares trade on a 1994 p/ 
e ratio of a mere 7.3 and many 
Wall Street analysts, rate it a 
buy, given its restructuring 
and the strong cyclical upturn 
In North American vehicle 
sales. 

But GM still has modi to 
prove, the market will soon 
start focusing on the next 
cyclical downturn (if it has not 
already done so), and a very 
jittery equity market means 
this is not the time to be 
(ncrpflgtng exposure to US con- 
sumer durable stocks. 


2015, the number of new jobs 
required to keep unemploy- 
ment rates unchanged in the 
developing world will exceed 
the current populations of 
western Europe and North 
America combined”, Mr Suth- 
erland said. “The economic 
implications are manifold, 
including competition for cap- 
ital.” 

This increase in activity 
comes as savings rates are 
felling around the globe. 

By contrast, savings In the 
developing world, and in Asia 
in particular, have been 
strong. According to the BIS 
In Basle, the developing i 
nations share of the world's ! 
$5,000bn pool of savings was j 
20 per emit in 1992, up from 
12.5 per cent in the early 
1970s, and higher than the US 
share. But savings as a per- 
centage of GDP have started 
to decline in fiie developing as 
well as the industrial coun- 
tries. 

But bow will our lives be 
affected if there really is a 
world capital shortage? 

One distinct possibility is 
that the low baud yields at the 
end of 1993 and the start of 
1994 will turn out to have 
been no more than a passing 
phenomenon. Even though 
some of the near 3 percentage 
point increase in 10 year UK 
gilt yields from low to recent 
high and file roughly 2 per- 
centage point jump in compa- 
rable US rates may unwind, 
capital scarcity would be cer- 
tain to leave real interest 
rates higher than 6 months 
ago. 

With globalisation, that 
means the required real rates 
of return on investment would 
increase throughout the 
world. Given their higher 
costs, the industrialised coun- 
tries would find it even more 
difficult than today to com- 
pete with the fast-growing 
developing nations of Asia in 
labour intensive production of 
low-tech tradable goods. 

In the industrialised world, 
the need for higher s kil l s and 
more high value-added occu- 
pations would grow ever more 
intense. 


Peter Norman 


JaMy co mptad by 11 m F l nancM Umt Ltd, 
NATIONAL AND 

REGIONAL MARKETS 

Figures in poranttiesss US Mctig 

■how number of Ones Ociar sines 

of stock Index 31/12/53 


®*krian, Sadis & Co. and NafWsat Securittes Ltd. In corfuxafcn wtfi the Institute of Actuates and th* Faculty of Actuates 


Pound 

Soring . Yen 
Index Index 


EMI** — — r . THURSDAY JUNE 23 1994 DOLLAR INDEX 

Local local % Dross us Pwrri Loca, 

“ EE °« CunwcySavreekSZwa* ago 

tnOm 3V2/93 YWd mdax Index Indw Index Index >flgh fryrofl 


AusWhpfl) 

Austria (1 7) 

Belgium (37) 

Canada (10$ 

Denmark (33) 

FHand(M) 

Franca (97) 

Germany ^a) 

Hong Kong {56) 

Ireland (14) — 

Italy (BO) 

Japan (40Q 

Mamma (H) 

Maxtor fM) 

Nathariand (27) 

New&mwdtiq 

p3) — 



South Africa £90) - 

Spom (42) 

SwadmpB) 

Swtawtand (47) 

United KkigdoropOS). 
USA BIS) 


EUROPE (720} 

NOCdc (116) 

Psdfc flash (750 _ 
Euro-PadflcCl'tTO) - 
North America (825) - 
Europe Br. UK £15) 


Padflo Ebb Japan (281) 242S0 

Wodd Ex. US (1053) Lm» 

Worfd Be UK (1987) — — -171W2 

World Be. So. AT. pi 13) 17DJ4 

world Ex. Japan (1703) 178.74 


The World Index (21TB 171.39 2 £ 164.78 10031 14231 14088 


173.13 16082 


CoprtpL U» FtoncW TtaM LMed. OoUun. { 
Baro wftm: Dec Si. ISM ■. 10Ct FHaact Dec 31. 1 
Canettnent Oem during to ■mUt entog MM 
jWEV to Forth AUEV fUemUntat anri OP A to i 


La A Co. and iMVeM 
r.raosr (US tinder 
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r<vvp ft (EMgknf. h 


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12457 A 
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/' t\ it 


FINANCIAL TIMES MONDAY JUNE 27 1994 


EMERGING MARKETS: This Week 


The Emerging Investor / Virginia Marsh 

Romania shows commitment 


Ranwnla is on course to 
become the latest of eastern 
Europe’s former' communist 
states to open a stock 
exchange following parlia- 
ment's acceptance tUs mrmth 
of a securities MIL 
The bill, doe to be promul- 
gated within the next two 
weeks, paves the way for the 
establishment of an equity 
market and securities commis- 
sion this autumn. 

The passage of the bill Is 
being seen as a sign of greater 
commitment to re faim by the 
government which in past 
three months h as pushed 
through parliament more 
reform legfiflathm than it did 
in its first 16 mrmfha fn offing 
Foreign investors have also 
been encouraged by signs of 
economic stabilisation and 
growth and by the n g teamarit 
with the International Mone- 
tary Fund last month of 
Romania’s first new loan 
agreement in two years. Under 
the toms of the deal the IMF 


Tan bast 


will support the minority 
leftwing government’s reform 
p rogr amm e with loans worth 
|72Gm over 19 months. 

The reform programme, 
drawn up last autumn with the 
.World Bank and IMF, has 
already had promising results. 

The tough monetary policy 
adopted by the country's 
reformist central banir gin c** 
last November has brought 
inf l ati o n down to 6 per cent a 
month against last year’s aver- 
age of 12 per nwnt- The leu, the 
national currency, haa been 
liberalised and madia internally 
convertible. Exports are up 89 
per cent over the first five 
months of last year while 
industrial production has stabi- 
lised after nearly halving 
between 1990 and 1998. 

Foreign Invest o rs and the 
country’s emerging private sec- 
tor hope that the gover nm ent 
will now begin structural 
re for m in earnest by speeding 
up priv at is a tion and restruct- 
uring of the state Bectnr. 




17AM 

RMkaa rafc 

555 

IM 

CMranr 

SfllM - 

• 

% 

Cho Heunq Bank 

SJCnea 

- 13.1416 

2.1233 

1027 

Ecracftnsi Hue 

Turitsy 

0.1473 

00203 

1000 

Brisa 

TUrkey 

' 0.1087 

00149 

1567 

Mari Bank 

SuKoraa 

12.7879 

10278 

14.61 

Bank of Seoul 

AKOrea 

9.7942 

ij»ia 

12^4 

Corticelra Amortn 

Portugal 

13JJ165 

1^4939 

12j03 

EregU Dartr VS GMc 

Turkay 

02257 

00199 

068 

CommercM Bank of Koras 

SJCWBB 

04223 

■ n<«n>; 

067 

Kofdoaa - ' 

Turkey 

noasa 

00248 

053 

Alpha Lseakig 

Qrsaca • 

22.1488 

1.1986 

6.72 


Emphasis is being placed on 
the stock exchange and the 
development of capital mar- 


Certtficates of ownership 
(COs), representing the ifopula- 
tian’s 80 per cent fine share in 
the equity of the 0300 state 
companies due far privatisa- 
tion, have been distributed to 
some is Jim Romanian s. At 
first tbs new exchange is dim 
to trade CQs white the govern- 
ment final ins mechanisms for 
their transfer shares. 

As a precursor to a mass pri- 
vatisation programme, the 
authorities, advised by 
Hambros, the US merchant 
bank, ere p r e p arin g a series of 
public offers. . 

The atm Is to. sell .about five 

mpritirTfl - gfapH m - im j y nl nn at a 

time fora combtoatijra of cash 
and COs. So far, the only 
Romanians ableto use their 
COs to buy abates have bean 

Himw pa rHoipitUng in tha pri- 
vatisation of some 500 small 
companies via. management 
.and/or amployeie buy-outs. 

- The pibHr nffiw programme 
wiU alto provide foreign inves- 
tors with a relatively "quick 
and simple way to buy into a 
state company. Foreign compa- 
nies w0i .be able to purchase 
part of the 79 per cent offered 
for cash or to come in via a 

. napfbil tnf-rofl fi a 

Until now there has been lit- 
tle font Ig w p mtiriprften in. the 

privatisation «nhran» , This is 
parity because the first compa- 
ntea-to.be sold were generally 
too small to attract foreign 


A burst of activity In Hungary 

Hungary Is experiencing an unprecedented buret of new equity 
Issues. Public n s iw te w to Sate, the phM u u iMiiHwih producer, 
and Global, a retailer, were oversubscribed last week. Sobscrip- 
flans for shares hi Fhomcvtt, a thriving private-sector producer 
of Yttamin pfflB, opened on Friday and are expected to dose 
today or tomonOT, writes Nicholas Denton In Budapest 

Holders of compensation coupons - securities issuedto victims 
of communist expropriation - can from today andy for shares in 
Qitnnhi , a leading pharmaceuticals company. Queues of inves- 1 
tors were already growing at the weekend, Anothta? Issue «*«!■ 
ulad for next week is that of Graboplast, a mjiwifTta^m r gf 
artificial leather. Sane 58 per cent of the company, worth $X4m, 
b on' offer from June 30. In addition, AV RT, the state tedding 
co m pa ny , gave the gOHshead for the sale of a minority stake In 
Richter Gedeou which 1 the tutiburiUes hope wd raise 147m. 

4|%wg h Inlta iw Himri Intel Wfft In Bnnyu r y hug rinwi 

the Budapest bourse, began to fall in February, faiwH for new 
tames still renudna i much stronger than last year. 


interest. Uncmtaiptydyw cam- 
mtiment to reform, ^excessive 
bureaucracy and iUfimlSea in 
setting up the six funds 
charged with implementing 
privatisation are other factors. 

TUs wiftant that most Of 
the 8900m in direct foreign 
investment since 1990 has 
come through Joint ventures 
rather titan direct purchases. 

The hope is that the Buchar- 
est exchange will attract signif- 
icant foreign lnvestxpmt like 
those in other central Euro- 
pean countries. _ 

Wasseratein Pereflapthe US 
boutique bank, has' token the 
lead, becoming the firat west- 
ern bank to set up a local mer- 
chant him lr and investment 
fund. 

Capital markets will also 


boost the country’s cash- 
strapped but rapidly expanding 
private sector. Larger p ri v a te 
companies i n volved in produc- 
tion are beginning to ranai gn 
from the thousands of small 
trading companies and forming 
associations set up in the 
immediate post-communist 
period. There are also many 
state firms, such as the Agri- 
culture Bjnifc, mvi of the coun- 
try’s big four commercial 
banks, which have diluted 
state ownership through capi- 
tal inwMMg 

The authorities believe that 
th«rn are already enough pri- 
vate or partly stateowued com- 
panies plawwfwg a Hating tWa 
antayrn ri tb pM* the mfatwmm 
of five companies needed to 
launch the Stock mrihampi 


■ Ecuador 

The biggest single trade ever 
crossed on the Quito stock 

exchange was executed last 

Wednesday when the 
Ecuadorean government sold 
Ite « teke in ftia ■ 

cement company. La Cemento 
National, writes Stephen 
FkDer. 

The stake - 20 per cent of 


News round-up 


by ihn I/wwiwn JMMMH Ttin mnhgnlr 
Hank Mnrpm Grenfell, and 
placed witii investmnii 

Stations In the US, which, 
took 70 per cent of the shares, 
and the UK. 

The shares woe sold by the 

g n w rwrnBii at the prevailing 

market price - 215,000 Shares 
were sold at 404,000 
Ecuadorean sucres (|187) each, 
giving a value to the trade of 
about 840m. 

l Hw gVon -wn ba d fo ifon from - 

a peak of 580,000 last 
November, in part because of 
a dispute with the mayor of 
Guayaquil about tax payments. 
They rallied sharply 
a fte r wa r ds. 

Bankers at Morgan Grenfell 
said they planned to create 
an unsponsored global 
depositary receipt p r ogra m me 
for the shares which should 
be in place in about two 
months. 

Hafftmt mnHwnimf tn 

e m erging markets largely 
by-passed Ecuador, which has 
only moved ahead slowly with 
economic reform. That has 

lHMTit that ahtrro g gpg riwapw 

than in other Latin stock 
markets. 

Wmrg jm said La Cemento’s 
prospective prlceto^amings 
multiple this year is about 9, 
compared, for example, with 
17 for Colombia’s Cementos 


Diamante, while the dividend 
yield is about 7.5 per cent 

Until Wednesday , La 
Cemento, which sold L4m 
tanhes of cement in 1993 to 
generate 8128m in revenues, 
had been a joint publtc/prtvate 
company since 1974. 
Hblderbank, the Swiss cement 
giant, took a SO per cent stake 
in 1376, ishteh it retains. La 
Cemento also has an 8.1 per 
cent stake in the Peruvian 
company, Cemen to s Norte 
Pacasmayo. 

■ Oman 

The first fund to offer foreign 
access to a Gulf stock market 

win open for trading on the 
London and Muscat stock 
markets on Thursday. 

The Oryx fond, jointly 
managed by London-based 
Blakeney Management and 
the Oman National Insur- 
ance Company, raised $52m 
In an issue completed last 


As obliged by Omani law, 

51 per cent of the fund’s capital 
was raised in Oman, with the 

remaftirtor mm frig ft-nra a 

M comfortabty oversubscribed" 
international Issue, with most 
interest coming from the US, 
the UK, Switaeriand and the 
east Aria. 


■ Mauritius 

Mauritius is to open its stock 
market to international 
investors following an 
announcement test week in 
the country's budget 
Previously foreign 
investment In securities could 
he channelled o nly through 
the UK-based Mauritius Fund, 
which was started 18 months 
ago. Thirty-four securities are 
listed on the equity market, 
which saw a 290 per cent 
increase in turnover in 1993 
as the market index surged 
by 119 per cent, ufoi- kg* 
capitalisation currently stands 
at Rsl&Sbu (gi.ibm). 

■ Burma 

More than 100 companies have 
invested over gibn in Burma 
since the ruling junta began 
liberalising the economy in 
late-1988, said Brig Gen David 
Abel, minister for national 

plmwifaif and BWnnmh» 

development 

Ha added that Singapore was 
the major foreign Investor, 
having invested seme 

• Emerging markets coverage 
appears daily on the World 
StoA Markets page 


CURRENCY MARKETS 


Matoko Rich 


Baring Securities emerging markets indice: 


Dollar bears looking for more action 


In the light of the dollar's 
diurnal pe rformance after con- 
certed central bank interven- 
tion to support it last Friday, 

the foreig n. wyt-.htmg w marke t o 

win be te s tin g the US curren- 
cy's downside again this week. 

Cynical markka are expec- 
ted to continue to ignore 
favourable economic funda- 
mentals such as steady growth. 
and low inflation fn the US in 
favour of speculative activity, 

A host of US statistics,. 
Including a May survey of con- 
sumer confidence and the , 
National Association of Fur- 
chasing Managers’ iwfai, will 
be released this week. But 
economists do sot expect the 
data to affect the market as 


deaims have been.dteragarding 
statistics for sa ne' thus. 

fit Germany, i m p ort an t cost 
oftiving indices and figures for 
industrial production and man- 
ufacturing output will be 
released this week. 

Under normal circum- 
stances, statistics conforming 
with market forecasts of a sta- 
ble inflation rate at about 3 per 
cent arid a slowdown hi the 
pace of growth might be ejec- 
ted to diminish sentiment 
towards the DMatk. 

But .most analysts 'behove 
traders are determined to drive 
the dollar down in an attempt 
to draw out further central 
bank action. 

The US government can 


expect little relief from the 
domestic monetary policies of 
its G7 partners. The Bundes- 
bank has shown it is unwilling 
to cut fa discount rate and the 
Bank of Japan, while vigor- 
ously intervening, on behalf of 
tiie dollar last week, is unlikely 
to cut its -interest rates while 
the government of Prime Min- 
ister TSutcmo Hata is in politi- 
cal rfffflmltipa. 

Furthermore, the Fed itself 
is unBkety to raise rates before 
tilB Jllty 56 FOMC maafctng ; 8S 
US Jmmbgeqjpdical- 

ing that uade fl yffi g faffatian- 
ary pressures are under con- 
trol 

Stating may test Its upside 
fupdimt Hu* dollar tfoiw week as 


investors relinquish their view 
that the UK economy fe merely 
reflecting trends in the US. 

Last Friday’s surprise head- 
line figures on the UK c ur re n t 
account deficit in the first 
quarter and a stable faflatinn 
profile could sustain the 
pound's strength against the 
dollar, pushing it up to the 
8L5&lereL 

. Meanwhile, the D-Mark, the 
Swiss franc and the Dutch gufl- 
dar may continue to benefit 
fomn jittery bond Tnartorda as 
they, are'; perceived ag 'safe 
haven currencies for investors 
seeking risk reduction. 

Developments on the Euro- 
pean crosses could also be 
affected by investor percep- 




FT GUIDE TO WORLD CURRENCIES 


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Lathi America 
Argentina D9) 
Brazil (Z1) 

Chile (12) 
Mexk30{24) 

Latin America (76) 
EUraot 
anew (14) 
Portugal (1^ 
Turkey (22) 

Europe (50) 


Indonesia (20) 14643 -2.18 -1.47 

Kbrae (23) 127.13 4091 4072 

Matayafa(22) . 211.88 -4M -2 JK 

Pakistan (10) 113.14 +2.78 +2^2 

PtiHppines (11) 26723 -6.86 -021 

Thailand (22) 21668 -1262 -050 

Taiwan (30) 1 147J7 -094 -tiU8 

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Q R O U P 


ROYAL BANK 
OF CANADA 


Dividend No. 428 

NOTICE 18 HEREBY GJVBI 
THAT a dfvldand at 29 cantB 
par sham upon the paid up 
Common Shares at this Bank 
bee been declared payable tor 
tha current quarter at tha Bank 
and its branches on and after 
August 24, 1994 to sharehold- 
ers of record at dose of 
business on July 25, 1994. 

By Order of the Board 

Jane E Lawson 
SKikrVlooPnaklanti&Knmy 

Montreal, Jun# 14, 1694 


BANCO BILBAO VIZCAYA 


FIRST QUARTERLY DIVIDEND 1994 

The Board of Directors of Banco Bilbao Vizcaya S A. 
has approved the payment of the first quarterly 
dividend for the Financial Year 1994 cm all shares 
issued, numbered 1 to 281,000,000 as follows: 

"Grom Dividend Tax Net Dividend 

SSptas 9.60 ptea 28JS0ptas 

Date of payment cnac after 11th Jdty 1994 


Payment: 


As the- Bank shares are 
represented by entries in tha 
official register maintained by 
the Servido de Compensaddn y 
Liquidation, SA (the "SCL"), 
the payment of the dividend 
will take place through the 
members of the SCL. 




_ — vr'ir-TA »“ ” "^4 


WORLD BOND MARKETS: This Week 


NEW YORK 


Renewed declines in the dollar 
sent US bond prices reeling 
on Friday. In apite of yields 
that Just a few weeks seemed 
attractive, few investors were 
willing to take the plunge Into 
the market with the dollar in 
such a precarious condition, 
and traders were busy selling 
in anticipation of further folia 
in band prices this week. By 
the end of the day the yield 
on the benchmark 30-year 
Treasury bond had reached 
7.52 per cent, its highest since 
mid-May. 

The direction of band prices 
in the days to coma wlU again 
be linked to the dollar, and 
with currency traders 
predicting that farther central 
bank intervention wfll be 

insufficient to relieve the 
pressure on the US currency, 
the portents do not look good. 

If Investors do manage to 
tear their eyes away from the 
dollar, they will find plenty 
of statistics on the state of the 
US economy. Perhaps the most 
closely-watched gauge will be 
the National Association of 


Richard Tomkins n LONDON 



. v . ic y^r* so 

cSqimk.MmP.I 


Piir phawirig Mnrm g M niCTT t ' g 

business index far June, due 
out on Friday, which will give 
an assessment of 
manufacturing conditions in 
the economy. 

Bond market bulls, however, 
may find little comfort in the 
figures, which are likely to 
show that demand and 
inflation gauges remain 
disturbingly high. Salomon 
Brothers predicts that the 
overall index will be up 03 
points to 58, a four-year high. 


Gillian Toti II FRANKFURT 


With no signi fic ant UK 
economic data due this week, 
international factors on set 
to play a key role in the gilt 
markets. In the aftermath of 
the Fed’s apparently 
unsuccessful attempt to ctefend 
the dollar on Friday, the 

jwhimatinmi hnrtd rUmafcn 
seems set to remain both 
bearish and volatile 
This is expected to have a 
knock-on effect an gOts, not 
least because UK bonds axe 
currently closely reflecting 

/ Walnpmftrtfal /V ffltifmnfgl 

European bond markets such 
as Germany. 

On the domestic front, the 
main event of the week will 
be the pan k q{ England's Wtoi 
auction on Wednesday of a 
floating-rate Treasury 2999 
issue. With the size slightly 
lower than the £L5bn. of the 

last FRO issue, some analysts, 
like Mr Nigel Richardson of 
Vamalrhi Thtu maHmmlj aiyyi 
♦but thin tho 

Treasury is revising down its 
expectation for the puhUc 
sector borrowing requirement 


mgaB BsgaMgaffl! 



Other traders disagree. 
argue that it is too early la 
the financial year to forecast 
a change In toe level of 
go v e rnm ent borrowing. 

Either way, the release of 
the Treasury forecast on 
Tuesday, which win include 
a PSBR prediction for this 
year, will be scrutinised by 
toe gflta market The forecast 
is expected to show that 
expectations of inflation have 
been revised down and those 
of growth rates up. 


Bunds staged a recovery last 
week but can tola be sustained 
in the coming days? 

Sentiment may be helped • 
hy data nn manufacturing T»fl 
industrial output for May, doe 
tola week. MrKlanaBaadar ' 
at Lehman Brothers predicts 
that both figures will grow by 
less than 0.5 per cart- a sharp 
slowdown from the previous 
month and further 
confir ma tion that ft* Qn mwn 
economic recovajy is pellid 
rather than vigorous. 

Provistoud inflation figures, 
for June are also expected. The 

iwtiiwmB ]| hi that flw 

year-an-year rate will at word 
be unchanged from toe 3 per 
cent of May, although toe 
closely-watched number could 
foil to Z8 per cent. 

Mr H0 > ■fthwb of 

Commerzbdnk in Frankfurt, 
says the market may recover 
confidence, with the yield on 
10 -yeer bunds heading below 
7 per cent He warns though 
that there may wefl be folie 
starts and investors may sell 
into a price recover. 



Crucial to the market in 
coming weeks are Qennany’s 
private and other “nonhenk” 
investors, who bought DM20bn. 
of bonds in the first four 

months of toe' year. The 
Bundesbank is hoping to drive* 
these in v es tors out of 
short-term deposits Into 
kmaerterm investments and 
this has started to happen. But 
these purchases are offoet by 
sales by foreign investors who 
off-loaded DM37. 7bn of bunds 

to February to April. 


TOKYO 


iA^SSSSSXS 11 


Eniiko Terrv-'Oi'io 


- >yy».tfwy ..»; ‘.v2E^« : 


iijWiWWWt 


Dona mnrjwMi 

tum of rising Inflation .due 
to economic recovery, but a 

closer look at economic 
data suggests declines in 
Tokyo may be overdraw. 

The worst seems to be over 
for the Japanese econ om y. The 
famiom, the quarterly sarvey 
.if h rndnftgg confidence, 
released two weeks ago 
indicated toe first uptumto 

sentiment for five years, while 

first-quarter GDP grew hy an 
annualised 35 per cent, the 
best to three years. 

However, while the economy 
has stoned deteriorating, 
statistics suggest that a 
recovery and inflationary 
pressures will be weak. 

■ Considering toe theoretic 
pqnfHHHiTm of long-term rates 
should be around economic 
growth, the bond market 

to be overshooting at 
current levels, says Mr An 
Vestal at Barclays de Zoete 
Wedd. 



Evidence of slow growth 

may be provided by this week’s 
industrial production figures 
for May, which are expected 
to fall, while consumer prices 
for Jtine are likely to reveal 
low inflationary pressure. 

Mr Vestal points out that 
while government bon ds are 
not a long-term buy, current 
levds are not Justified by the 
underlying economic condition 
and predicts the benchmark 
will fall below 4 per cent 
during the next two months. 


Capital & Credit / Antonia Sharpe 


Madden’s team goes global to fund Ontario 


If you want to do business with 
the Canadian province of 
Ontario, one of toe biggest bor- 
rowers to the international 
bond market, here’s some 
important advice. 

Don’t insist on dealing only 
with John Madden, the assis- 
tant deputy minister who Is 
responsible for toe province’s 
borrowing strategy, because 
the rest of his team is equally 
Important 

Since his arrival at Ontario's 
flnq nm ministry to late 1992, 
Mr Madden has concentrated 
an building a team approach to 
raising toe large sums needed 
to fond the province's balloon- 
ing budget deficit - not an 
easy task when Its credit rat- 
ing was on the skids. 

An integral part of toe strat- 
egy which they devised was a 
decision to embrace the global 
bond concept which became 
fashionable a few years ago. By 
so doing, the province was able 
to raise copious amounts 
through a small number of 
transactions. 

“We have developed large, 
liquid hwnrhnuirkn with matu- 
rities of five, seven and 10 
years and these have served us 



John Matfifan; Concentrated on 
building a team approach 

well In the current climate." 
Mr Mflddnn mm during a visit 
to London last week. 

Extensive pre-marketing of 
deals, listening to what inves- 
tors want and awarding man- 
dates on a negotiated basis 
rather than throug h competi- 
tive bidding have also worked 
In Ontario’s favour. 

This year, Canada’s largest 


province is well ahead of its 
funding prog ramme, having 
raised CWbn of its borrowing 
requirement of C$7.7bn. It also 
expects to preborrow a farther 
Cgftm to C93bn for next year. 
"We like to stay ahead to our 
ftituHng , it allows us to be flex- 
ible," Mr Madden said. 

However, difficult conditions 
have prompted some rfwmy 
to the .way Ontario taps the 
market “We are having to 
shorten the *iwm needed to 
launch a deal and we have to 
be careful to size and price 
appropriately,” he Bald. 

This was evident in 
Ontario's recent offering of 20- 
year global bonds - toe size 
was restricted to Hbn and the 
yield spread of 07 basis paints 
over comparable Treasuries 
was wider than the spreads on 
Ontario’s bands to toe second- 
ary market But by the end of 
last week, the spread on toe 
bonds was unchanged, a rare 
occurrence to the current cli- 
mate of sliding bond prices. 

Although the province will 
continue to rely on global 
bonds for around 60 per cent of 
its funding, like many other 
borrowers it is becoming more 


dependent on private place- 
ments and structured deals. 

ft has raised around $80Qm 
under its )2bn medium-term 
note programme, at IS basis 
points below Libor for five-year 
mahirWag «mri UbOT minUS 20 
basis points In the one to 
three-year area. 

Although Mr Madden has 
made it a priority to be open 
with the banks in order to gar- 
ner their support, he has 
avoided becoming a sitting 
duck by not making them 
privy to risk-management dect 
sians behind each deal “Every- 
one knows our goal is to get 
back into fixed-rots Canadian 
dollars, but we come home a 
different way each time," he 
said. 

Although Ontario still needs 
to redse a lot of money, its debt 
burden should get lighter in 
toe next few yean. The budget 
deficit is forecast to drop to 
C$8.1bn to the 1996-96 fiscal 
year, from Cf&6bn in 190446, 
and to C97bn the following 
year. This should allow its 
credit rating to bottom out at 
current levels. 

Bankers, who find Mr Mad- 
den’s homespun attitude -of 


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encouraging dialogue a 
refreshing change to the 
nloalr-flwd-dflg ywr behaviour df 
other borrowers, believe that 
his current job win not be Ids 
Taat “Although he IS handling 
one of toe largest accounts to 
the world, he wfll be looklng'to 
move on," says one banker, 
adding that he would be an 
ideal candidate if the poet of 
chief Hmyndta) nffirar at a large 
organisation became vacant 

At 38, Mr UyMan baa ampla 

time to return to the private 
sector whence he came (a char- 
tend accountant by hdidtiy , 
he came to go ww n wmnt from 
Beneficial Canada where he 
held a senior financial poet). 

He rules out a political 
career, thou gh his convincing 
remarks about wanting to 
serve the people of Ontario and 
making toe world a better 
pipna for his children would go 
down a treat during any elec- 
tion wnwp afgn. He even toler- 
ates toe Incessant flash of a 
photographer's camera. 

But wherever he ends up, 
one twng la sure: his future 
colleagues will end up believ- 
ing that any successful deal is 
due to them, not him. 









International / Conner Middelmann 

The Big Bang conies to Portugal 

; week, “Big Bong” came to and a market- masSr system. Last, the rise to Portuguese rracy r emain s overvalued 


Lastweek, 

Portugal, bringing toe coun 
try’s bond market into line 
with the rest of Europe and 
boosting its attractiveness to 
foreign Investors. - 

The long-awaited reforms are 
largely structural and unlikely 
to change investment flows 
overnight But, coupled with 
Portugal’s improving economic 
Amdamentele of Ming infla- 
tion and a declining budget 
deficit they are likely to boost 
the market’s allure in the 
medium term. 

"These reforms are ambi- 
tious for one of Europe's small- 
est economies, but underline 
the government’s commitment 
to raising liquidity in this mar- 
ket and increasing Its attrac- 
tiveness to overseas Investors,” 
says Ms Wendy Nifftkeer, 
senior economist at IBJ Inter- 
national. 

Since Portugal joined 
Europe’s exchange rate mecha- 
nism in April 1992, it has been 
working on a complete over- 
haul of ftq financial system, 
resulting in a reft of reforms, 
most of which took effect last 
Thursday. They include; 

• Abolition of a 20 per cent 
withholding tax on non-resi- 
dent holders of government 
debt “This was toe most 
Important reform - without to 
the other measures would have 
been mere gimmicks,” says Mr 
Mannel Pinho, director general 
of the Portuguese Treasury. . 

• Creation of a screen-based, 

over-the-counter wholesale 
market in government bonds 


Retail bond transactions will 
continue to trade on the stock 
market 

9 T^ ybilaHn w pu mrittlng Bhnrt. 

selling and bond lending will 
soon be passed; this Is expected) 
to provide further liquidity and 
risk-management tools. 

• The Bank off Portugal wfll 
engage in government bond 
repos to provide liquidity to 
tile Tnarkwfc 

• Stamp duty and stock mar- 
ket charges will be reduced; 
fees and stamp tax on Trea- 
sury bond repos have been 
eliminated. 

• A new deHvery-veraus-pay- 

ment settlement system to 
expected to- reduce counter- 
party . risk and ensure 
smoother settlement. .’ 

• Non-resident entities win be 
able to issue debt in the domes- 
tic market after giving four 
dayB’ notice. 

• A screen-based derivative^ 
market, set up by the Oporto 
Stock Exchange to set to kick 
off early next year with the 
launch of futures on govern- 
ment bonds. 

Amid recent turbulence In 
Internationa^ bond markets,' 
Portugal has performed partlc-. 
ulaxiy badly. This is partly due 
to toe feet that the higher- 
yielding, peripheral markets 
underperformed core markets 
during the sell-off. The slide 
was forthar exacerbated by the 
Portuguese market's lade of 
liquidity and the absence of 
efficient risk-management 
tools. 


short-term raise to bolster the 
flagging escudo has caused toe 
yield curve to invert, creating 
the only negative curve in 
Europe. The resulting negative 
cost of carry makes It impossi- 
ble for players to fond them- 
selves at toe short end of toe 
curve and invest at the long 
wid, and Han been , weigh- 
ing an toe market On Friday, 
Portuguese three-month money 
was trading around 18.8 per 
cent wan above the 1LI5 per 
cent yield on toe 10-year 
benchmark. * 

The yield spread between 
Portugal and Spain has also 
widened sharply in recent 
weeks, especially at the short 
end. After yielding fiat to Span- 
ish bonds in March, Portu- 
guese 10 -year bonds now pay a 
premium of 65 basis points 
over Spain. The three-year 
spread is at 174 basis points 
over. 

However, “even if Portugal 
offers a large yield pick-up 
over Spain, that's not attrac- 
tive when you have a negative 
cost of carry", says Mr Steve 
Major, head of hood research 
at Credit Lyonnais. "They have 
to get short-term rates down.” 

The currency also remains a 
concern, despite officials’ 
assurances that they are com- 
mitted to a strong escudo. “We 
will do everything necessary to 
support the escudo, and are 
willing to accept short-term 
costs to achieve longer-term 
benefits,” said Mr Pinho. 

However, some say the cur- 


and 

may slip further - especially if 
short-term rates falL "Real 
short-term rates are almost 8 
per cent - that’s unsustainable 
in the long run,” says Ms Niffl- 
keer, who expects toe authori- 
ties to let the escudo drift 
down to around Esl06 per 
D-Mark. On Friday it was tract 
ing at EsiOBAO. 

Currency worries, the nega- 
tive yield curve, last week's 
replacement of the central 
bank governor and the lack of 
fresh supply in recant months 
may overshadow the market 
reforms, keeping investors at 
bay near-term. However, once 
international markets and the 
escudo stabilise, Portuguese 
bonds could stage a strong 
recovery, with the yield spread 
over Spain narrowing back 
towards zero, Mr Major pre- 
dicts. 

S entim en t could be further 
lifted by good news on the 
inflation and budget deficit 
front Consumer prices rose by 
5.7 per cent in the year to May, 
down from 6 per cent in April, 
and are expected to fell fur- 
ther, averaging between 5% 
and 6 per cent this year after 
6K per cent in 1993. 

After last year's setback, 
budget consolidation also 
appears to be back on track. In 
the first five months of the 
year, fiscal revenues have 
risen by 2L2 per cent over the 
same period last year - sub- 
stantially higher thmi the 4A 
per cent increase In expendi- 
tures over the same period. 


NIW INTERNATIONAL BOND ISSUES 






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m. 


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FINANCIAL times MONDAY JUNE 27 1994 


new YORK 


Frank McGujIv 


Falling dollar 
offers perfect 
excuse to sell 

Thebearish reaction on Wall Street 
to Friday's multinational effort to prop 
up the dollar suggests stocks could 
take a hammering again this week. 

In the hours after the intervention, 
the Dow tumbled 62 points to end a 
five-day stretch which wiped a net 
105 points off the bellwether index. 

It was a fitting climax to a trading 
week dogged by concern over the 
dollar. The sliding US currency could, 
make foreign investment in 
US-denominated securities less 
attractive, cutting off an important 
source of cash from the equity markets. 
It could also make imports more 
expensive, raising the threat of higher 
inflation. Most Importantly, it coaid 
increase pressure on the Federal 
Reserve to lift interest rates again, 
which would threaten economic growth 
and corporate earnings. 

The currency markets will r emain 
the main focus for investors this; 
morning. Analysts say the ftitfle rescue 
mission only served to underscore the 
dollar’s vulnerability. "We need a stable 
dollar to hold th e market t oget her.” 
says Mr Hugh Johnson, rhivf 
investment strategist at First Albany 
in New York. 

But others were less certain about 
the relevance of the currency’s pli ght 
to the downturn in share prices. “The 
market right now is moving from a 
weak technical standpoint, not on the 
basis of any fundamental changes,” 
says Mr Peter Cardillo, chief strategist 
at Westfalia Investments in New York. 
“In the dollar, we have found a perfect 
excuse to sell off.” 

Indeed, on Friday morning stocks 


Dow Jones Industrial Average -' 


• 3780 



352QI-I « 1 1 u-t ~ . T ~J 

17 May IBM 24 

Sourck FT GnpftBa 


were felling long before it became 
ap parent that the Central hftnks would 
meet fierce resistance in the foreign 
exchange markets. A wave of computer 
program-guided g*»ning 
with the opening bell and drove the 
Dow down 52 points within two hours. 

Mr Cardillo believes the programs 
had been set up in response to fits 
previous session's close below the key 
technical support level of 3.700. To 
him, t hat suggests the market is 
destined to test its April lows of just 
below 3,600. 

The broad-based retreat by 
technology stocks last week adds 
credence to such a scenario. On 
Thursday, the decision by Mr Mirhael 
Karfopoulous, an analyst at SoundVlew 
Financial Group, to lower his 
short-term rating on Cisco Systems 
set off a chain reaction which battered 
the technology-laden Nasdaq composite. 
Even Mr Karfopoulous expressed 
surprise at the impact of his rather 
tame comments about t he computer 
networking company. 

"When one stock can cause a whole 
sector to move so sharply,” observes 
Mr Cardillo, "it shows there are a lot 
of nervous investors out there willing 
to dump anything because of the 
technical erosion." 


29 

EQUITY MARKETS: This Week 


LONDON 


Terr/ B viand 


Support levels 
become a 
moving target 

When one of the most noted bears in 
irmdnn assures us tha t “the markets 
are not going to crash”, the bulls must 
indeed be having a bad time; 

Mr Nicholas Knig ht, internatio nal 
equity strategist at Nomura Research, 
added, however, that markets will 
merely "trade to lower levels in 
true bear-market fashion”, which 
offered only scant comfort to 
investors. 

That was written before the central 
banks made their concerted 
intervention to defend the dollar on 
Friday. 

The banks' move inspired a powerful 
bounce at the long end of the gilt-edged 
market and a determined rally to the 
Footsie 2JJ00 mark. 

This morning, the stock market will 
be watching to see if currency 
intervention a lone can preserve the 
dollar. 

If, as the stock market believes, only 
action on inter est rates can save the 
day, then share prices will a gain be 
at risk. 

“Support Levels’’ in the stock market 
have became something of a moving 
target, with the Footsie 2£20 no longer 
sacrosanct. 

For the record, the chartists fear 
that any further seU-off would leave 
the Footsie vulnerable right down to 
2,800. 

Mr Knig ht believes that tha dollar 

will remain under pressure until 
US short rates are materially 
higher. 

OntD the problems of the US dollar 
are convincingly addressed, runs 
the market argument, ba rgain hunters 


FT-4SB-A AR-Sntv index 


■1,520 ■ ; 



1440 ..i ... i * . ■ i...— i 

'17 June 1894 ’ 24 

Soum: FT GrsphfcB' ' 


in UK equities had best equip 
themselves with long spoons. 

On the brighter side, however, selling 
of equities remains fairly moderate 
anti international broking hn n«^ff 
maintain that there are heavy 
institutional buying orders waiting 
to go into UK equities as soon 
as the outlook becomes more 
settled. 

Views an UK equity market 
valuations remain favourable, ahhmrg h 
these are moving targets while bond 
market yields continue to threaten 
the 9 per cent level. 

Even at these levels, Strauss Turnbull 
seat an equity dividend yield of almost 
4 per cent as militating that shares 
are not expensive relative to 
conventional gilts. 

TJfrp many others, Strauss Turnbull 
warns that the relative against 
index-linked gilts, now close to 
a multiple of one, gives no such 
support. 

For "yield buyers”, this is the time 
to buy UK equities. If bond markets 
are overshooting wildly in their fear 
of inflation, then prospective yields 
of 5 per cent on equities next year 
imply, according to S. G. Warburg, 
that equities would be able to hold 
the line even against yields of 10 per 
cent on long gflts. 


International offerings / Tracy Corrigan 

Liberty Life blazes trail 
for corporate South Africa 


Liberty Life’s $3SQm to $500m 
global convertible bond offer- 
ing, due to be priced in two 
weeks, is likely to prove a land- 
mark issue. A successful deal 
could pave the way for a spate 
of financings by South Africa’s 
underborrowed corporate sec- 
tor. a flop could turn off the 
tap Of fntemflrinnal inves tment 
before the flow has really 
started. 

The deal, for the country’s 
fourth largest company, was 
approved at cabinet level as a 
suitable trail-blazer for the 
return of corporate South 
Africa to the international cap- 
ital markets following the first 
non-racial elections in May. 

In fact, Robert Fleming, 
which won the mandate to 
arrange the offering, did not 
offer the cheapest terms to the 
company. But the generous 
indicated pricing of a 6 to 6Vi 
per cent coupon and a 10 to 12 
per cent cent conversion pre- 
mium for 10-year bonds, con- 
callable for at least the first 
five years, was felt to be neces- 
sary to attract a broad range of 
foreign investors. 

First of all, bearish global 
market ftftnrilHnnK have maite 
international fund managers 
much more choosy. (In feet, 
Robert Fleming has indicated 
that the pricing can be 
adjusted if the current weak- 
ness in world markets wors- 
ens.) 


In addition. South African 
companies are a little known 
quantity. The company is 
doing its best to address this 
problem, fielding a visit from 
underwriters and fund manag- 
ers to Johannesburg last week 
and hosting a series of road- 
shows in Asia. Europe and the 
US this week, when the book- 
building process begins. 

In practice, the decision on 
whether to buy the deal will 
for many investors be a deci- 
sion on South Africa. The fis- 
cal discipline of the new gov- 
ernment’s first budget, 
presented to parliament by 
finance minister Mr Derek 
Keys last week, encouraged 
investors and the imminent 
inclusion of the country in the 
DFC global emerging market 
index, at 13 per cent, is set to 
boost interest in South African 
shares generally. 

"Liberty Life is a good proxy 
for South Africa, and the con- 
vertible structure gives it a 
defensive quality which 
appeals to more conservative 
investors,” said one fund man- 
ager on last week’s trip. 

For investors viewing the 
company as proxy, there are 
several attractive features: its 
broad range of interests, such 
as brewing and property, mean 
that it stands to benefit from 
domestic economic growth. 
However, the deal also has a 
keep-well agreement which 


gives investors concerned 
about political risk the added 
security of Liberty's UK assets, 
which include Svui Life- 

Further, the large size of the 
transaction, which has made 
some underwriters nervous, is 
an added incentive for some 
investors. 

The South African stock 
market, with average dally vol- 
ume this year of $63m. is not 
very liquid, and some investors 
expect the convertible bonds to 
be easier to trade than the 
stock. 

Some fund managers will not 
be able to buy the bonds even 
if they want to, because they 
are not rated. (South Africa 
itself has yet to be rated.) Fur- 
ther, in the US, where sanc- 
tions on South Africa were 
strongly enforced, some f und 
managers have not yet 
received approval to start re- in- 
vesting. 

However, the reception of 
two straight equity offerings 
for South African companies 
following May's elections bodes 
well. 

A $67 m offering lor indus- 
trial and mining giant Anglo- 
vaal, priced late Thursday at 
$27.33. was 2.7 times oversub- 
scribed, according to arranger 
SG Warburg, with just over 
half the demand from the US. 
Meanwhile, a $7Dm offering for 
retailer Pepkor is due to be 
priced this week. 


OTHER MARKETS 


ZURICH 

Ares-Serono. the Geneva-based 
human fertility drug specialist, 
has much to talk about at its 
annual press conference today, 
writes Ion Rodger. Hard hit 
last year by pressures from 
governments on drug prices, 
it has nevertheless boldly 
intongffipd its commitment 
to pharmaceuticals in recent 
months. The diagnostics 
division has been sold, 
minority shares in the Israeli 
beta interferon subsidiary 
Interpharm have been mopped 
up and big investments have 
been made in new plant 
Tomorrow the directors of 
Logitech, the world’s leading 
maker of mice, scanners and 


other peripherals for personal 
computers, face the press. Net 
pr ofit trebled to SFr27.8m in 
the year to March 3L But an 
unexpected sales slump in the 
three months to March showed 
again that the PC sector can 
spring a surprise at any time. 

Last Thursday's news of a 
£124m provision at Rothmans 
International hag added an 
negativ e factor to 

the assessment of Richemont 
file Swiss group that controls 
Rothmans and a gaggle of 
luxury goods companies 
brought together in Vendfttne. 
a new holding subsidiary, last 
summer. 

Richemont reports results 
for the year to March 31 on 
Friday. Net income was 


broadly flat at £96.6m in the 
first halt but the group 
warned in December of weaker 
sales of luxury goods in some 
markets 

FRANKFURT 

The Daimler-Benz supervisory 
board is expected to meet on 
Wednesday to elect a successor 
to Mr Edzard Reuter, the 
management board chairman, 
who steps down next year. Mr 
Juergen Schrempp, head of 
the Daimler Aerospace 
subsidiary, is widely tipped 
for the job. Adam Opel, (Hi’s 
German subsidiary, holds its 
annual news conference 
tomorrow and Audi’s AGM 
is on Wednesday. 


MADRID 

SeviQana. the electricity 
distributor in the south of 
Spain, which mnnrti 
reported a 17 per cent increase 
in first-quarter after-tax profit, 
holds its shareholders meeting 
on Wednesday. Last week, 
James Capel downgraded the 
stock, saying that the Spanish 
government’s nffiriai estimate 
of the sum owed to the 
company in respect of its 50 
per cent stake in the 
Valdecaballero6 nuclear plant 
under moratorium had been 
set at Ptal70bn, substantially 
below the Pta2S8bn included 
in its books. Banco Popular 
meets its shar eholders on 
Thursday. The hank , more 


than 50 per cent-owned by 

nOO-Spanish jnstitiTtinnal 

investors, has reported a 73 
per cent rise in net profits for 
last year. Hoars Govett which 
recommends the stock, along 
with that of Bankinter, says 
that both offer an almost 
ir resistible combination of 
high rates of profitability, 
strong balance sheets and low 
market ratings. 

PARIS 

The market, under pressure 
since the start of the year, 
found no respite last week, 
writes AHce Rawsthom. 

Analysts and e conomis ts 
are convinced, however, that 
on economic fundamentals 


the CAC-40 should recover over 
the summer. But there is 
concern about the Paris 
market’s vulnerability to 
gloomy economic news from 
the US and Germany and ai<n 
to the political uncertainty 
in France itself in the approach 
to next spring's presidential 
elections. 

"The political situation is 
a factor.” said Mr 
Jean-Franpois Mender, chief 
French economist at Salomon 
Brothers. The presidential 
campaign raises the risk of 
various candidates pledging 
themselves to more 
expansionary policies to 
recapture lost votes from the 
demagogues: Philippe de 
Villiers and Bernard Tapie.” 


TOKYO 

Continued uncertainty over 
currency fluctuations are 
expected to keep investors 
away from the stock market, 
terries Suite Terazono. 

figures this week are likely 
to provide further evidence 
that the economy has 
bottomed, but may also reveal 
that previous expectations of 
an imminent upturn may have 
been over optimistic. 

Industrial production data 
an Wednesday are expected 
to show weak output in May, 
while Tuesday’s May 
unemployment figures are 
likely to hi ghlig ht continued 
sluggishness in the labour 
market 


HONG KONG 

Domestic politics may 
dominate hearts and minds 
in Hong Kong this week, but 
it is unlikely to have anything 
more than a marginal impact 
as investors' attention remains 
firmly on the US dollar, 
interest rates and long bond 
yields, writes Louise Lucas. 

Retail investors have gained 
the upper hand in the absence 
of institutional buyers and 
international players and there 
is scope for an upwards spike, 
albeit on thin turnover, in the 
event of progress on talks 
between Britain and Uhina 
over the colony’s future. 

Compiled by Michael Morgan 


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STBS : 248 246 245 

Jun 22 Jin 15 4m 8 Yaar bqo 

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FINAN CIAL times MONDAY JUNE 27 1994 































































34 



































































FINANCIAL TIMES MONDAY JUNK 27 1994 


35 


CURRENCIES AND MONEY 


MONEY MARKET FUNDS 


POUND SPOT FQRVVAS 


AGAINST THE POUND 


DOLLAR SPOT -FORWARD AGAINST THE DOLLAR 


JUtS* 

Bnp* 

AwtA 

Belgium 

Dmwk 

FNmd 

Ranoa 

Germany 


9«*iB OBfip Bdftffer 
nw-pant an day iptMd 


Otyi Md 
N* law 


Onemonth Thro* month* Onyv 8ar* & 
Rata KRA Rata KM Rata KM Eng. Index 


Jim M 


CUng Change 
mW-potat an day 


BJdWIer 

spread 


Do's mid 
Ugh low 


One month Time months On* raw LP Morgan 
Rata KPA feta ftPA feta KPA Index 


I 

LuMmbaurg 


Nanny 

Pwtugri 

Spain 

Sweden 

Switzerland 

UK 

Ecu 

SORT 


$*i) 17X903 
(Bfif) 30.7070 
9.8770 

8.1774 
64379 
2.4830 

IPO 372.507 

0*3 1.0184 

84 2428,27 
<W 60.7678 
IP) 2.7831 
CNXrl 10,7228 
fiV 254,783 
CPtHj 204.104 
(SKr) 112288 
ISFr) 22842 
CE3 

- 12880 
- 0.936078 


(DKr) 

(FM) 

{FFi) 

(DM) 


+0X391 815-071 
-0.0807 2S2 - 100 
-00187 708 - 830 
-02282 878 - 87Q 
-00040 336-421 
■4X0047 878-641 
-0381 181 - 822 
■4X0009 163-178 
+1.06 371 - 682 
-0.0607 282 - 100 
-4X002 817 - 648 
>4X012 188 - 288 
-4X483 851-975 
-4X382 880-227 
-00177 204-373 
-0.0121 828-884 

-00002 852-888 


Europe 


v "‘ r ‘ 

Aigandna 

Tfeo) 

1X388 

40,0035 


Bmrf 

<cn 

3887.91 

4864 


Canada 

«ca 

2.1416 

*010117 

• r% 

Maedeo (NawPeao] 

62268 

400168 


USA 

m 

1X422 

40X036 

.."l 

PaaHlafflWddN 

EaatfMrlca 


' . 

AuatmBa 

<**} 

2.1170 

40X220 


Hong Kong 

(HK« 

11X1® 

40X256 


tnda 

(R*4 

463764 

40.113 

•MS 

Japan 

W 

156X03 

-0X22 

■ ■ . 

Matnytoa 

(MSI 

60042 

40X1® 

. " 5 ' 

NswZsaland 

(NZS 

2.0180 

40.0160 


Phappfea 

tPro^ 

410381 

40.0971 

- ; -«s ’ 

Gtoxf Arabia 

m 

5.7833 

40X13 

J 

Bngapam 


2.3653 

40X041 

• 

S Africa (Com.) 

n 

5^907 

40X342 


S Africa <Pn.) 

(HI 

7.3052 

40X278 


8outh Korea 

(Won) 

1243X0 

4676 


Taiwan 

fr» 

41X224 

40X181 


Thatand 

W 

38X771 

40.1086 


17*572 17 X 200 

17 X 364 

OX 

17 X 880 

OX 

. 


1148 

Austria 

( 3 ch) 

11 X 825 

+ 0,012 

BOO - 650 

11 X 850 11,1810 

81 X 880 60*830 

60 X 083 

02 

60 S 128 

-04 

508320 

-ai 

1138 

Mghm 

(BFr) 

328200 

- 6.11 

000 - 400 

33.1440 32.7550 

9.7171 0 X 22 ? 

0.7014 

-IX 

9.6885 

-09 

3.7126 

- 0.4 

1161 

Danmark 

(DKr) 

6 X 780 

- 0.0255 

725 - 77 S 

£3065 6 X 728 

8 X 300 0.1440 




. 

_ 

BIX 

FWand 

m 

5 X 028 

- 0.0288 

078 - 078 

5 X 442 5 X 339 

6.4666 63812 

64461 

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84467 

-04 

84434 

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108.8 

Franca 

m 

54716 

- 0 X 16 

700-730 

65050 5 . 4*45 

Z 470 S 2.4485 

24672 

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24618 

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1 X 872 

-X.O 063 

908 -B 7 S 

1 X 102 1 X 805 

376 X 61 370.542 





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400-700 

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1.0176 

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104 X 

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1 X 173 

+60049 

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1 X 248 1,5052 

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2430.82 

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7 B.B 

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60.7576 

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1158 

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328200 

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2.7730 2.7438 

2.7831 

00 

2.782 

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£7407 

0 .B 

1108 

Nettnrlanda 

« 

1.7917 

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012-822 

1 X 038 1.7815 

167703 10.8868 

10.7173 

0.6 

107298 

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10721 

QX 

861 

Norway 

(NKl) 

£0632 

- 0 X 241 

G 22-542 

7.0008 6 X 100 

258 X 04 2 S 610 S 

255.738 

- 4 A 

257 X 83 

- 4 X 

- 

- 

- 

Portugal 

w 

165 X 00 

-67 

100 - 300 

168 X 00 184 X 30 

205^04 202.684 

204 X 64 

- 2.7 

200534 

- 2.8 

200.804 

-22 

65 X 

Spam 

(Pta) 

132.360 

- 0,875 

300 - 400 

133 X 00 131.780 

11 X 041 11 . 7 B 33 

11 X 610 

- 2 X 

11 X 880 

- 2 X 

11 X 849 

-IX 

7 SX 

Sfedan 

( 3 Kf) 

7.8704 

-60206 

668 - 741 

7.7243 7 X 380 

2 X 780 2.0602 

£.0826 

as 

2 X 505 

OX 

2 X 340 

14 

7205 

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(Sfit 

1 X 385 

- 0.011 

380 - 390 

1 X 810 1 X 830 

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re 

- 

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BOX 

UK 

(Q 

1 . 5*22 

+60036 

418 - 425 

1 X 512 1 X 335 

1 X 896 1 X 702 

1 X 889 

-68 

1 X 833 

as 

1 X 89 

-OX 

- 

Ecu 


1.1992 

+60029 

887 - BS 7 

1 X 056 1.1917 

■ 

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- 

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Aenartoaa 

- 

1.43754 



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1 X 475 1 X 300 

- 

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tpeadi 

0 X 077 

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975 - 077 

60078 0.0978 

3 B 43 XQ 3807.00 

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Bred 

(Cr) 

2547 X 4 

*4625 

700-707 

2547.07 2457.00 

2.1540 2.1274 

£.1433 

-IX 

£1406 

-1.5 

2-1804 

- 7.8 

85.7 

Canada 

(CS) 

1 X 887 

+60044 

883 - 890 

1 X 801 1 X 870 

5 X 493 6 X 016 

- 

re 

re 

_ 

re 

- 


Modes Maw Peso) 

3 X 885 

*6003 

880 - 910 

3 X 910 3 X 880 

1 X 512 1 X 336 

1 X 414 

0.6 

1 X 401 

QX 

1 X 342 

OX 


USA ( 8 ) 

Pachfe/IBdtb Eadl/Afrtca 

" 


- 

2.1277 2 X 857 

2 . 11 ® 

04 

2.1153 

04 

2.1144 

QX 


AustnAa 

(AS) 

1 X 727 

*60100 

727 - 72 B 

1 X 748 1 X 820 

11 X 888 11.6524 

11 X 104 

66 

11.9008 

04 

11.0334 

- 0.1 

- 

Hong Kong 

(HKS) 

7.7285 

-60015 

280 - 290 

7.7295 7.7280 

466670 461100 

- 

- 

- 

- 

- 


ri 

trrta 

Pa) 

31 X 688 

B 

650 - 725 

31 X 726 31 X 850 

156870 154,180 

155 X 23 

ZB 

154.403 

6 t 

150153 

3-5 

1861 

Japan 

(D 

1009 OO 

-oxs 

860 - 950 

101.950 96 X 900 

4 X 146 68748 

- 

m 

m 

_ 

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re 

_ 

Maiayaia 

CMS) 

2 X 000 

*6003 

885 - 905 

2 X 910 2.5862 

2 X 284 2 X 014 

2.8182 

OX 

2 X 217 

-04 

2.0283 

-04 

— 

New Zatoand 

(NO* 

1 X 062 

+60065 

075-999 

1.6959 1 X 909 

42 X 264 466811 

- 

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PMIpPfewa 

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27 X 000 

re 

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27 X 000 28.8000 

6 X 170 5 7511 

re 

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ri 

SeutS Arataa 

(SR) 

3.7602 

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500 - 503 

£7503 £7600 

2 X 674 2 X 435 

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1 X 273 

-60009 

270-275 

1.8281 1 X 258 

6 X 856 64866 

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1 TO 

3 X 263 

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3.6280 ££700 

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4.7470 4.7200 

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806000 

+665 

400 - 800 

606800 806 X 00 

41.7007 41 X 278 

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Taiwan 

(TS) 

260250 

4 X 513 

000 - 500 

28 X 600 269000 

367016 366526 




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Thailand 

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25 X 800 

+601 

700 - goo 

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11 X 87 

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11 X 05 

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11 X 325 

0,4 

103.7 

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132.715 

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7.7214 

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CROSS RATES AND DERIVATIVES 


tor onto the iaat me ebefen 


■ am nor remedy qncxad to he 

nngi taes - 100010. Ote and mmw ki txxn i 

■re rounded by tha F.T. 


t80R nte ta Jut Zfe BO/aOer „ 

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28046 -0.8 28.885 -60 

25.1528 >05 2528 -02 


25.7B -2.7 


kith* 

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ertythi Mtti 

ki US currency. IP. Morgen 


nenffrilndoaa Jun 2£ Brea average IBM-100 


EXCHANGE CROSS RATES 

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Brigkmi 




Franca 

Oarmany 

Ireland 

«tri» 

Nettteriende 

■ ■ 

raorwRj 

Portugal 


UK 


tanpreijm 


(BFr) 100 
PKi) 6045 

(m) aai« 

(DM) 21X81 
QQ 4006 
<U 0083 
FQ 1037 
(NKr) 4708 
(Ea) 1089 
(Rod SAM? 
(8Kr) 42.84 
(BFr) 24.60 
(Q 80.78 
(PC 2071 
(5) 32.02 
(V) 3202 
3007 

Dmtdi Kroner, Ranch 


19.06 

10 

1U7 
y gqg 
9826 
0380 
0602 
9.027 
3.780 
4.741 
8.1 87 


0X77 

4.620 

0276 

02.18 

7.BZS 


1082 

8.710 

10 

3.428 

0304 

0340 

3X54 

7.B70 

0313 

4.134 

7.138 

4X88 

0487 

0041 

0471 

84X2 

0901 


4.862 

2X46 

2X10 

1 

2.424 

0.102 

0391 

2208 

0.087 

isar 

2X84 

1.103 

2.483 

1.180 

1X87 

16X3 

1X16 


2X08 

1.050 

1X04 

0.413 

1 

0042 

0338 

0X48 

0380 

0488 

0880 

0482 

1X16 

0475 

0850 


4777 

2608 

2674 

084X 

2387 

too 

877.7 

9WB 

862.1 

1138 

2062 

1178 

2428 

1133 

1673 


0630 16686 

0780 1868 


fane, Nomagai Krone, m Suedbh now per 10; Mgwi 


6.443 

2X65 

3X75 

1.122 

2.719 

0114 

1 

2X77 

1X66 

1X54 

1X38 
2.763 
1X01 
1.702 
17.78’ 
2.140 
10 ;! 


21.12 

11-08 

12.71 

4XS2 

10X5 

0442 


601X 
2602 
301 £ 
1004 
2607 
10X0 


3X80 02.18 

10 237X 


1QO 
124X 
216X 
1230 
264.7 
119X 
185X 
1837 
1801 
Fat Ereudo, Lira 


4X08 

£252 

0X88 

6.184 

1072 

6.007 

0052 

6080 


402.1 
2109 
241X 
82.87 
2000 
0418 
73X7 
1804 
8013 
100 . 
172.7 
08X0 

204.1 
8033 
1320 
1312 
1607 


23X9 

12X1 

14.01 

4.789 

11X3 

0487 

4X78 

11X3 

4.041 

S.7B1 

10 

6.727 
11X2 
6X21 
7X8S 
76.83 
8.191 
Per im. 


4.068 1X70 4X18 3.038 3006 0633 


FIXED INTEREST RATES 


MONEY RATES 

Jtma 24 Over Orta Vno 

njrig month mthe 


3bt Oop Lomtx 09. Rap o 


2.133 

1X33 

2X12 

1X83 

ieox 

1X29 

Btogkmt 

5H 

B* 

BA 

5% 

84 

7A0 

4X0 

£440 

1.165 

2X38 

1X28 

1B4A 

1.624 

week ago 

5» 

H 

84 

84 

879 

7.40 

4X0 

0X38 

6408 

6809 

0 ran 

B£17 

0X22 

France 

5% 

s* 

54 

5% 

BVi 

SXO 

fe 

2X31 

6884 

2.107 

1X1B 

153.1 

1X88 

weak ago 

BH 

SYi 

6» 

541 

57h 

5X0 

fe 

6085 

6041 

6088 

0.084 

6418 

0X53 

Germany 

4X0 

4X5 

4.® 

POO 

£13 

£00 

4X0 

6747 

0382 

6775 

ri Via 

08X2 

6485 

week ago 

5X0 

4X6 

5X0 

6X0 

£15 

8X0 

4XD 

1X28 

0X33 

1X97 

1X38 

145.1 

1X00 

Ireland 

5& 

Si 

54 

5% 

64 

- 

ri 

0X10 

oxea 

0X41 

0X08 

81X9 

0X06 

week ago 

SS 

5i 

54 

6% 

84 

- 

- 

1.011 

6490 

1X48 

6758 

78X4 

0X30 

fety 

ah 

64 

Bh 

a H 

9H 

— 

7X0 

1.748 

0X48 

1.811 

1X05 

131 X 

ixea 

week ago 

Bi 

84 

B 

8% 

BQ 

fe 

7.00 

1 

6484 

1.037 

6747 

75X9 

0.623 

NafttofiRnds 

4.07 

4.® 

6X1 

£06 

5X5 

- 

5X5 

2X64 

1 

2.141 

1X42 

1G6.6 

1X88 

weak ago 

5X3 

4.90 

6X1 

6X5 

£20 

- 

5XS 

6984 

6407 

1 

0.720 

72X8 

asoi • 

StffflZNimd 

4 

4% 

44 

44 

4H 

£625 

3X0 

1X38 

6848 

1X88 

1 

1069 

0X34 

week ago 

4Vk 

414 

4% 

4V4 

4% 

riot; 

3X0 

13X8 

8X27 

13.7B 

0X10 

10«. 

8X85 

US 

4Vi 

4% 

4tt 

49 

84 

- 

3X0 

1X05 

0.778 

1.685 

1.198 

1210 

1 

week ago 

44 

444 

4M 

48 

54 

- 

3X0 







Jcgien 

2i 

24 

24 

24 

24 

- 

1.76 







week ego 

Si 

24 

24 

24 

2* 

- 

1.76 


076 

076 

5.05 

6XS 

028 

qwt 

7.60 

7X0 


■ (MIAMI Mini QMM) DM 126X60 par DM 


II 3 UBOR FT London 



Open 

Seaprioa 

Change 


Low 

Eafevol 

Open M. 

Bap 

66231 

68307 

*00071 

0X320 

68206 

26710 

78X87 

Dao 

68250 

66311 

+60071 

66338 

68210 

154 

2,170 

Mv 

■ 

0X322 

+60072 

68318 


49 

710 

■ MR 

HI HtAMC PUTUMtt QMM) 9Fr 125X00 per 8R 



Sap 

0.7422 

67638 

*00114 

67SS6 

0.7300 

13.778 

48.772 

Dao 

67407 

0.7651 

*0X116 

67585 

67410 

163 

BBS 

Mar 


67574 

67801 

+60116 


" 

2 

7 

mur 

AMHI VM nmmn PMM) Yan 1£fi pv Yon 100 




UK INTEREST RATES 


LONDON MONEY RATES 

Jim 84 Over- 7 days 

night 


Ona 

month 


Three 

months 


8 lx 


Ona 


rwwra ocorung 
Staling CDs 
Traasuy Bts 
Sank OS* 



Open 

Seaprioa 

Change 

High 

Low 

EeLvoi 

Opart to. 

Sep 

0.0038 

1X018 

*0X071 

1.0084 

6B870 

10X67 

80X77 

Dec 

1X100 

1X080 

+0X072 

1X113 

0X980 

383 

2.903 

Mar 

- 

1X180 

+00075 

1X180 

1X060 

2 

444 


61,-4% 5%- 4% 5-4H 6ft -6ft 6%. 5% 6^-^ 

4U-4% 5ft-6ft SU-6A Si-4J1 
4I-4S 

— - - 48-48 5-4H BU-5A 

load authority dept. 6% - 6% 4» - 4JJ 6 -4|| 6% - 6ft 6% - 6A 5ft - Bit 

Dtacomt Marital daps 4% -8% 4% -4% 

UK dealing bo* base ierflhg rate 5% p* cent from Fafanmy 8, 1884 

Up Id 1 1-3 3-8 H 0-12 

months months months 


bitarfaank Fixing 

- 4< 

44 

6 

6ft 

- 

- 

- 

week ago 

44 

44 

4ft 

64 

- 

- 

- 

USCMdrCDa 

- 4X0 

4 AS 

4.75 

5X4 

- 

- 

- 

week ago 

- 4X0 

4X8 

4X8 

£24 

- 

- 

- 

SOT Linked Da 

3ft 

34 

3H 

4 

- 

- 

- 

week ago 

3ft 

34 

3ft 

4 

- 

- 

- 


KCU Linked Da add meat 1 mth S*i 3 maw 63; ■ 
met ere chared We tar 610m quoted to tha manwt 

day. The ban* ere: Berrien That Be* of Tokyo, B 

Attl rone «* thomr tor tm ckrwtc Morey Mi UB S CC* and SDR LWwd Depeeft* 


mo* SO 1 yew afe. I UBQR tntertw* (tag 
by tour ratenno * be*» at 11am eedt worttng 


EURO CURRENCY INTEREST RATES 

Jun 34 Short 7 daya Ona Three 


Sri 


Ona 


tom 


notice 


month months months 


Carta of Tax dap. £100X00} 1% 4 3% 

Carte aTtadap. tad* Cl 00000 k 1%p» Depoahs tWMwantor assh %po. 


3% 


3% 


■ 8TKWJWaiynW8SMM)Ea2X00pa£ 


rim. wider rata of tiaoouri 4me0pa B»0 tad rateSfefepoct Ftance. Make up dey toy 31. 
1804. Agreed rat* tar period Jun 20, 1994 to Jii SS, 1B9*, oonemee I SB B0?pe. Maronoa rata for 
period Apr 2a 190* to Usy 31, 1904, Sriiemw IV 4 V 122Spo. Flnsnoo fee* ton toe 9%po tom 


Britan Franc 

6% - 6 

5% - 6 

S&-6A 

6ft ■ 6ft 

5H-SB 

8-5% 

Dartrit Krone 

S%-5 

5%-5% 

5-5% 

6%-5% 

5%-8 

8%-8 

D-Mark 

6ft -4H 

5-4% 

5-4% 

6-4% 

5-4% 

6%-6% 

Dutch Gutter 

6-4(1 

6-4H 

5ft - 6 

5ft - B 

6ft - 5ft 

5% -lift 

Flench Franc 

6% -5% 

6%-6% 

6% - 6% 

6%-6% 

5% -6% 

8%-e 


Sep 

1X384 

1X512 

+60132 

1X848 

1X310 

B|B12 

36753 

Dao - 

1X440 

1X408 

*60134 

1X644 

1X300 

41 

364 

*■ Mar 

- 

1X458 

*60134 

1X620 

1.S300 

1 

17 


riAarSC 
>1,1984 

BANK OP ENGLAND TREASURY BILL TENDER 


Jun 24 . Jh 17 


Jun 24 Juo 17 


fed of 


ESOOcn yyflfco 
21342171 (1330m 


■ MUBWIM M 3/8 OWlOlIri 01X60 (Dents pa pound) 


V 

Strike 

Price 

M 

- CALLS - 
Aug 

Sep 

JUi 

- PUTS — 
Aug 

Sap 

■*? f * rT » % I 

1.450 

1602 

10.02 

10.10 

- 

008 

627 

L] v di 

1X76 

7.67 

7.71 

7X4 

- 

622 

668 

i \ 

1X00 

6X7 

6X2 

£06 

0.14 

667 

1.08 

1 

1X25 

3.17 

3.77 

4X6 

054 

1X0 

1X3 


1X60 

1X0 

2X4 

2X4 

1X0 

2X1 

2.BB 


1X78 

685 

1X2 

1X2 

2X0 

3X3 

4X1 


Ifin, KapM Ud ( 88.710 ( 98.730 

Matmant at min. inri 81 * 30 % 


FT QUDfZ to WORLD CURREHCK8 

The FT Qulda to Vfeld Curranotoa 
tadla can be tand on the O t w Bfrig 
Markets pegs in today's adUon. 


Top actridad mtt 4X335% 4X834% 

Mb. nta if dbcount 4,9168% 4X735% 

tongs iWd 4X779% 4X334% 

OQw ri mm tufcr CEOQm ESOflm 

MkL iccnpt- W IB dm 


Portuguasa Esa 15% • 16% 
7*2 - 7% 
5%-4% 

2:| 
4ft -4ft 
9-7% 

2%-aA 

3% -3% 


Stnrilno 
Swiss Frio 
Can. Date 
US Dolsr 
baton Lira 
Ysn 

Asian SStng 


16 - 16 16% - 16ft 14ft - 13% 13% - 12V 12% - 11& 
7% -7ft TH-7% 6 -Til «4-B 64-6% 

6-4% 411-411 5A-M 6% -6% 64 - 3ft 

3U - 3tt 4-3% 4% - 4% 4% - 4% 4% - 4% 

6% - 6% 3-6% 6B-0A 7% -7% Bft-7H 

44 - 44 4ft-44 4U-44 0-4% 6% - 5% 
8% - 0 8% - 8ft 3% - 0% 6% - B% 9% - 9 

2% - 2ft 2% - 24 2ft - 2ft 2% - 24 2% - 2ft 

3% * 3% 44-44 *% - 4% 54 -8ft 0& ■ 6ft 


Short tsm mss ere can for the US Doter and y«v other* taw dqe* nodes. 
■ THRU MONTH ■UROOOLMA pMM)S1m pcfrda oMDOH 


Piwtooa rri/a "L ewa M.T29 tons a*X« ■ fey. ftofe opw krt, O* 3*7.ia Pixa *23X14 


■ F aw iil In New York 


JIB 24 

— Cm — 

•- Prw. do*e 

£epot 

1X520 

1X385 

1R* 

1XS16 

1X377 

Sett 

15SM 

1X3® 

lyr 

1X450 

1X311 



Open 

Satf price 

Change 

High 

Low 

Bat vol 

Open frit 

8ap 

04.87 

94.70 

-607 

04X7 

94.78 

87,808 

446X43 

Dec 

04.17 

94X8 

•600 

94.17 

94X8 

128X21 

413X64 

Mar 

03X3 

03X0 

-0.12 

03X8 

03.78 

73X68 

294X74 


■ U8 TMMWY MU- IW1MI 81m par 100K 


UK GILTS PRICES 


Jun 

Sep 

Dao 


05X7 


06X2 

05X6 

84.87 


-0.05 

-0X7 


06X9 

04.72 


06X4 

04X8 


3,137 62 

1,140 23X71 

718 8X88 


Wk% Amrrt komri 


PnceE V- at 


are* lad tty 
dua rife 


90% Am* 
IMet PrtcaE u- Em 


htoaet Lad Q» 


doe 


ri fee 


m% ton 

Prices fife 


lad tty 
ri 


22 A* Open krisreei Ige are for prentaua day 


VlMiabFkehail 

■nmlOpeUilWtt- 1® 

EnhU’jpci®*— 1004 

TfeltalBOm 10111 

IZpctgQB 103%«l 

Etch JpcOe* 90-05 BA 

Wipe 1995 1WW 

Tteae l2fec1«NM — 10BU 

14K19M HOVri 

i5Lpc iuam «4* 


IX® 
-X 1,240 
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BCI 73V* IMBjtt— ITOJi 
C un wm ka i lOpciMB — 
Cow7pei»r» «H 

Trieel St* pc 1997J2 — 113VB 

Grit 10%pe 1997- 1X691 

Tries 6Vpc tOBTtf KCJ* 

Each IBpc 1997 11* 

9MK 1999 itt«ri 

7«ri7(*per«Stt Wd 

TranB%pelB9S-9S»- 9W 

T4pe-98-l 1l£e 

TririlVaBcW 1254 

geii raises TI2H 

Trial 9%pc 1999(3 1M - 


2X50 

214 

2XU 

640 

770 

1 . 1 ® 

900 


Male RtMn Taws 

£rirrjt*pc7iw 

Tree* iQijpc IBM 

Trees fipc 1999 tt 

OoMCMn tOAepc 1909- 

Trwefeftde'® 

Opeauatk 

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lOpc 2001 


Tpc Vitt 

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B\K 20tE 

Bpcamtt 


114% 

107U 

9fft 

10BB 

1D0A 

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-2 3^409 
0.1 20JD0 
-.1 IX® 
-A 3,700 
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-2 938 

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-v3 970 

-2 935 

3.909 

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-2 1171 
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1X50 

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SX 1264 
17.1 1®3 
11.41346 
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25X1271 
14X125* 
3.41293 
1661305 
2331309 
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641210 

15X1302 
17.1 1251 
24.1 13*1 
21X12® 
1131273 
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2631331 
15413® 
21X13® 
114 ISM 
6« 1347 


17X128* 
1X412® 
22.4 - 

1541242 
13 - 

2611044 
7X12® 
HU 12® 

sox - 


10002003. 


Trim 1i«a9B 2001-4 — 

RnAeavoc 1 ®^ — 

Camden 9%pe 2004 _ 
Trm Bltpc 2004^,— 
Com9%PB20QS 

TririlftpcaRS-X — 

7Vpc200ett 

8® 20003# 

TlwallVpc 2003-7 — 

Tries 5%pc 2007 » 



Trias ape 20® » 


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120% — 
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6321 Ap13 0(13 


31.11281 
10X12® 
7X1274 
21X1246 
194 - 

14X1847 
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31.1 - 

1X1334 
15X12® 
9X1130 
17X1301 
7X1343 


Me® «37Xj 199* QX 

4%pcria«.— <136X) lOTij ox 

2%0CW (7UJ 184% -.1 

2%pa'tt (76% 180% -X 

4%pcU*# (1SSX) 1® -.1 

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S%B9® (768) ISO* -.1 

2%ee11 <74X1 155% -X 

2*2PC'13 062} 1Z7A -X 

ZVpe'll <B1^ 135* -X 

24PC-20 <33.09 120% -X 

2 lyre •24# 07.7} 107*2(1 -X 

41^0-30® — 0351)1061101 -X 


IX® M1BM16 
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2X00 JU7Jyl7 
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7X1313 
21X - 
16X1319 
134 1317 
22.4 - 

13X1314 
134 1318 
17.1 1319 
161 1320 
MX 1121 
1631322 
10X1323 
166 - 


BANK RETURN 


|ld Bgtree n > w e mtie » aa ahew RP1 teae for krindng |la 8 
mantha prtor u lawd and hewa baoi aoiuatad to raflact rabadno 
of RPMo 100 In January 1967. Cenvankm tarter 3J45. RPt tor 
Ootnbar 1998: 141 X rod for May 1904: 144.7. 


TrSwBpc20M B*fl -2 11® Mr2SBl25 

Trial 6 U4pc 2010 BOU 65 2X» 

Cm again 201133 — iOB*d OX 4X73 Jel2JyT2 

Trm 9pc 201 233 103% 04 61® FeBAgO 

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Tries B% pc 201733 1 0ZA 62 6850 M5to2S 

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21-113*9 
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4511 

13 

358 

total 

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16213® 
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1631845 
31.121701 
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162 - 
2661332 
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26121239 

254139 

23X1243 

1X1324 

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Other Fixed Interest 

AMm0riH%2D10-_ 

Ariai Dev 1 0% pa 2009— 

Birin 11%w 2012 

tarindQp6%pc*iQ — 

fepcCfeplOM 

ISpcW-S 

Nyto tkabec 15*02011- 


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118% 

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110% 

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101% 

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725 JM0X30 

— — 

110 

ox 

315 AplOd 

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138% 

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3*938775 

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Wednseday 

Inctwaa or 

BANKING DEPAHTMB4T 

Jute 22. 1004 

dacrRM tot w«ek 

UaMtfae 

£ 

E 

Captod 

14,553X00 


Pubic deporita 

884X82X01 

-286,160.483 

Bankera depcelta 

1561X81X04 

-82X76783 

Raroive and other account* 

ZXB6X46133 

*80X96312 


6305/467X38 

-247,105X44 

Aaaete 



Government aaourtttee 

1,022X03,708 

-70.900X00 

Advance end other accaunta 

2X24X07X80 

+470X49.798 

Premtee, equipment and other aeo 

Z t Q49,Q3D l O0O 

-886.781.104 

Note* 

£725X02 

-101,847 

Coin 

1B8.B09 

*7.101 


5X05X67X38 

-247.106X44 

ISSUE DSPAPITMENT 



UabMae 



Notea In dreuWksn 

17X10X71.108 

-9X98X53 

Notes fei Banking Department 

0,728X82 

-101X47 


17X20.000X00 

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Aaaete 



Government debt 

11X15,100 


Other Government aocurfliw 

16703X90X52 

-132X50X71 

Other Security 

1.104X94X48 

+122X56671 


i7X0OAOaoaa -iwxxyjoo 


LONDON RECENT ISSUES: EQUITIES 


• Tap 1 aback, rt fe-feae to 

STOCK INDICES 

jun 24 Jua 23 J«i 22 


, p *” rtt ” tmto. iri & riaMend. Ctoafeig mkHricw are ahow in pamh WaeWy pereerdege ctri^a are cModaed on a fariy to rnday bead. 


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FT-St »IM !» 
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33738 3437.1 3465X 
1451 J 14611 149U 
1803X8 182154 1824.® 
f78ft® 190*® 1B06® 
1445X5 1476X6 1485.® 


— IBM— Stoc 

jun 21 Jbi 20 ttgn txae Htfi 

28402 2971.1 3528X 28766 38263 9869 
3481.9 34767 <1668 3374X 41S2X 13794 
3407X 34909 41867 33718 <7867 13763 
1*64.7 14064 17763 1«1X JTnU «6S 
1826X8 1636® 2004X6 1B03XB 2001X8 136179 
1BQ673 1816X9 2080.72 1766® 2060X2 1363X9 
147603 1491.12 1784.T1 T 445X5 1784.11 61XZ 


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FT-SE Eurabri* 1® 132634 1336® 1321® 1301« 130643 184618 130346 184619 90045 

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FT QrOfemy B340J 2231 i 231 IX 22960 23161 27116 2291 X Z713X 494 

FT flow seen*® 91X1 92.10 91JB 90® 91.14 107*4 86® 12740 4619 

FT Ftad Henri 10615 10645 107X3 107.70 10631 133X7 107® 133X7 5053 

FT Goto tones 1973X0 2004XB20165T 2026® 2013X5 23874 176202 238740 922.16 

PtritonKOrGottfttoM 232X 23TX 2314 Z34X 2368 27 7S 165.0 734X J35 


base lending rates 


Mam 1 Company 

A&od feet Bank -fe 

ASBar* 

riMoreytowtetwr 6S 

Bartioffevute 

Bflnoo 0*080 Vinayn-. 

Bank ol Cyprus 

Bank «r hriand 

m Bankolkida 

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BaidsyEBank 

CXBfrtNOdtoWd-^ 

OKto5ddo0anit. 

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Popular Bart. -SJ5 


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EjUUrBri* Umtotf ... 625 
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•Robert Ftomhg& Co- 5^ 

GTOber* 

gQlririglWm— — 525 

Hst*) Bade AG Zurich. 625 
•Hfflriros Bank 

Hotfeabto*Genin«Bh.6» 

dHBSamuet^-- g 

C. Hoow & Co 

Hongkong 6 Stanghai. 6® 
Xilnn Hodge Barit.— 6S 
rit«po«Jc»eid»0Son6^ 

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Mo0h«|BankUd 

MklandBri* - W 5 

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aborting to®u6on. 8 

Royri 0k <M Scotland, 626 
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7S9- 

dUtMBkof Kuwatt— 625 
Unlly Trust Balk F4c... 6» 
W u d am Truri — 

WMroway lx*ia<r..- &2S 
Ytstattw Barit 625 


• Members ol British 
Mercfianl Banking » 
Securities Houses 
AaEoeWkn 
■ toarinHsoaftn 



FIXED INTEREST STOCKS 


Issue 

cries 

£ 

Amount 

paid 

UP 

Latest 

Rental. 

date 

1994 

High Low 

SbMk 

Ctostng 

price 

£ 

+er- 

_ 

FP. 

* 

96p 

9Sp 

Britton Cv. Pf. 

95p 


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07p 

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103 

100 

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% chg 

Jen ataca Jro 
24 3V12« 23 


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MkL 

cap 

(Da) 

1004 

high Low Stock 

Ctoee 

price 

P 

+/- 

Net 

rev. 

ttv. On 
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WE 

net 

S120 

FP. 

60.1 

123 

116% Awa Horrible 

121 

-1 

W3.74 

28 

£0 

120 

1B1 

FP. 

464 

1B6 

100 Amey 

168 


LN1.06 

08 

50 

361 

255 

FP. 

14£3 

287 

236 Argert 

281 

-1 

- 

- 

“ 

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100 

FP. 

312 

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100 Bane QJW Sfn c 

100% -2% 

“ 

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FP. 

9.44 

110 

1(6 Bksmatuy Fft 

110 


WN204 

2.7 

30 

112 

§150 

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2B0 

154 

140 aawfei Driphki 

140 

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£3 

52 

108 

fe 

FP. 

219.7 

81 

87 CAMAS 

72 

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68 

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104-0 

112 

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150 

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17,4 

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ISO CPI Aramee 

ISO 


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28 

153 

§143 

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12X 

170 

149 Caaaal 

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100 

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BOX 

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42 

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19X 

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130 

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461 

143 

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138 

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1063 

233 

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232 


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21 

58 

£1 


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082 

97 

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88 


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233 

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227 

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£6 

110 

120 

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342 

130 

126% Norcor 

127 


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168 


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249X 

131 

113 Redrew 

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140 


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440 

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RIGHTS OFFERS 


Grid Una rida (36) 1071X0 -11X 200*88 «a 100® 2X0 23674a 1522X6 

■ ftogkmf tobfcn 

rides (IQ 2013X0 -11* 296054 14® 30.78 4.44 344080 1902X3 

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drift Aorta (12) mist -BJ 163021 28X0 5524 064 3J3B.SS 13B100 

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36 


FINANCIAL TIMES MONDAY JUNE 27 1994 


BANKS 


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1.13 89 IO 
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195 08 1* M 
193 69 M 
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1.12 79 8BS 
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1.10 07 8 

in 79 am 

1.1S 72 BBS 
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19% 11% Chtfr Oa 19 2783 1ft 12% 13 -% 

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38 037% 37V 

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mm 190231 a a 
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asr 

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118 7.1 n 8715 31% 
048 3.1 3 971 lft 
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150 1828 8% 
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8% ft 8% 

25% 2S% 25% 
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npteril 117 18 a W11 31% 


172 29 1510077 31% 
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020 M a 814 24% 2ft »% 

198 io asm oft eft a 

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490 ao W9 54 654 54 

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278 8A 1231087 51% n% 
1.12 39 *1 7812 3ft S% 
118 09 17 IS 28% d2fi% 
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110 10 13 2084 7% 7% 


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001 09123 879 10 

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30% zft c anri x in 49 b 2472 aft 2 ft 2ft 

27% latorinkk MS 29 20 71 Z7% zrh 7Jh 

29 2i fttePd n* 10 W W as% aft 25% 

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39% 24% Conte? ® 

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44 31VtapSd 25 1ZW 42 

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76 62 ton Ed Pf 590 73 


1.41 89 3 3ft<S2% a% -1 

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1 801 JH d% % 

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25 12JB 42% 41% 41V -% 

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072 15 W 8790 39% 2ft Zft -1% 

1.48 ID 13 5* 2ft «V 2ft +% 

in 89 15 34 21% 21% 21% +V 

1 8807 12% 11% 12% +% 

401 79 1 80 60 60 +1 

290 73 9 370* 28% (Bft 28% -V 


lTANHOPJ 


When you nay with us in 
BRUSSELS 
stay in touch - with 

your complimentary copy 
of the 

I FINANCIAL TIMES I 

I BUteWTl riJUteUterittUII ft 


47 38% toriBG U8Un«S 
BftSftOnM 190 29 2D 040 S» 
20% 12% Cm Stan 13 3252 12; 

86% 48V tone* 1 m 13 4M83 81; 

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1*8% H7C0OP7M 798 69 *1 00 I 

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418 12 4 SZV 52V « 

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798 u xim n n n 

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175 73 2l 00 SO 50 SO 

225 69 TO 27% 2£% a% 

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lU 11.4 319 1ft «ft 1ft 

1 2B1 ft 5V BV 

1 2070 1% 1% J% 
192 17 123007 ■% 3ft aft 


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MlVBftmCHKpC 

g 4tVMaiq 
4Z%R«w 
37% 33% FKH2.1 
18% 11% RUM 
Oft BiVHmreu 
nazVFsM 
17 12% MB* 

23% iftftdPWF 
48 39% Fit tote 
53% 5i%mun 
10% 8%FUUM 
4ft 3ftMWB 
36% 29% Raw to 
41% 31%RMF 
2818%FMGn 
2ft 23V tamale 
fftnVFWMr 
33% a% mw 
2ft 1ft Rota* 
9ft 4ftRUGTX 

mh 45% we to 

7V fttaCGd 
48 41%FtteC8SX 
t7% iftRxMGx 
70 53V fM 
10% BFtttoX 

aft »vrebwi 

issr- 

14V WFriKtto 
a anted ft 

81 33% FnaHta 

S MhBnmmt 
4% FrtadA 
4VFdMB 
18%taMcH 
ZTVZIVRMCIU 
2k 4 ZlVRteGd 
33 SHOT 
7ft «FdAri6i 

1BV WVRrintora 


097 14 42 W a m 
112 73 30 14V 14% 1 

012 M 27 W IB 14% 1 
390 ft* WOO 38% 36% 3 
040 ST 24 W 7% ® 

883 2008 14V 13% 1 
on M 14 588 7 0% 

194 19 14 5086 59 38% 5 

798 11 5BJ 47% 48% 4 
198 89 42 W4 24% 24% 2 
048 B91Z7 13G8 7% TV 

asan 75% 74V 

048 19 a 755 30% 30 3 

2A0 29 II 8013 B*% 83% * 
190 49 n 1ZI8 M 23% ! 
042 2A tt 1509 17% 17V 1 
1510011 a awV 1 

084 24 122821 23d22% S 

18 183 Zft 23 

oa 15 X 15 W% W% 1 
OW OT 16 2078 MV 23V : 
190 4A 81548 »V » 
10ft 39 14 2212 35% 3ft 5 
OTZ 14 sn 7% ft 
OBI 99 119 9 8% 

032 09 14 373 37 38% I 

890 79 WOO Bft Bft I 
390 79 5 n 50 

890 89 0 * «ft 

290 41 5 8148 48% 48% 1 
in 3J 8 513 40V fft • 
2.15 11 84 3ft K% I 

005 09 408 15% 1f% 

0.10 02 28 988 » 53% 

398 49 11 4848 7ft 74 
090 19 58 804 1ft 15V 

078 4,1 1B3 13% 1ft 

194 41 83772 48% 44% 
395 70 8 5ft 62V 

040 01 7 W1 0% dft 
in 15 10 222 37% 37 

UD 39 10 853 34% 33% 
1.40 30 13 3743 37 3ft 

098 29 18 404 19% lft 
in 42aZ0B1O29V 28% 
040 1.1 18 438 3ft 37% 
198 79 11 2084 Zft d»% 

079 49 W IIS 17% 77V 

002 19 S3 1481 51% 01 

471238 B53 51% 
088 08 7 19 ft ft 

c in 27 W 43 4ft 44% 
on 10 12 304 lft 12% 
in 11 4115*01 67% 58% 
090 88 58 10% W 

074 29 23 77B 37% 37 

OW 2.1 IB 82 13% 13V 
in 18 12 4838 29% Zft 

094 QA 394 1ft dlO 

on 79 38 B dft 

002 09 IB 1338 37% 38% 

19 502 36% 38% 

095 1.1 7 ft 4V 

096 1.1 8 2 ft «V 

195 70 38 2024 10% d18% 
090 20211 1153 24 23% 

OW 31 7 170 24 tea 

9 an 2ft 25% 
088 19 S M3 8ft 60% 
r 098 06 236 14% M% 


a j' 

M 23% 

17% Jft 
20 mV 

Zft Z3 

w% w% 
MV 2ft 

sft a 

35% 35% 

37 38% 
Bft Bft 

n so 
n 87V 

4ft 4ft 


|| 


27V 22% IBP be 
10% 8VCNn» 
31V21VPT1X 
11% 8%Bri%te 

8 2VICFKX 
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41% 33% MB top 
29 24% VteAZ 
48V 43ted79B 
a 23IR4DB 
20 24V8Pf*2 
62V 46MPIUI 
38%90VW«tatox 
47% jarateflPA 
52 47% teriWS 

48%3Z%NCM 
11% 8%teM 
18% 16 IM total 

2ft 21% toe* 

B7V 83%tadW798 
30% istodtoGrti 
23% i8%todrete* 

ZlVl2%M«tari 
15V I1%tadmm 
41% 32% toriM 


STVaftWdK 

aft&ESff 

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284 15 WOO 
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4.12 14 « 

084 2A 18 1208 
390 71 4 

390 70 8 

an 30 203081 
292 8912 044 
190 3A 15 2820 
090 51 3 WS 
102 79 W 
140 10278 809 
798 8A WOO 
UB 70 450 

UB 14 13 285 
096 04 883 

1211B1 
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On 10 41 383 

025 30 a 

on 19 IS 8 
in 14 ■ 384 
15 W 
0 200 
084 27 4 44 

198 39 37 


a% a% 26% 
BV dft ft 
23% a% 2ft 
10% W W 


9A91%te(telM 002 IA a 7 23% 23 33 -V 

S 3mSS 2 220 70 384 3ft 80 30 

31% 30% WOriteB 200 84 2 31 31 31 -% 

1ft iftUcOOdtot 090 20 8 43 1ft 813 13% ' 

amZbm OB 09 a 8908 59V 8ft » -V 
1A0 1112 IBM 119% 117% 118% -% 
nCVlfeMH 2 M 3A2S715Z7 6ft 88% 8ft £ 
87 SZVlfcXam 108 23 a2B2Z %% 71 jl 71% -12* 
48V39%Hteto 100 23 a 19® 43% 42% 43 -V 

SgSSx* 144 2* a 88 1ft « W ft 
_i~L inTmrbin 10341s 27% 21 Z7 ft 

3S% 31%M*toHri 201 7017 282 34% 34% 34% ft 

wveftteto* oaz 10 20 20® 70% 7B 7ft -1% 

30V20Vl*rilriaCn on 29 21 “ J? j* 

2ft 28%HririBMl 290 14 ™ ® 5 S2 J? 
eft KVWrifik 2244012284857%M»% ft 

*1% 3ft Mate* 102 49 122M tea 27% Sft -ft 

10% lft UdHr 090 89 W W% 

iS 3?SSt IJttUWwfe Jl i 

a 2ft IWtk 1.12 17180448 3^8 Sft 3ft ft 
1ft 14% taxor Fn MB 1.7 31 «6 1ft IS V0% ♦% 

iiSES. 

ass™ “ 27 s«s & "4 £ a 

M is— s a a ^ 


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110% TVPtelMi 110 10 132094 7% . _ 
1ft ftPtotoWx M» 29 M HV 11% 
I 9% 6%PPte»P 096 0* 8 148 7ft 
Zft -wSSS. 690 49 8201 1ft 1 

27% 2*V PXxi 2.125 2.12 63 88 2ft 2 

14% lOPtonwRl US 10 4 133 ’0% ? 


3 £ 
’iH 

die ift 
25% 25V 


14% IStarinx 198 11 
360 303Pln*y2.12x 2.12 17 
46% 37Rtora8 104 27 


46% 37RtoraB 104 27 173304 » 
3ft2iVFBrii oa 09 a wre ^ 
28% iftPWrDte on 12 4810110 a 
SvteStataPW OM 1.155 ZM 21 


WOO 318 318 318 
3304 5ft 3ft 38% 
W48 Z7% a% 28% 
HOBO 32h 21% 21% 


l iftWdta 

I 31% Mid toll 

1 nVMdtnc 


' 13 Bl teh w B 8 183 ft 

32V 21% Ftam Cite 1® 17 11 1651 

24% i5%nw>re*> Hi □ 

35% 29% MM 000 10 21 14n 32% 3 
aft 25% FlQl*l 11 1« 31% 3 

-£%£*** 0A0 19 42 148 « 4 

iftPnpoGIM 178 63 10 W 1ft « 
W%RxBBkB 11 141 JS 2 1 

UhtiXF 096 09 HB .12% 


41% 36% Mriri* 
10% iftWrih 
41% 31 rid) 
38 Sft tan* 
1ft 14%rinxriy 
45% 38%Mnta 
45%3fttartja 
4% ftWRlGri 


55 47VtoriG390x 300 12 


Zft M trite 
40%35%totFFx 
1ft IftHMdlX 
7ft Bft MPBp 

1ft ^ Write 


ft ft umi 

34 iftlri Owri T 

i ift lawitori 
ft 2 tot Trite . 
50% cVrito _ 
21% IfttoMien 
36% 2ft brio* Bril 

11% fttadta* 
12V ft tody tab 
9i zflritop 
W4% Bft err 


2BV a 28% 

44 44 44 

24 M M 

SB a a 

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35% 35 X 

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84 84 84 

zft aj* WV 
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39% S § 
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18%df7% 17 
MV M 14 
ft 2% S 


Ms* 

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82% BlV 81% 


nil 

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mi 

TO S i 

a % n . i 

% % % * 


M% W%PBtochc _ 

16% wnrateF in 00 

2ft 22% Potari&B 172 20 

4ft 3ft PVc* 196 40 

26% 18% MSP 106 90 

21% iftpite on 10 

38% 28 Pterin 024 07 

afto7%nwwkx 1002.1 
aft IftFIMtax two 21 
15 IIFItak 

1% V PlrilriUol P 2901849 
60 51% RoeC 114 2 2 


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oft Z9Pn*mi 32 8791 Z9V nZ8V 73M 

21% 1ft PrapTtAm 190 53 27 319 1ft 1ft 1ft 
4% ftPlte«* OAZ109 3ffl 3% 3% ft 
4ft aftRnU 1.12 27 11 77 41% « 41 

31% 2*VPnUB 194 39 13 89 27% _S7 


178 18 10 79 1ft 019% 1ft 
11 148 13V 12% U 
108 09 n .12% dU lft 
172 20 a 3283 2ft 24% 2ft 
106 40 a W2 3ft dW » 
108 39 91931 iftdlft lft 
On 1017 4193 1ft lft 1ft 
024 17 W 322 33 32% 32% 

190 2.1 M1M 78 77 V 
040 21 17 in 19% 18% 1ft 
23 87 1ft 12 12% 
2981848 1 WOO 1% 1% 1% 
114 22 7211878 Sft «V »% 


17V ifttaWM 090 11 7 840 16 1ft 15% ft 

i&ki 24% Main Fd 031 1.1 7 1343 27% 27 Z7% ^ 

TO% 7%IW 8 245 - ft 9 8 ft 

3% 2% Metatar 091 292K V ft 2V ft 
1ft 4%W8MNWm 0AM 4GT ft ft 5% ft 
10% ftriHri 098 09 in 9% dft ft ft 

^aftMtar* on 1148W7I m -i% 

27 1^! Wot Irii ' M4G2B ^% lft ft ft 

22%W%MdriM 048 2AM 33 lft ISV 1»% -% 

23%l7%MWriM 163 2J U3 19% «% 19% -V 

7V attodtop 122B« » & 

28 23 trite) Bk 098 01184 W 2ft 26% 2ft 

85% TZtal* 140 4.1 10 8005 84% 82% K% -1% 
2tf%10%Whcriv 7 W2 lft 11 1ft ft 

ift ftMowu on ii a b ft 9% o% -% 

lft iftlltodririn 110 19 9 32 lft 1ft 12% 
83V72%ta6nri : 2n 13 18 3878 TTH 78% 7ft -1 

10% Fillrita 0T9 18 2 446 8% “y -ft 

zft ZZ% Marita ft 100 71 11 758 22% <J22% te» ft 
20% iftUanlgaBa 198 79 8 87 1ft 17 1ft ft 

b kiss a j 5 3 - 3 

"i^sssfs’.asts % 

'i iscr “ s % 5 

60% Gft EpSt in 21 5 3899 5ft *B% ®% -1% 

2ftw%l5tti UO 39 w no « 2ft tek ft 

m% TBVWHi IM 1J MMM Bft 77% 7ft -ft 

55 42% Irito an 08 1225M 48V 44% 44% 

% V Mg Atari 11 J! .P «r J" 

8% 7%Mte tt« 70 2 a s ' s 2 

11%. fttaPriT OTZ 70 « ft ft ft ft 

g% SVIBadctori* 005 70 40 9 8% ft ft 

ift in* l*rinriM~r 093 7J 097 ift W% 10V -% 

46 31 V MnttO 100 39 22. 436 43V 42% 43 -V 

lft TO%5 STlE 012 2.118 1 WV 10V 10V 

tet 1ft ffimlri* IW 18 21 HOT ZlV ZlV W% -% 


(FnraiStx 0A2101 
tPraU 1.12 27 


23 

7% 8 

"33 


31% 24VPIXUB 194 30 13 

% % Ptud 9B|C 0.1893.1 0 

n 51 PtCenrtjOS 498 70 WB 
WZOBVPWreffAO 7 AO 60 » J 

99 STPOtanCBI 7.15 12 WOO 37 
W3B4VFtt*n70 700 80 2 94 

32 25 RAGE 210 1* 103104 25 
13V 11 nSNnriln 9 274 11 

1% i%Pid*tgr 1 i 

24% lBVtaQMS 104 90 0 53J 18 
39% 34%MUP 008 10 19 13 ® 
38% ZlVMax 024 11 7 
11% ftPrinriMnxOTS 89 
10% 9%Rtori*B*y* 075 79 


3 IW 118 118 


ftrimCrin 


-3* 7% Rmntefir x ISO 89 
14% IftMariterxlSB 7A *19 

1ft 9%PtantaxOT8 7.1 190 II 

9% ftPMtataBXin 18 187 ; 

ft 7% PuhwriHx 0J5 90 7U I 

8% 7%nmdtax 072 9.4 3088 j 

82 61%0ariaflx 3.12 39 18 4098 7 
10% 1Z% Qatar St OAO 27 » 20* 1 


OM 11 7 788 21% mV W% 

078 89 79 9% ?% ft 

075 79 472 ' 10 9% ft 

on aa » 7% d7% 7 % 

098 7A *19 12 lft W 

078 7.1 198 10% WV 10% 

an 18 1B7 7% 7% 7% 

075 90 715 ft 8% ft 

172 9A SOW 7% 7% 7% 


TO % 70V 

£3 


Mgitari 

MntoOp 


24% 21% DoexOM D 120 49 
13V 120D(riMdP 110 17 
35% 29% Qatar 1.M 30 
36%MV0ri*nV 0A8 29 


OSB 2*111 1» 30 

in 49 299 M 

110 17 <32 12 

1.M 30 15 283 31 


*19 12 lft U 

198 10% 1ft 10% 
187 7% ft 7% 
7U ft ft 8% 
on ft 7% 7% 
KB8 72% TOV 71% 
204 14% 14% 14% 
120 2DV 20 ZD 
299 MV M% 2ft 
432 12V 12% 12% 
293 31% 31% 31% 
730 24% 24% 24% 


12% IftMpwU 


2 2 


i n ibs Bmp im 2J i* no <7% 

■ 5ftHCHtop 190 IT 14 .08 

! SJlWaT OH 10*3 340 

^IfeWD 098 29 181408 

24% WMrix 072 28 7 38 

an 20 7H* 

■ 44% NriA 194 39 111*94 


ift mo 


«%37% 

48 n 

14% ft 


23 

108 98 

81% 44% 
45% n 

13% 8% 
30 15% 



- J - 

338 89 10 38% W 

UD 02 6 Sft 38% 

032 41 12 MB 7% ft 

17 431 W% Sfi% 

098 07 W 0% ft 

0 548 9 dfl 

OW 11 306 lft « 

1TZ 10 11 JW » <ft 

796 79 WOO 1 00 1® 

iA4 29 19 K 48% 48 

IW 27 1S10BW *3% *v 

an 39 n 118 9% ft 

038 SA SBSOZS 10% 10% 


42% sft nridrite 290 1716 ton 
4ft BWMtU 208 89 13 W 
a 24 my ns 45 10 U77 

aiftSS “^“2 22 

7% 4% MEDn W 351 


86% Zft BriFuri 
18% 13% NUG 
18% 13% EMM 

48 3ft Mt Pita] 
24% 1ft MBlld 
28% 24% MSteX 
14 fttalSWri 
Zftlfttetor _ 


MB 40 10 1577 
BA4 20 22 M3 
W 351 
8 10 
108 59 W 444 
1Z3 534 
048 3313410433 
190 47 « 91 
1213847 
198 42 18 677 
7 W7 
1 1028 


37% 25% COnSc 000 IT 01M f 

sev iftoadto in u snsa ie%di5% ti 

10% a%toriWi 00* 14 o ft o 
11% 10% Gam HR in 11.4 3W 1ft 1 

7% 4% taws Com 1 W 5% ft l 

i£ AOmrCB 12070 1% IV 

5e%3^6to«pto 102 17 1230® ■% n% a 
28% 23VCospriT88 022 09 19 WH 2ft Zft Z 
uVWVtote OM 20M IW 1ft*nft 7 
28 24% Crriri 100 47 9 28U ZB% Sft 2 
088 2044821® 


34% 77% Curing 088 22448 SOT S 31% 31% -V 

i6 % ts% oxwrm aa 10 i84 12V ift Jft ft 

.A'issf" “ u ;s|ss 5 

^aeu a&ssiSl 

33% 16% Otari 9 012 22V S% _ 

«V 19D 30 13 S66 4ft 45% 4&% -% 

12 reonr 1.18110 13 961 10% w% 10% 


1.18110 13 981 10 


308 7A 42 
100 17 13 148 
100 20 12 203 
18 428 
109 S0 281W73 
MU 9 

m 7 a 17 

100 11 832 

an 29 15 83 

1.70 117 W 
004 23 S 313 

102 20 warn 

148 10 S 4214 

38 SI 

1 11 Gate It 1A012A <0 

16 V Gate I D0O 10 7 403 

120x3*0 000 11 8 304 

i l8%toAtl* 112 M 171 

OBGriOH 140 3A 4WI8 

I 45taeCc 1A4 3.1 MMS 

I x% ton Horn on 19 2 WB 

IIGreHamx 132 2012 W 



52% 52% 52% 
41% 40% 40% 
Sft 50% 50% 

n% wv 11% 

30% 30 30 

28% <08% 28% 
17% 17 17 

11 % 11 « 


27% 27 27 

11 % 11 % 11 % 
19% 19 IB 
12% 011% 11% 
Sftj a 2B% 

3 2 



002 2.1 28 286 
098 40 14 182 
435 7A WO 
in 00 11 SB 

0J2 80 moo 

6 223 
1A8 7J 11 « 
109 59 38® 

on 00 181878 
8.18 2.1 12 374 

an 19 82 3 

039 20 133781 

on 7j n 

tn 20 W2189 
B0o u s an 
087 B2 573 
092 10 631SM1 
090 90 271 

OJO 15 788 

007 7.1 I® 
0*2 15 57 

MS 2AS38 IB 

UD 11 jJ 
102 30 80 wB 


2% IB% 2% ft 
Iftdlft 1ft -V 
17- T7 jr ft 

*5» ^ . ± 

333 A 

- 18 

A sk -ft 

21% .» 21 ft 

ft 9% ft ft 
82% 81 81% -1% 
re mf re ft 

7% 7% Jh ft 

12% 1ft 12% ft 


UzRriterG 690115 S 
r% HBDBn in 19 124817 

1% MtanMv on 10 M a 

r% WMdcEq 72 277 

r%ttoactar 100 UltW 
iVHwAmMx OM 120 m 
IState 200 7.1 11 808 
1% tar Stony 012 1.1 MO 
StefJVta 1-52 8J 13 JOT 
AMwFtaB 103 80 53 1968 
!%nvaa za s.4 ii mm 

State 0*0 18 20-1540 
fttariri OAO 20 42 WB 
ftltexae OM 0937 120 
7%JMBM 149 10 3B31H 


17% IftMnriri OAO 20 42 WB 

to37%Ntate OM 09 37 120 

48 37%MmM UU9JJ 
81 49MM03P 117 03 16 206 

wosi%N6MCraFr ia « » 

48% 41 ArigMlS 390 19 WO 


3Sa%to»*>M 
9% 4%HM 


« tW "iwi 

7% 4%tarfta* 
74% Sft NoriS 


M2 70 BZM* 

OJD 14131718 

144 30 12 W94 

oa 20 5 716 
119 00116 832 
in 47 SR 
390 80 T7 W 
99 277 . 4% 
ub an 18 3069 8ft 


2 SS 

30 39 

% % 
aft 

1ft 17% 
lift lft 
40% 40% 
17 1ft 
2S% 2ft 

33 

BZ 52 
30% 31 

15% 15% 

*2% 

01% 11% 


1ft W% 

4ft 40% 
40V 40% 
49% 4ft 

«i% n% 

42 42 

«4% 1ft 


RJB ta 83180P9 8 5% 8% 

HJ Cop 000 29 34 7 21% 21% 21% 

nocatm aw is woo w 9% s* 

BPSHter 131 10 87 237 ft 4 4 

taxxp 1287 1ft IS 15% 

HrinP 100 34 10 2083 38% M 35% 

textei 132 091872088 3ft 3ft 3ft 

RXyJanMF 132 22 8 «5 MVdlft 1ft 


18% 14% RXyJanMF 002 22 8 S3 Iftdlft 1ft 
(ft OOVtalii 100 24 12.6887 6ft Bft 

47% 39%Rte*nOA 140 34 171444 *1 4ft 40V 

7% fttelBriM in 154 6% ft 8% 

18% Ifttariam- 106 8J 15 17B 17 1ft 17 

15% ft HnxgniEq 15 017 ft dft ft 

35% Zftfltalric 000 10 12 ®3 31 30% 30% 

H atl thte tri 23 07 OM 121 OM 

8% 5% Mm 002 04 5 ms 5% «» S 

35 2BVMptaMR 0T3 29 W 1238 30 28% 2ft 

52% 45% tapUbNY 102 20 8 815 4SV dCV 45V 

23%M%tax9> 18 352 13% 1ft lft 

11 . 3HtaO*C)l 4 881 B 8V ft 

g ift nraefit as* 14 9i84i zft *% 23V 

4ftRBytat 190 11 8 22JG 48% 47% <7% 

iftHnaaPADS 293117 WOO M%<tM% M% 
3ft taota Mr M2 24 112010 34 32% 32% 


21% 15% RtoAU 

m ream 

4ft 25VtatmKri 
2ft. 21% tacME 
23% 20% HoWta 


0 298 2% <C 

*1 018 3B% 38 

1JB 02 W 842 ZlVCT 

001 30 9 749 23% a 


vra xirn (HAM ■«* ***** w • 

ft 5%R0CMCV OJ0 112 3 3ZS 
M% 34% takril 190 27 13 5012 


44% 34% Atari 

stSE 


On 3.1 13 3581 19% 19% 19% 


IV 38% 39 

!% dZT% 21% 

§22 

% 38% 37 

i% 6% 5% 
1% 9ft 00% 

!% 24% 2ft 
17 1ft 1ft 
>% 8 8 
1% 28% 28% 
r% 108 106 
t% 12% 12% 


15% IftAteStai OAO 29 2S 406 
31 MAteto 140 IA 23 822 

g ift Aril 19 42 

21%Art*S in 15 161744 
ITVBytadOqi 090 14 3S GE6 


18 68 5% ft 

1A0 13 34 13M B1% Bft 
131150 10V 10% 
110 11 32 441 ft 4% 
090 10 W 430 2S% 24% 
Q20 12 10 43T 17 1ft 

100 4319 ft 8 
291107 82 2ft 28% 

808 5H 18 8128 107% 108 
1.16 18 SBS 12% 12% 
OAS 19 18 3329 23% 24% 
028 1 J M 141 18% dWV 
m 19 2B 406 15% 15% 
140 IA a 822 28% 27% 

19 42 18% 18V 
an 29 16 1744 2ft 24% 
060 14 35 6B6 17% 17V 


Trass' s as si -S 3 

43 47% 47% -1 


wv 4% be red 


2 A 


a% 18 l 2 SMtoR 000 45 93 72 17% 17% 
13 10% SRM UEGpx 006 30 to 174 11% 11 % 
27% IftSPSTl 108 5.1 3 106 2ft 28 
M% IfttaUMitoX 107102 9 120 13% 13% 
20% WSMKridX Oa 10 IS 1469 18% 10% 
3S22%3tagVta 12 88 2ft 3ft 

18Vl3%StoNx 006 21 9Wn 17% 1 ft 


! 174 11% Tl% 11% +% 
I 106 2ft a 25 -% 
1 120 13% 13% 13% +% 

s un ift wv wv -% 
l 88 Ift 2ft 2ft -1 
i nn 17% ift ift -% 

tanflnoed m next page 







39 


\ 


FINANCIAL TIMES MONDAY JUNE 27 1994 


4padmJtaz4 


NYSE COMPOSITE PRICES 


NASDAQ NATIONAL MARKET 


4pndmJanS4 


_ » am t 2L rm 

*> I Em « Umirator ON Mat U* 


Cooftnowl from previous page 

jrasssw B, s 

&T0Z*MJ» in aau i 


24 23$ZJ$ 

5% A ^ 


"S^jKT 

25 17$ SnDgg ^ 

isSiOm 


33 53% A 


120 06 13 42 27$ 27% " 

1J0 “ 

140 17 74fiil 381.497% 

028 13 #12 «% 12% 11% ' 

084 1* 84343 48% 48% 48% -1% 

1-62 07 filBOB 18% 417% 17% J, 

018 1,7 9 MB 9% 9% 9% -% 
3857 14$ OTA 14% JU 
UO 08 15 841 33% 631% 32% -1% 
aio 05 IT 4308 21 20% 30% -% 
OB4 10 147836 21% 21% 21% J+ 


*■» ' HO W Ik 

P* Imam* Ik « E P Bilk 

2B%21%XK OS6 25 13 2623 22% 22 

18% M%H*Enmp US 105 14 122 15% 15 

77% 81TW. 158 25 192048 63% 85 

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AmadTd 221100 25% 024 24 -1% 
Amor Comm 272 23 25 24% 24% 

AST FtoRti 6)0000 13012% 12$ -% 

Alton 16 541 10% 1030 10% 
AOSEAfe- 032 IB 2787 24*22% 22% -1% 
AMfek 048 10 1878 5D% 48% 48% -% 
AiSoM) 12 9 3% 3% 3% 

Mood* 092 18 113 A A A +% 


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AmBptaf 
Am Or Bo 

Am Hang 

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MM to P to to mto- atoimt ip dilto no pfearnnkp nP. 

rdddah cWto ar to » pandfeg » wm m to few* MM 
atowk to Bdtofe bpi to to to to, dwP m i aul to h 
top fe pwtog H aato toPMI nm win tn ndto n d * 
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■mp w nv mpM mo* w k iw m *1 * **<■■■■ 
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B El 8 008 01 11 

Brtbaga B 30 
BtoarHWt 43 

Btoar J 008 11 231 
BtoflLB 024 3 2100 
Bus* m 255 
BPScuSi 04411 824 
BnftMCp 040 9 742 
Bndnati 080 12 15 
BuPfiK 052 15 713 
BatoF on 15 425 
BfefVMa (UD 13 117 
BubtoP 140 13 OH 
BBSTFlB 108 91187 
BEAMS St 143 
BwdKSra 02832 77 
nnUPI 18 48 
B**rWHx044 14 484 
BHA&p 012 15 5 

filtoc 95 166 

BgB 01815 44 
BhfivWXQOB U 357 
Bbgin 3011320 

Bkxnrf “77 2407 
BkPDigx V04 11 88 
BMCSoft* 1310084 
Batons 134 101419 
BfiEuna 0Z7W 481 


Baton Bk 078 5 137 
Barton It - 362008 
BadyWA OH 18 2 

Brencox 020 7J 312 
BurnS 024 15 780 
BSBBncp 078 8 54 
BTSMhb 048 8 4 

Bnflok 256047 

BPfeOT 23 82 

BurBram H7 175 
BPkwnR 57 44 
BaOtoWg 8 23 


5 % 6 % 
10 % 10 % 
A d it 
lA 18% 
iA 14% 
10% d19 
1A 17% 
1A 1A 
21% 21% 
32% 032 
28% 28% 
25 24% 
60% 50% 
31% 30% 
0 A 
14% 14 

1A 16% 
40% 38% 
10% 10% 
5% A 
11% n 
12 11% 

20%dO% 
10% 10 
30% 29% 
43%*ri% 
31% 30$ 
21% 21 
27% 27% 
A 05% 
33% 32 
A 87$ 
46% 46% 
12 11 % 
7% 07% 
20 ZA 
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17% lA 
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0 A 

31 30% 
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17% A 
17% -% 


21% A 

32% -% 
2S% -% 
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A A 

14% 

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A A 
33% +1% 
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11% A 

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17% A 
13% A 

0 A 


AMEX COMPOSITE PRICES 


StMk Ok E 10P H0k Lnnaopl 
MvMpi 445 134 14% 13% 13% 

Maine 3 30 1% 1% 1% 

44PM 2 179 4 3$ 3$ 

An hr Pa 1JM 12 1« « « « 

MMdaA Wm 114 20% 20% 20% 

Hum 005 1 1396 0 fit 5% 

4m 6i-' 2 928 1% OTA lA 

Angto-MA *0 21 A 7% 7% 

ASH tan 072 5 201 2% 2A 2A 

Aabdh* 23 17 2% 02% 2% 

Mrnl B I486 0 4% 4p 

ABuCMB 1 75 % A % 

AodkxxA G 893 7% dG$ 7% 


Stack Dlv. E 100l Up LavC 
I Comtara 030 21 40 16 15% 

Oomndrac 1 12 ft Ji 

G&nCdTM 5757 $ 
CramATA 084548 103 10% lA ' 
CmwnCA 040 40 30 lA 17$ 

, CmmCB 040 14 44 18% 1ft' 
D*fc 053 79 25 1 A 10% 
CmhnwdU 13 2 2% Z% 

U talk 15 570 OTA Ifi 

DtaWk 2B 1» 17% 17 

Onananm 9 6 4ft 4ft 

DiCln 048 9 45 9% B$ 


. H to 

Dk E IBP 
4 104 
3 313 
015 45 30 
121400 

1 046 
012 28 07 
28602 
02 487 
006 154681 



04615 48 
1-72*75 42 

0073585474 
030 0 94 
8 92 
15 885 
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054 12 10 
320 10 3 

020 13 4 

052 73 113 
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23305 % Jjji 

020 13 14 22% 22% 22% 
®28 21 B 12 12 12 


Can litre S2S 21 B 12 12 

OwtaA OOI 5 092 2% 

□atom 6 78 2$ dA 

Owngtan 45 307 31 Wh 

cuts m «3 5% A 

CkePti 004 24 £8 9% 0% 

chmha am 100 fit A 


004 12 10 34% 34% 34% 
on 18 3 74% 74% 74% 

020 13 4 11% 10$ 10$ 

052 73 113 2fl$ 29% 2»% 
2B <33 45% 44% 44% 
2 14 A A A 

on 7 194 22 % an 22. 

072 K 411 20% 19$ 19$ 

070 35 634 16% 16% 18% 

1 » % d$ S 

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■“ 2 63 

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020 9 12 
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A A A , 

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26% 2A 26% A 

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154 Tl 4 21% 
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an 10 27 35% 
012 27 212 2A 
092 17 3» 15% 
OIO .1 120 1H 

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OJSIOO 1% 

£10 10 ‘Tf 3A 
-18 199 18 

OW T2 452 11% 

21 "87 3ft 
020 53 52 8% 
036 571220 36% 
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CTk in 354 25% 25% 2A A 

Cabot Had 0 U7 7$ 7% 7% A 

CafidMipa 137 M 42 26%d25% 26 A 

CadmaCDMUD 21 71 18 17% 18 A 
can Cp 110 815 A d8% A A 

Ctogan 225 7 8303 12% 11% llfi -Ifi 
4UBdmJUm& GtoMkn 211347 22% 21 % 22 % A 

CtoMto 1 1035 1% 1% Ifi 

CnfeUL 1 1B8 3 d2% 2% A 

Cato 1 » 1ft 1% 1% A 

ImCkwaChag epontac 000120 21 OA 68% 8A A 


11 11 
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190 13 464020% 20% 29% A 

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GET YOUR FT BY HAND DELIVERY 

IN STOCKHOLM. 

If VOU work in ihe business centres of Malroo, Lund, Stockholm or Gotbenbui^ wcufdeliver youcdaUy 
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CMXlnto 012 25 U4 48% 46% 48% 
CMDnDmO81 20 37 250H% 34% -1 

Onto on 10 18 20% 20% 20% 

Oner* 008 18 273 11% 10ft 11% A 
Ctogma 41031 7 A A iH 

cmr 8 334 1A lA lA 

caicp io is 12% 12 12% A 

CHPOTM 77 12 1A lA 10$ 

Crancor 45742 lA lA lA A 

Ctodmx 11211 810 31% 30% 3A -1 
QditSpr 231122 11%9t1J% 11% 
Cbandtor - 0 20 A 4fi 4fi +fi 

Owptarl On 8 73 21% 21% 21% A 

OnnSb 00913 075 A A A A 

Cbeoxfepi 42 47 tto% Sfi A 

Cbanto 15 5 10% 10% 10% 

Onto 1 200 % A % 

Ongamr 12 10 A d3% A 

cupisrfl 71039, A A SI A 

Ctdmn'pp 547717 57% 55 SA A 
CkwFtax 120121117 S2%d50% 81 -1 

OdaxCp 017 303316 32 3A 91% A 

drratoac. n00M2A27%2A A 
CBlt* 118 7» A a& A 

CtacnSya 1226404 2£77 21 22% +1% 

QzBaDQp 108 15 55 2A 27%. 27% A 
OnnHbr a 49 B A 720 -.27 

cm or . n . in 12% 11% 11% 

Oolhi to' 0 633 A A 4$ A 

CncaCofeB ixo 17 14 2A 27% 27% A 

CaM Buff 130 729 A A A A 

Cnih—ffl- 26 241A1A1A 

CopmCp 22 000 . 14 12% M A 

cegoa 102 2V U n% 11& -ft 

Otorrt 15 ,5£. v -13 12% 12% A 

Ctogan 040 68 720 iA 017. 17-1% 
OnUGP 12B 13 12 21 20 21 A 

CWfiP- flffl 8 31 24% 23% 24% A 

Con* OM 13 S00 19 1 A M$ A 

Cato 009 17 1938 1A 17% .17% -% 
CotoSp DOB 408352 19 18$ 17% -T ■; 

WnM kO Bi 11 425 31% 31% 3A A 
Canand 070 94 165 U% 17 . IS A 
Onagrtap- . ^345. 5M 1 A A W% A 

Gratae ~i. a bz:i 2% tt *2% *% 

Cnatoctirf .tl 3S7 % sb A A 
COBft*;' UB'20 M6 41% 41 41 -% 
Otofetoa- l'J.ioo A A B A 

CamM iM 18 5020011% 10% -11 
CooWCto ' 32 95 '.-1 A lA lA A 
CMData 14 813 A 0 A A 
Curt UD 181722 lA 10$ lA A 
Ctowtah - 76 000 A .8$ A 

QadfeCg. ■ : ' 178008 4A .■■fii'SA A 1 
Cap HA ' 44 361'16%-lA « 

Ctaka- B 002 283127 23 22 22 A 
Op Coop 02810 1% ft 1% A 
DmnRn . . as ' 8 5$ 5$ & A 
e^tapn 34170 A A A ■%; 


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’ DSC Cm 1124266 iA lA iA A 

Ovteraa 013 20 45 75% 874 74 

OataSHtfi 12 1W 2ft 2% 2ft A 

Dtotox 32 114 A A 7% A 

Manga 15 325 OT7 16 lA A 

OngUnDp 092 It 115 SO 25% fi% A 


Depayx 

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DncbHta 

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020 20 70 A A 
032 23 sn 1 A Id 
UO 44 101 29* 2A 
044 11 2 8% 22% 

2*10599 24% W 
018 18 03 15% 15 
32 221 37% *% 
1X0 8 S 30% ZA 
020 3 7 7% A 

18 114 2A *A 
MO 8 134 17% 16% 
13M48 IA 12% 
41814 A A 

6 B8 Ifi 1% 

0 30 4 4 

15 346 SA 32% 

020650 362 A * 
2 4» 3ft A 
020 242300 24% 24 
058 14 40 13% 13 
11 20 7% d7% 

112822 10%OTA 
024 201579 ZA 23 
008 51 381 A . 5 
1X0 17 120 31% 31 
0X2 12 113 17% lA 
030 24 6 033% 32% 

7 75 21% 20% 


A 

15% 

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22% 

W% -1% 
15 

38% A 
30% A 
7% 

19% A 
14% -1 

13% +% 
9 

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4 

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24% A 
IS 

7% A 
10% A 
Z3 A 
fit 

31 A 
16% A 


Envoi Mi 
Baton Cg 
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Eft* Sot 
Emm he 
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2 373 

3 45 
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21733 

10 887 
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27 1442 
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21 237 


4 84 

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17 15% 
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2% dZfi 
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47% 47 

13%OT2% 
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A 86 
11 % 11 % 
fit fit 
2$ 82% 
3$ fit 
50% 48% 
SB 85% 
15%814% 
14% 814 
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21% 20% 
10 17% 
13 12% 


RtarA 

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FrtHawto 

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11 73 A A 

0X4 11 84 5 A 

004 51 1805 32% 32fi 
153414 24% 23% 
3 174 A 2$ 
1X4 18 643 54 5A 

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024 0 242 10$ lA 
238X41 M%OT4% 
1X0 121652 3S% 35% 
0X4 0 875 32% 31$ 
1X011 103 28 - 25 

an 20 11 23% 22% 
1X4 H 366 23% 2A 
1X8 10 43S <3% 43% 

038 7 355 8ft A 
052 6 240 23% 22$ 
1X8 11 32 47% 47 

42 34 7$ A 
251065 20$ 20% 
17 15Z 6% A 
0X0 15 1888 A A 
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1X8 10 812 31% 31% 
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41 139 A A 
1X4 11 32 2A 2A 
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058 23 458 37% 36% 
098 11 40*2% 21% 
0X1 18 12 14% 14% 
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8 17 A A 
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0 11 A 3 

10 28 A A 

016159 153 A A 
(MO 18 8 17% 17% 

18 835 A A 
35146 IA d9% 
4X0 41 687 25 » 

129 30 A A 
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0X0 18 286 20$ 20% 
35 30 A 2% 
0X0 06 100 20%OT9% 
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0 382 ,*« ft 

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7 in lA 10% 
5 028 A A 


MtogA 54 zioo 
tatHyto 004 8 ss 

HwparGp 0X013 25 
MO &px 018 222533 
HmObcar 175608 

Hatodna 008 21 17 
IfetotbfeB 9 273 

HatoBM 12 n 
Baton* 018 233152 
(MPj 3 

Htoenlliy 8 100 

HP* 072 14 1008 
Hogan ^b 015 232548 
Hotojh 51 258 
HnewBMf 0X0 8(100 
Ham Oka 072 25 251 
HnUta 044 10 148 
Hanbo* 10 762 
HaatoAn 044360 77 
HwtJB 02018 815 
Hanfigh 0X0 ID 064 
HurtaCD 0X0 0 30 
thkferidi 35 11 OB 

HycorOa 10 86 


Fife* 

DB Doran* 


48 215 7% 7 7%+% 

2(19642 A fit 033 +46 

4 145 A <£% A -% 
28 362 A 84% A +% 
3 389 A A <% A 
040 32 149 17% 17 17 A 

1,18 10 605 SA 3A 3A -1% 
0X4100 54 M% 814 14 

17 654 M% 13% 14% +J% 

175109 15 14% lA A 

0X014 300 10%OTATA A 
Z9T7S48 25% 2A> V A 

21 200 A 8A A A 
6 560 A ®% A A 
0X4 112EOB4 5B% 57% SB% 

81068 .A OT%1% A 
an 27 4121 iiViA u% -1% 
20 230 A 0 A A 
024 15 416 11$OT1% 11$ A 

3 220 A A : A 
71079 9% All A 
31065 A 09% A A 

121002 7% A A A 

14 Z14 17A 18% IA A 

00020 48 3fi 3fi 8fi -fi 

2501303 A A 5 A 

0X1 IB 082 27% 2A.Z7% A 
1 57 Z% 2% A -fi 

10 *1 17% 16% 17% A 
11737 »207%2O4%ZD4% A 


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12 % 13 +% 
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25 28% A 
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I KtotoQ) 0*4 S 204 
Kqdan%iatl40 13 2 

KtoyOB 7 519 

KtoySw 072 231047 
Katoutov U1 11 215 
tOmbtox 0X4 13 201 
nsGhar 13 24 
HXta* 485087 
KraWdgg 3 554 

X* A 02148 

KDOOQhC 1044004 
ndtos b 341 


21% 8Z1 
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20% 20 
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28% 27% 
7 0% 
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35% 33% 
7% 87 

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10% 17% 

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23% A 
47% A 
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20% A 
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31% A 
12 A 
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20% A 
14% A 
27% A 

35% A 
21% A 
14% 

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14% A 
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3% 

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17% A 
4ft +A 

10% A 
24% A 


15% +1 
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11% A 
20% • 
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8 0 B A 

20% 20 20% A 

lA 14% 14% 

28 2B% 20% -Z 
19& 18% 18% +fi 

12 $ 12% 12$ A 
0 05% 8 A 

fit 7 fit 

15% 13$ 13$ -1& 

0% 80% 0% A 

13$ 13$ 13$ A 
22 21% 21% A 
fit T\ 7% -fi 
ii%- 11 11% A 
20% 20% 20% A 
021. 20 20% 

27% 28% 2B% A 
14% M% 14% +fi. 

AAA 

16% 17% 10% 

25% 25% 25% -fi 

AAA • 
22%m%21% A 
S3 5 A 


MAC Box OW11 78 
NaPFnd) 07211 63 
NatPbza 11 117 
NtoGmgt 036 68 288 
NBaStoi 020 20 172 
tWgtoor IT 4 
IB 046104 114 
Moor 16 634 

NtokPn 213806 
HUM'S 93 299 

Nang* 25 3 

Nbgra 027 19 67 
NnaEBlB 0X0 22 40 
New tonga 8 904 
MfdDtoM 2213303 
NmgrtQpxQM 12 123 
NotaDrl 241460 
Nontaan 058 24 123 
MWD 040258892 
Harxfta I 12 229 

NSftrUB 4 275 
HaHUt 0X013 352 


27% Z7% 
17 IA 
fit 85 
11 % 10% 
«% 13 

lA lA 
81% 60% 
20% 25% 
lA iA 
A A 
fit A 
10% 10 
19% lA 
iA A 

31% 28% 

0 A 

fit 7% 
55% 54% 
44% 43 

17 lA 

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41% 41 

13% 13% 
14% M% 
31% 29% 

A A 


27% A 
17 A 
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17% A 
60% A 

25% A 
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19% 

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54% A 
43% A 
iA A 


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OCtafeyi 

Octal Op 
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OgtatwyN oxo 
ObtoOe 1X8 
OH Kan i.iB 
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OwMca 
OpBcrtR 
OnctaS 
Orb Sow) 

Orttotoi on 
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nm tfwM l* 031 


OaHOA 041 
OtodnrtiT 0X0 
OPiTtol 172 


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29 104 IA 17% 

13 4137 18 17% 

14 191 13ft 13% 

B 261128% 24% 
61375 30% 29% 
10 175 33$ 3A 
16 3 36 830 

7 576 32% 30% 

12 934 18%015% 
21 364 22% 22 

5342102 37% 35 
451219 «% 17 

Z1 Z100 7% A 

10 18 14% IA 

11 n A A 

8 10 2 % 2 % 
44 1051 T4 1 A 

11 21 11 lA 

14 7 32% 32% 


IWOig 

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fXO 12 426 

0X2 12 272 
132 14 232 

21 910 
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OXI 373455 

22 21 

059 40 7 

0 47 

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072 IS 357 
14 101 
02024 BO 

0X1 13 202 
1.1217 32 
25 235 
23 240 
040 4 2 

251519 
41 30 
050 25 409 
O0B 21 8744 
014 14 100 
8 198 
17 45 
0X9 3 918 
106 828 
210731 
411738 
10 150 
02(24 26 


Q- 

*8% 45% 
12 % 12 % 
ZS 21% 
50% 60% 
2S8Z1% 
29% 29% 

A * 
10 0 % 
14% 14% 

33% 31% 
37% 3A 
fit 85% 
21 % 21 % 
13% 13% 

31% 30% 
A fi* 

5 A 
10 % 10 % 
12 % 11 % 
16% 10 
38 37% 
32%031% 

26% a 
A fi* 

fit 6 
fit fit 
29% 29 
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25% 2A 


IA A 

17% A 
13% 

24% 

30% A 
33$ A 
38 A 
30 % - 1 % 
lA -1% 
22% A 

36% +2 

17% A 
7% A 
14% 
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2% A 

13% 

10% A 
32% A 


46% A 
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51% A 
22$ A 

29ft +fi 
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F T G HIDE TO T H E W E E K 




MONDAY 


TUESDAY 


HK airport progress review Korean nuclear crisis 


The Joint liaison Group (JLG). which 
deals with the details of the colony's 
1997 transfer to China, reconvenes. 
Commentators will also be looking 
for signals of progress on the Hong 
Kong airport, which has teen held 
up as a result of China’s concerns 
about Us financing. 1 

US and Canadian trade and 
agriculture ministers meet in Chicago 
tn an attempt to resolve their form- 
trade dispute. 

Washington has threat- 
\&k ened to impose a quota 

at the end or July if 
gjj ftfffm i the Canadians fail 
to agree to curbs on 
.Jm Cast-rising exports of 

durum wheat, used 
for pasta. Ottawa has threatened to 
retaliate against a range of US prod- 
ucts. 

US commerce secretary Ron 

Brown, on a trip to Latin America 
accompanied by 22 business readers, 
inaugurates a US commercial centre 
in S3o Paulo. He meets Argentine Presi- 
dent Menem on Thursday in Buenos 
Aires and President Frei of Chile on 
Friday. 

AustraBa*a prime minister, Paul 
Keating, leaves for a three-day visit 
to Indonesia, where he wQl have talks 
with President Suharto. Australia has 
teen eager to promote trade ties with 
its nearest south-east Asian neighbour. 
However, the visit has teen overshad- 
owed by the Indonesian government’s 
decision to revoke licences for three 
Australian news magazines. 

Nigerian mHtt a ry leaden meet: 

The Nigerian 
four-month 
National Consti- 
tutional Confer- 
ence opens 
in Abuja. The 
military regime 
says this will 
help to restore 
civilian rule, 
hut opponents 
say the govern- 
ment is stalling 
and should make way for Moshood 
Ahiola (above), the winner of last year's 
annulled presidential poll, who was 
arrested last week. 

Vat In harmony: The European 
Commission opens a conference on 
European enterprises and VAT. Busi- 
ness leaders and Brussels officials 
will address the problem of how to 
harmonise value added tax regimes 
in the Union by 1997. 

Chess: Gary Kasparov faces his 
younger challengers in the second 
leg of the $750,000 Intel Grand Prix 
in New York (to June 30). India’s Vishy 
Anand won tte first leg at the Kremlin. 

FT Survey: Russia 

Holidays: Venezuela. 


Other economic news 

hr the aftermath of the Fed's 
attempt to defend the dollar 
against the yen last week, the 
US and Japan will be the key 
economic focus this week. A 
clutch of Japanese statistics 
should indicate that Japan's 
recession has bottomed out, 
and there are mixed signs of 
recovery. 

Tuesday: Analysts expect 
today's data will show that 
Japanese unemployment rose 
to 25 per cent in May, from 2B 
per cent in April, while May's 
retail sales were 2.9 per cent 
lower than May last year. 

In the UK, the Treasury’s 
revised economic forecast is 
expected to point to an increas- 
ingly healthy recovery. Predic- 
tions far 1994 gross domestic 
product growth are likely to be 
up from the earlier figure of 25 
per cent, while inflation fore- 
casts are likely to be down 
from 355 per cent 

Thursday; A spate of US eco- 
nomic indicators today and 
tomorrow an expected to show 
the recovery remains strong 
but spending has slowed 
slightly. Today's data Is likely 
to show a small rise In factory 
orders in May, while Friday's 
purchasing managers’ Index is 
likely to reflect the healthy 
state of the manufacturing sec- 
tor. 


across 

l Justification for V-rign (It) 

7 A friend brings drink back (3) 

9 Though solid in form, they 
may have fragile footing (5) 

10 Rouse the fiery Celt, perhaps! 

11 Mention It, perhaps, too late 
C3A4) 

12 U may be forced to obtain a 
decision (5) 

13 Doctor liaised for sitting 
donor (7> 

15 A drink all round when 
there's profit! (4) 

18 A letter less than perfect in 
conception (4) 

20 A name is confused - result 
of this? (7) 

23 Memorial of old priest out- 
wardly Roman Catholic (5) 

24 Responding to a phone call 
about disturbing news (9) 

28 Mon of action. In his turn (9) 

27 Foreign friend has to leave 
with another (5) 

28 It markod the passing of the 
horsedrawn vehicle (3) 

28 Another view of clairvoyance 
(6£) 


Deputy prime ministers from North 
and South meet to discuss arrange- 
ments for a summit between the lead- 
ers of the two countries in an attempt 
to resolve the crisis precipitated, by 
the North’s nuclear programme. 

The Japaaese fl wn— at 

against a background of fresh, political 
turbulence, may announce a package 
of deregulation and tax reform mea- 
sures in an attempt to curb the high, 
trade surplus. Events wffl.be closely 
observed by Washington and foreign 
exchanges, and may affect the value 
of the yen, the week after it attained 
a new high against the dollar. 

China’s eight-year-old bid to rejoin 
the General Agreement on Tariffs and 
Trade enters a crucial stage with nego- 
tiations in Geneva today. Following 
Washington’s decision in May to renew 
China's most-favoured- nation trading: 
status and to dissolve the link between. 
(his issue flnri that of China's human 
rights record, the Gatt negotiations 
are bound for the home straight Bei- 
jing hopes to become a member by 
the year-end, so that China can become 
a founder member of Gatfs successor, 
the World Trade Organisation. 

Chun's president Eduardo Frei 
meets US President Bill Clinton in 
Washington. Mr Clinton bas already 
assured Chile that it win be next in 
line for a free-trade agreement, but 
the necessary ‘fast-track'’ negotiating 
authority to enable that has run into 
difficulties in Congress. 

HaRTs exiled piasMent, 

Jean-Bertrand 
Aristide (left), 
will apeak on 
efforts to 
restore democ- 
racy in his 
country at the 
National Press 
dub in Wash- 
ington. He is 
likely to repeat 
his demand 
for US military 
action to allow his return to Haiti. 

Impressionists hammered: 

M Manet's first 
version of one 
of the most 
famous of all 
Impressionist 
painting s "Un 
* bar aux Folies- 
Bergere n ls 
on offer at 
Sotheby's in 
London tonight. 
It Is sketchy 
hy comparison 
with the finished product but a price 
of about £3m is anticipated. In the 
same auction is one of the 10 painting s 
of poplars completed by Monet In 1891 
(above). It might also fetch £3m. 

FT Survey: Computer Networking. 



WEDNESDAY 

Hong Kong awaits vote 

B Chris Patten 
(left) puts his 
democracy 
proposals for 
Hong Kong 
to the vote 
at today's meet- 
ing of the Legis- 
lative Council 
(LegCo). The 
governor first 
mooted his 
proposals to 
broaden democracy in the colony in 
October 1993, Immediately incurring 
China’s wrath. 

China accused Mr Patten of violating 

the Basic Law, which lays out the con- 
stitution for Hong Kong after transi- 
tion, and said that it would dismantle 
representative bodies upon assuming 
sovereignty in 1997. 

Some 17 rounds of talks between 
Britain and China foiled to resolve 
differences. 

Bulgarian debt: Bulgaria and 
Deutsche Bank are doe to sign a debt- 
rescheduling deal which will reduce 
the country's US$9.27bn foreign com- 
mercial debt by US&Sbn. 

Last November Bulgaria *nd some 
300 T- oprigp Club commercial banks, 
chaired by Deutsche Bank, agreed 
to reduce principal on the debt, which 
was racked up by the former Commu- 
nist regime, by about SO per cent, and 
they set a midrl994 deadline for agree- 
ing final terms. 

Bulgaria plans to maira an advance 
payment of more than US$700m. The 
country hopes that settlement of the 
debt will attract foreign support in 
its transition to a market economy. 

India** prime minister P.V. 
Narasunha Rao begins a three-day 
visit to Russia. 

Da Beers of South Africa, which 
controls at least 80 per cent of world 
trade in rough (uncut) diamonds via 
its London-based Central Selling Organ- 
isation, reports first-half sales today. 

These are expected to at least match, 
and perhaps to exceed, the record 
US$2.54bn reported for the first six 
months of 1993. 

Safety In numbers: 1821 quoted 
wwipaniPfl, about 95 per cent of those 
in the first section of the Tokyo stock 

wplmng B, linlrt annual Bharehnldar s* - 

meetings today. The companies deliber- 
ately meet on the tango day in order 
to frustrate the efforts of sokatyo, 
extortionist gangs who blackmail com- 
panies not to disrupt AGMs. 

Hairing: Henley Royal Regatta, 
premier aquatic event of the En glish 
summer, opens (to July 3). 

Cricket: Oxford University {day 
Cambridge University at Lord's (to 
July 1). 

FT Survey: Business Books. 
Holidays: Chile, Costa Rica. Malta. 


THURSDAY 

Day gains a leap second 

Today's final 

dfiSE minute will 

ATHpA have KL sec- 

SLffigTSek ends, so as - 

MH8tr\7wl fo bring atomic 

|on^ ,w j| docks in step 

with solar time, 
which is defined 
by the Earth's 

raf «=Si*‘ erratic rotation. . 

fgj f = — ===- Atomic docks 

are accurate 
to one second in a million, years, but 
the Earth is gradually slowing down. 

Bid Birch, New Zealand’s finance 
minister. Is due to deliver the country’s 
annual budget It is expected to show 
the first fiscal surplus since the late- 
lSTDs. Mr Birth has cautioned forecast- 
ers against being too optimistic, bid 
many economists are predicting a sur- 
plus between NZ*200m (US$340m) and 
NZ$500m. 

An important question is how NZ 
uses this “reward" from a decade of 
hard economic reform - and to what 
extent it chooses to meet social goals, 
such as a reduction in unemployment, 
at the expense of faster reduction in 
pubHc debt 


Abkhazia talks: United 
Naticms-sponsored talks resume in 
Geneva between the Georgian govern- 
ment and Abkhax separatists on a 

pw wianmt pr VUHraT «p Hlamwit far 

tho omVtaH-iati province. Under the 
terms of a ceasefire accord signed in 
Moscow In May, some 3,000 Rimnaw 
troops are being deployed to police 
the Abkhaz border with the rest of 
Georgia. Over 200.000 non-Ahkhazfc 
fled tiie region (luring brief but Woody 
fi gh^g last September. 

UK by-election: Labour, the main, 
opposition party, the Monk- 

lands East parliamentary seat near 
Glasgow against a strong Scottish 
WatirmaKs t ft gl ty ehafiang a Labour 
has a big majority tn the constituency, 
which was held by John Smith, the 
party leader who died in May. But 
the party is undo: pre s sure over allega- 
tions of corruption on the local council. 

Afghan preri dentBn rh an u d d in 

Rabbanl’s term expires. Prime minister 

f hilKuHiWn Wplramify ar- ha y w arned 

his battle to topple the president could 
intensify if Rabbani does not step down 
on time 

Fundamentalists in Bangladesh 
have called a general strike to support 
tbeir demand for the death of feminist 
writer Taslima Nasreen cm charges 
that she insulted Islam. 

Cricket: Third test between England 
and New Zealand begins at Old Traf- 
ford, Manchester (to July 3). 

FT Surveys: Executive Cars and 
Chemicals and the Environment. 

HoW syK Ecuador (Bank Holiday). 

Sri Lanka, Zaire. 




md children first 



FRIDAY 


Russia’s sell-off continues 

The largest sell-off of state property 
in the world formally enters Its second 
phase. Foreign investors are being 
encouraged to join in. 

Germany takes over the six-month 
rotating presidency of the European 
Union. It is keen to promote opening 
up to eastern Europe, and to demon- 
strate »mt the Maastricht framework 
of closer cooperation on foreign policy 
and internal policing, together with 
enhanced powers for tte European 
Parliament, will succeed. 

Roman Herzog, Germany’s new 
president and former chief justice of 
th e cgn-s titnHtmal grant, at S l gpa fr bis 
largely ceremonial post 

Elf Insurance: Today is the deadline 
for member states to implement direc- 
tives completing a stogie market in 
insurance. 

Mow currencies are dne tote 
introduced by Uzbekistan, the Sam, 
and Brazil, the Real - the country’s 
fifth currency since 1986. 

Holidays: Bangladesh (Bank Holiday), 
Canaria, Ghana , Pakistan (Bank Holi- 
day), Taiwan, Thailand. 


WEEKEND 

Historic Tour de France 

Europe's premier cycling event begins 
on Saturday In the northern French 
city of Lille (to July 24). 

The sweep into England, which this 
year comprises a symbolic stretch 
through the Channel tunnel as well 
as stages through Brighton and Ports- 
mouth, will mark the tour's first trip 
across the Channel since 1974, when 
a circuit race was held around the 
Plymouth by-pass. 

The British stages will take place 
pqflr .+hfl h ffgimring of the 72-day endur- 
ance test which ends in Paris. 

Paraguayan president Juan Carlos 
Wasmcey on Saturday starts a working 
visit to Britain. It will be the first 
recorded visit to the country by a serv- 
ing Paraguayan head of state. 

Guinea Bissau polls? Sunday sees 
presidential and parliamentary elec- 
tions in this west African state. 

Bumo wrestling: 15-day Grand Sumo 
Tournament (mens in Nagoya, Japan, 
on Sunday. 


Edited by Patrick Stiles and Martin 
MuWgan. Fax: (+44) (0)71 873 3191 


ECONOMIC DIARY 


us May axkSnghcww sates- # - ‘ 

Now Z*nd June trade bafwtce ■! 

US . May new home-sales 

US June consumer co nfidence - 

US May export price Intb . / 

US . NWy krport price fndx 

US Johnson Radxwk w/e June 25 *. 

Japan May unampfaymant rate - 

Japan Mey wtai satoe~ • • 

Japan W Twt Mate prtca indx» lVZOJijnia ~ 

Canada Apr manufaahrirvg new'ordare 

Canada Apr manufacturing stdpraerttar - . 

Canada May fnriuat production price taAC 

us inqeqppjinr 

US tat go- GOP, deflator final - : 

US latqtr, alter tax oofpfcteprogte 

U9 Juneapricotoraprlcae - 

Japan . May industrial prodPctiorFf' 

Japan May ri a pm a nt a t 

US tnttai cfaims, wfo June 25 

US State benefits, Wa Juie 18 

US May personal Incom e 

US . May p eraon econeurnpttop, expand 

US May factory orders - ~ 

US May factory Inventories 


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DOWN 

1 The futility- of conceit (8) 

2 Time to dtoeon mince (81 

3 Ben. Is foreign dramatist (55 

4 A crime upsets a whole conti- 
nent (71 

5 Seaborne territorial detach- 
ment from the Arctic (7) 

6 Produce l turn Into a bal- 
anced diet (9) 

7 Father tries moving piano 
first (6) 

8 Bet on chaps not bring clerics 
(6) 

14 I leave ridiculous organisa- 
tion, it’s fordcal (9) 

18 Here’s hoping I spring a sur- 
prise (8) 

17 Dries washing on lines or 
stays (5^) 

19 Looking pate cooing out of a 
cinema (?) 

20 Out of place competitor (4,3) 

21 It's becoming a type of frac- 
tion (6) 

22 A French wine cartel is bro- 
ken up (6) 

25 Rising back writing for 
papers (S) 


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FINANCIAL TIMES SURVEY 


Privatisation programme: 
(, Thrown in at the 
deep end: Page V. 


RUSSIA 


A guide for the 
business 
visitor: Page VIM 


"■ first > 



•*-**«** srntfM . 


S‘\in. 9 *& 





.V->‘ 






Monday June 27 1994 



Russians* will decide their own future 


a loan of *L5bn as the second 
part of a systemic transforma- 
tion facility -a soft loan to 
Russia which assisted in gener- 
ating farther lending from the 
World Bank and greater inter- 
national business interest and 
confidence. 

At the same time, Mr Ana- 
toly Chubais, the deputy pre- 
mier in charge of privatisation, 
has completed his great task of 
giving away Russian state 
industry to the papulation in 
exchange for vouchers. The 
next phase, in which the 
remaining shares will be 
bought for mane? and when, it 
is hoped -and there are amm 
signs that the hope is realistic 
-Russian and foreign invest- 
ment begins to restructure 
these companies, should now 
begin. 

Tn part, this has been made 
possible by a political trace 
which contrasts extremely 
favourably with the fevered 
and inimical relations which 
existed between President 
Boris Yeltsin and bis govern- 1 ' 
mmsit on the pna hand and the 
former Supreme Soviet on the 
other for most of 199243. 

The leaders of the two parlia- 
mentary homes are a presiden- 
tial aBy - such as Mr Vladimir 
^rghfflko, speaker df the Fed- . 

■ • I" -t-W. *. " /■ V. 


No one can say which of three possibje courses Russia will take as it 
struggles to transform itself inhere are far too many imponderables, 
writes John Uoyd. The wesf can do little to influence the outcome 


The old andthe naw; a Moscow food aupannaftatpaft) «nd a New Star joint yanteeehop. B SMp raneuraMpIsthrtwfcMa shape we be^hntna to tr a nefonw ttw maa ft pB from nwcv dteMbutton poWa to much mowttmcawe— lee ww mp > u^ « p i nh w rT biy *■*■»■» 


L ooking at Russia today 
can be done through 
three possible prisms. 
Through one, we would see 
economic and political 
improvement, albeit springing 
from- and to an extent drag- 
ging with it - considerable 
chaos. 

Through another, we would 
see a further and perhaps even 
more damaging confrontation 
between political powers and 
or economic collapse - albeit 
not leading back to a reasser- 
tion of a communist regime. 

The final one Is muddling 
through - albeit with a ques- 
tion mark over how far 
“through" gets you, and to 
where 

Let us take the first, and 
most pleasant point After the 
elections of last December 
which produced such a strong 
showing for the right-and-left 
nationalist groupings, the trim- 
ming of the radical reformers 
from the cabinet did not result 
in an abandonment of eco- 
nomic reform. On the contrary, 
in many ways the government 
under Ur Victor Chernomyr- 
din, prime minister, squeezed 
more tightly on credit and 
Inflation, to keep the latter 
under 10 per cent a month 
- good by recent Russian stan- 
dards. 

In March, Mr. Michel Cam- 
dessus, the managing director 
of the International Monetary 
Fund, went toMoscow t^agree 


IN TIBS SURVEY 

□ The e c onomy; From rev- 
olution to evolution; the 

economy Is already restruc- 
turing — Page H 

□ The m&tary: A legacy of 

the communist state has 
resurfaced 


□ Commercial banking: 
End of the Wild West 

free-for-all Page IV 

□ Agriculture: Recent 
reforms tn the sector are fuQ 
of promise ... Page VI 

□ Foreign affairs: The 
mood towards foreigners has 
changed gresty_.. Page VB 

□ E ditorial production: 
Phflip Sanders 


eratton Council or Upper 
House -and a potential oppo- 
nent turned ally, such as Mr 
Ivan Rybkin, speaker of the 
State Duma or lower house 

Although an early vote by 
the Duma released the ring- 
leaders of the parliamentary 
revolt of October last year, a 
more recent one, in June, con- 
firmed a tight budget on a sec- 
ond reading in spite of intense 
pressure from the military and 
industrial lobbies. 

The constitution which was 
voted in on a referendum in 
December 1993 imamhigiKiiMily 
confers most power on the 
president, greatly moderating 
the struggle for primacy 
between the legislative and 
executive branches. The armed 
forces -mdoding the military, 
the Interior Minis try and the 
re-vamped security force, the 
former KGB rare directly sub- 
ordinated to the president and 
so far continue to show loyalty 
of the kind which brought 
fliwn in on his «rfde . if bejat- 


• -*»,*.■ 

ber. Under this gram# peace, 

g n(p>pr flr^?inJii^ tluiv e&- 
h pacMy in Moscow and St 
Petersburg, the effects of this 
become more and more obvi- 
ous, as shops begin -to trans- 
form themselves from 'mere 
distribution points to much 
more attractive salest venues, 
as a wider range nfogoods 
become available, and as com- 
petition begins between.cjampa- 
nies for customers. Russian 

hflwk$ and flmmrial Minpmlwi, 

though many are stfH weak, 
now begin to produce ^larger 
and more powerful entitles 
which are beginning to shap e 
Up to fhrw gi\ competition. ~*nd 
are training staff hi the «Wk 
to make that possible. 

Let us take the «w*!n<i prism. 
Through it, one sees a pQhtical 
and economic climate which is 
npt peaceful, but static with 
nmitiftna mo ve ments bdowthe 
Sfltf&ce. The tight budget has 
been passed by parliament, but 
most economists and politi- 
cians believe it will be impossi- 
ble to meet; and that it orfll 


edly, in the CrmfhmhtHnn with 

the Supreme fiogat last Gcfo- *- ' buckle before the military and^ dent 


other demands - sparking high 
inflation, perhaps hyperinfla- 
tion. by the end of the year. • • 

Prh nrH ration thnng h fat Ww* 

stage is formally accomplished, 
has mainly matte quasi-private 
monopolies of what were previ- 
ous state monopolies -that is, 
less under any Wnd of control 
which aMS have moderated 
their p^x V fmy and rmramptv K- 
tive behaviour. 

The parliamentary l ull is 
also temporary, an this view. R 
is the period In which the 
opposition forces - especially 
the ultra-nationalist Liberal 
Democratic Party led by Mr 
Vladimir.Zhirinovdcy, the com- 
numist&K~ and others - are 
extending their organisation 
and srqtport, ready for an 
assauttonthe presidency and 
the gbvmnment later in the 
year theeconomiq aitna- 
* : ■ •- J - 

The c&stjtutuaiia not really 
accepfed/by many of the politi- 
cal parttes/and'may not prove 
robust Anpngh to withstand, 
any serious challenge. Presi- 
appar- 


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* V ' 


ently recovered from a Shaky 
period at the beginning ot the 
year which, saw hfan disappear 
from view for weeks on rad, is 
still detached from government 
and is given to governing by 
decree through a closed inner 
circle of advisers. 

In the states surrounding 
Russia, conditions are mostly 
worse -tire Baltic states, espe- 
cially Estonia and Latvia, are 
an. exception, hi particular, 
Ukraine continues to plunge 
downwards economically and 
to produce printfoai stasis— a 
state of affairs which impacts 
directly on Rngpia drwa the 
Ukrainian region, of Crimea is 
seeking closer ties with Rnagfo 
and eastern Ukraine also sup- 
ports a pro-Russian policy In 
contrast to the still-radical 
nationalism of the west of the 
country. 

. . -The; > Caucasian - states, 
though' no threat, are 
extremely unstable, as is 
Tajikistan. The other Central 
Asian states are stable enough, 
but desperately poor. 

' . rtrfme is now an epidemic, 

• - ,, -.‘•i , : i-4- - 


from corruption to highly-or- 
ganised Mafia-style criminal- 
ity. Official corruption means 

an of had and dis- 

honest gover n ment on the part 
of most of the public; the 
organised crime Instils fear, 
most of all in those trying to 
start or maintain businesses. 

The last year has seen vio- 
lent deaths of a number of 
bankers and prominent busi- 
nessmen: their fellows now 
huddle in heavily-protected 
offices behind security guards. 
At a more mundane -but per- 
haps as damaging - level, wide- 
spread tax evasion deprives the 
state of huge amounts of tax 
revenue and contributes to its 
weakening as well as to the 
decay of the infrastructure. 

A last turn of the prism. 
Muddling through - which 
might describe much of the 
policy this year -has the 
attractiveness to the governing 
elite to many others of 

i m p ly i n g nO nMrai change. 

Inflation may go up, hut may 
again be corrected. Politics will 
be at times , unstable, but no 
one powerful : enough has 
ennn gh stake in violent change 
to attempt to institute It Priva- 
tisation does not produce ™u»h 
improvement in enterprise 
behaviour initially but, bit-by- 


bit, flie better managers and 
companies find it in their inter- 
est to modernise and restruc- 
ture - leaving the bad to decay 
and die, even if preserved long 
after effective extinction to 
maintain employment 

The nationalists and the 
communists continue to exer- 
cise a malign influence on pot 
icy, especially foreign poli- 
cy - but not so much as to turn 
the country back into autarky 
or outright hostility to the 
west, or to any other group of 
states - Russia Is too weak for 
that kind of adventure. 

Mr Yeltsin does not innovate 
but is not toppled: parliament 
does not bring in the necessary 
legislation but does not make 
another grab for power: the 
government does not folly con- 
trol the economy but is not so 
weak as to lose power entirely. 
Through all of this, the trader 
shoots of private enterprise 
continue to grow as best they 
can- sometimes failing, some- 
times partially succeeding, but 
generally increasing. 

No one can say which of 
these courses will be closest to 
the one which Russia takes: 
there are far too many impon- 
derables. The west can assist 
Russia to avoid the wont and 
can contribute at the margins 
by helping Russians to help 
themselves wherever the goals 
are dear and achievable. But 
ultimately, as always, the fate 
of R flijgig depends on the Rus- 
sians themselves. 


■4t . 


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Reformers who feared 
the worst can pride 
themselves on the fact 
that reforms have not 
been rolled back 


way”. With services exceeding 
50 per cent of grass domestic 
product for the first time in 
Russian history, industrial out- 
put; considered the most sacro- 
sanct economic indicator 
umter Communism, now only 
accounts for 30-35 per cent of 
GDP. A booming private econ- 
omy in services and trade is 
under-reported and virtually 
untaxed. As a result, up to 40 
per cent of the economy may 
not he taxeft at all, and GDP 
may be undercounted by as 
much as 15 per cent 

In the pursuit of attempts to 
drive down inflation and set 
the foundations for economic 
growth, 1394 has marked the 
onslaught of the tightest mone- 
tary and credit policy since 
Russia's botched attempt at 
Polish-style shock therapy in 
January 1992. 

The paradox is that the 
squeeze is being operated by 
Mr Victor Chernomyrdin, the 
prime minister who six months 
ago floated the idea of fighting 
inflation by “non-monetary 
means", and by Mr Victor 
Gerashchenko, once dubbed 
the “worst central banker in 
the world". 

The belated reformism has 
also been accompanied by 
some clumsy attempts to - 
return to greater state control 
over the economy In order to 
“restore order” to it For exam- 
ple, one of Mr Yeltsin's least 
enforceable decrees Issued this 
month, designed to crack down 
on tax evasion, require compa- 
nies to report any banking 
transactions greater than 
$10,000 to the tax authorities. 

But reformers who feared 
the worst can pride themselves 
on the feet that reforms have 


FINANCIAL TIMES MQMPAY JUWE2H994 


RUSSIA II 


T wo-and-n-balf years after 
President Boris Yeltsin 
launched radical market 
reforms, the Russian economy 
may finally be settling from 
revolution to evolution. 

“The most important role of 
reformers now is to prevent 
silly thin gs from happening,” 
explains Mr Sergei Vasiliev, 
deputy economics minister and 
one of the few radical reform- 
ers stm in government 
Six months after the election. 

of a parliament dominated by 
ultra-nationalists and Commu- 
nists, and the departure of 
senior reformers such as dep- 
uty prime ministers Mr Boris 
Fyodorov and Mr Yegor Gai- 
dar, this may sound a bleak 
assessment. 

But Mr Vasiliev believes that 
in order to continue its tortu- 
ous march towards a market 
economy, Russia “doesn't even 
need very active reformist poli- 
cies at the moment The neces- 
sary measures are of a 
long-term nature and require 
day-today efforts." 

Professor Yevgeny Yasin, 
chief economic analyst for 
President Yeltsin, takes this 
argument one step further, 
c laiming that Russia tms 
already completed “the main 
reforms" needed by its econ- 
omy. “Now we need painstak- 
ing polishing work,” he says, 
citing for prampiR, the need for 
a more efficient banking and 
judicial system, and for a 
crackdown on organised crime. 

At the alarmist end of the 
spectrum. Mr Sergei Glaziev, 
head of parliament's economic 
reform committee, warns that 
an expected 25 per cent drop in 
industrial production this year 
will mean the “liquidation" of 
entire sectors of Russian indus- 
try. 

But dramatic Russian statis- 
tics tell only half the story of 
an economy that is already 
restructuring in what an IMF 
economist described as “a com- 
pletely chaotic, unplanned 







The economy is already restructuring, reports Leyla Boulton 


From revolution to evolution 


not been rolled back - not least 
because a middle-of-the-road 
government which proposed to 
change tank: turned out to be 
Ideologically bankrupt 

Mainly because the depar- 
ture of the radicals left Mr 
Chernomyrdin and Mr Gerash- 
chenko carrying full responsi- 
bility for any resurgence in 
inflation, it has remained 
under 10 per cent a month 
since February, its lowest level 
since August 1992. 

An end to subsidised credits 
to all enterprises except for 
agriculture, coalmining, and 
the biggest factories means 
that companies face a real 
prospect of closure unless they 
restructure and as long as the 
government maintains its tight 
policies. Related attempts are 
being made to force companies 
to repay the Rbs22,00Qbn in 
debts they have accumulated 
with each other in an attempt 
to tamhimn themselves against 
the shock of government poli- 
cies. 

“How can you have a market 
economy where people don’t 
pay their debts? We have to 
teach people to give back 
money they owe,” says Prof 
Yasin. 

At the time, a Tnaat 
privatisation programme, put- 
ting 70 per cent of industry 
Into private hands by July 1, 
has been allowed to draw to a 
successful conclusion. Foreign 
trade liberalisation has contin- 
ued, with the lifting of quotas 
from next month on most 
exports including the oil and 
gas which are Russia’s main 
source of hard currency. If car- 
ried through, these will effec- 
tively remove the last controls 
on domestic energy prices, as 
wall as abolish as important 
source of corruption. 

President Yeltsin, who 
returned to the economic stage 
with a host of decrees this 
month, also ordered the scrap- 
ping of exemptions from export 
and Import duties which have 
cost the country dear. Mr Ser- 
gei Alexashenko, deputy 
finance minister, estimates 
that these and other tax breaks 
may represent as much as 7-10 
pea: cent of GDP. 

Mr Alexander gfrofchin, dep- 
uty prime minister ras ponsfo iw 
for the economy, says the 
authorities’ decis ion to stick to 
financial orthodoxy reflects a 
"realisation that there are no 
extravagant tmwi* for stimu- 
lating economic growth". 

Mr Dmitry Tulin, deputy 
governor of the central bank, 
claims tiie new stance is due to 
a “general change in the men- 
tality of monetary authori- 
ties. .. who. by their own expe- 


rience, not through textbooks, 
realised there Is a very simple 
correlation between money 
supply growth and tire growth 
of prices.” 

Mr Chernomyrdin can also 
cite as his personal achieve- 
ment the relative political sta- 
bility which has followed the 
election of the new parliament 
and the adoption of a new con- 
stitution setting out a clear 
division of powers. Confound- 
ing predictions of farther con- 
flict between the executive and 
the legislative authorities, he 
recently cajoled powerful con- 
servative forces in the new 
State Duma into accepting an 
anti-inflationary budget for 
1994. 

Particularly revealing of the 
political elite’s new under- 
standing of economic realities 
was a refusal by the energy 
and agricultural lob- 
bies - strongly represented in 
the Duma - to snpport 


Rbsl5,000bn in additional 
spending demanded by ths udl- 
itary. This would not only 
have wrecked a budget already 
under threat from faffing tax 
revenues at a time when the 
government says it has col- 
lected only 36 per cent of tax 
receipts due in the first quarter 
of this year. It would hove 

TpBfl n* liruiwrinfrtfwg thwir own 

energy and farming subsidies 
through a sharp increase in 
Inflation because Russia 
finances its budget deficit, 
which wfll be at least 10 pm 
cent of GDP this year, mainly 
by printing money. 

Lying not for beneath the 
surface of reformers’ relief 
over the avoidance of “sDly" 
decisions, is concern that more 
is not bring done by the gov- 
ernment to push through 
structural reforms. 

Mr Alggashgnlro , the reform- 
ist deputy finance minister 
responsible for the budget. 


says "the most dangerous prob- 
lem is that we have no strate- 
gic thinking in the govern- 
ment". 

“To the extent that the gov- 
ernment ia not meeting all the 
needs of declining industry, 

there is thar apy png 

on bat it is a passive policy," 
agrees an IMF economist. 
“However, there are many sec- 
tors winch require a pro-active 
policy and in which the gov- 
ernment has to play an organ- 
ising role." 

An industrial policy, provid- 
ing selective government sup- 
port for Sectors and wwopantea 
most likely to achieve growth, 
is described by the government 
as urgently-needed but has yet 
to materialise. 

This year, for example, Rus- 
sia is to spend RbsZO/XMtm on 
coal subsidies, representing 
almost a tenth of budget m> 
nues projected at Rbsl24,000biL 

But none of this money will 


be used for the longer-term 
restructuring which is the only 
way to secure the Russian coal 
ind ustry’s future and stop a 
debffltating drain cm the coun- 
try’s finances. 

“There has been a chance for 
two years to dose down at 
least one mine,” says Prof 
Yasin. “Maybe there is not 
enough political will now; 
maybe different people are 
needed in office." 

The government is also fell- 
ing to build up an adequate 
social safety not to cope with 
future unemployment «rwi pre- 
vent p o vert y . 

Earlier this mouth. President 
Yeltsin forecast hm* the fi ght 
against inflation would lead to 
“regional” unemployment in 
specific parts of the country, 
such as Ivanovo province 
where textile plants have been 
on the verge of closure for 
months. 

Mr Yasfliev argues that even 


Inspired individuals needed 


Some western observers ask whether it is 
realistic to expect Russia, with an admin- 
istration which is itself desperately unre- 
fonned, to carry out the sorts of struc- 
tural pohdes which have defeated many 
western governments, writes Leyla 
Boulton. 

Russian history reveals a deep-rooted 
tradition of state interference in the econ- 
omy even before the 1917 Bolshevik revo- 
lution killed off Russian capitalism. But 
the doubts revolve around whether a 
Communist-era bureaucracy, with a 
Third World-level of corruption, can cater 
to the requirements of a modem market 
economy. 

Mr Grigory Yavlinsky, the prominent 
economist and a presidential hopeful, 
argues from his experience of conducting 
grass-roots reform in Nizhny-Novgorod 
province that the necessary policies are 
so simple they require Utile more than 
political wfll and expertise at the top. 

“The problem is the mentality of a gov- 
ernment and various lobbies which try to - 
use mousy in a Soviet way,” he says. 

One example of a simple solution, he Is 
trying to introduce in Nizhny-Novgorod 
is provided by the burden an enterprises 
which have to pay for the of 

housing built far workers but no longer 
occupied exclusively by them. 

On the grounds that subsidising indi- 
viduals is much more effective than sub- 
sidising unwieldy companies, the Idea is 
to transform the corpor ate housing snhst- 
cQes into salary increases for workers and 
let them deal with the homring as they 

Tflq» - 

Mr Yavlinsky is convinced that mainte- 
nance costs would fall to a third of their 
present level as residents sought to save 
money and rented out extra space to busl- 


The benefits would be mg m ffcgi tf fin- 
attempts to restructure tiie economy as a 
whole. 

“Only after that can, you seriously talk 
of widespread bankruptcies of enterprises 
because this kind of refonn'would finally 
create a proper housing market, enabling 
people to move around the country to 
look for other Jobs." 

But he says the scheme is being held 
up because the government is refusing to 
let companies deduct from their tax hill 
the amounts they have nwtn now 
deducted as housing subsidies. 

President Yeltsin's attempt to adopt a 
more proactive approach to reform with 
the issue of a dozen new decrees tins 
month included instructions for the side 
of bankrupt stateowned enterprises. 


The World Bank Is discussing the 
establishment of pflot projects 


But Mr Boris Nemtsov, the governor of 
Nizhny-Novgorod, finds that it is stin too 
vague to be helpfel precisely because it 
provides no clear instructions on how to 
dispose of the saddled social assets 
attached to these enterprises. 

A related failure remains the absence 
of a convincing safety net capable of cop- 
ing with poverty and mass unemploy- 
ment. “The ma fri issue is that social sup- 
port to not targeted,” says Mr Sergei 
Vasiliev, the radical deputy economics 
minister, who argues that reasonably 
well-off parents like himself should not, 
for w n wi p ift qualify for child benefits. 

Bui partly because of political hang-ups 
about giving up a Soviet-era promise of 
benefits for »ti, developed 

with success in the Baltic repuhhc of 
Latvia - is unheard of In Russia. 


“The social services do not know who 
the poorest are,” says Mr Vasiliev, -who 
prints out that it would be easy enough 
to use state-owned television to invite 
citizen s who M beneath a m in im um sub- 
sistence level to apply for benefits. 

Despite widespread political hand- 
wringing over the social consequences of 
reform, he adds that the feet that no 
single ministry has overall responsibility 
for social policy mmnw that nobody ram 
be held responsible for its absence. 

The World Bank is discussing the 
establishment of pilot projects in three j 
regions for i mprovin g the social safety 
net Bid these would only tabs effect next 
year and would be of minor significance. 
Mr Vasiliev concludes that the govern- 
ment will only begin to take serious 
action under pressure from “an external 
crisis, like an explosion in unemploy- 
ment”. 

Meanwhile, the regions are being left to 
their own devices, wttfa mixed results, as 
Illustrated by the contrast between con- 
servative Ulyanovsk (Lenin's birth-place), 
and Nizhny-Novgorod, a laboratory for 
economic reform. 

Both have social safety nets of a kind. 
Ulyanovsk, which continues to control 
prices, is maintaining a Soviet-era sys- 
tem. Nizhny-Novgorod has set up a miiri- 
mum monthly income threshold of 
Rbs55JNX) for every man, woman, and 
eMld. This moans that the family of a 
factory worker cm a salary of RbslOO.OOO, 
with an unemployed wife and two chil- 
dren, q ua W fle s Bor an additional payment 
of RhsllO.OOO- 

TUs may not be much. But such initia- 
tives provide ample proof that with 
inspired individuals in charge, Russia 
could deal with these pressing problems a 
lot more effectively than it is now. 


if bankruptcies become more 
prevalent in Russia, the pres- 
ent fiwmrini policies “mean 
that enterprises wfll be dying 

very slowly in Russia, which, is 

not a bad thing: We can always 
consider the possibility of a 
social outburst but 1 don't 
think there will be something 
sudden in this sphere.” 

But nobody knows exactly 
what the efforts of these finan- 
cial policies will be on overall 
employment, not least because 
of uncertainty over whether 
the government will beep to 
them. Unemployment, mea- 
sured- in terms of jobseekers, 
is still remarkably low at L8 
per cent But it is already for 
greater if mw counts the num- 
ber of people who are bring 
kept on by enterprises but are 
not befog paid. 

The main question over the 
next six months is whether the 
government will adhere to its 
flmmrfai policies when enter- 
prises start dosing down. 

Although the central bank 
has yet to phase out scrolled 
“directed credits” to the econ- 
omy, they carry real Interest 
rates for the first time. 
Although subsidies are still 
being found for the biggest 
enterprises- "those with good 
connections to the president 
and prime minister” according 
to Mr Alexashenko - most 
companies now face hard bud- 
get constraints. 

The central bank says it is 
following to the letter mone- 
tary growth targets agreed 
with the International Mone- 
tary Fund. A mffpiprandum of 
understanding between the 
Fund and Russia -setting a 
monthly inflation target of 7 
per cent by the end of the year 
-may be unambitious. But 
because the government Is so 
much stronger than its prede- 
cessors, it may also be the first 
DIF agreement to be carried 
out to the letter. 

“We haven't set vary ambi- 
tious goals," says Mr Tulin. 
“But we are realists. The pres- 
ent state of affairs in the econ- 
omy does not allow us to be 
more restrictive." Displaying 
continuing central bank con- 
cent about areas which should 
be the responsibility of the 
government, he argues that 
more ambitious targets for 
inflation would trigger “very 
high unemployment”. 

But one veiled signal that 
the government may already 
be unable to stick to the 1994 
budget and monetary growth 
ceilings came when the central 
bank earlier this month low- 
ered its official lending rate 
from 200 per cent to only 185 
per cent This was well above a 


140-150 per cent average inter- 
estrate calccdated by the Inter- 
national Monetary Fund as the 
benchmark which the central 
hank agreed to shadow in the 
memorandum of understand- 
ing. 

Explaining the caution, Mr 
Tuhn says that “the monetary 
factors of inflation are under 
the control of the central bank 
except for one: the size of the 
budget deficit" He says the 
restrictive policies must also 
be aooompaoied by an indus- 
trial policy. 

However, because of the gov- 
ernment's likely failure to 
implement an industrial policy 

to minimise the damage to 
Russian Industry, foreign 
investment appears , to be Rus- 
sia’s best feme for restarting 
growth in its manufacturing 
sector. 

Mr Chernomyrdin is due to 

meet international business 
leaders today to discuss obsta- 
cles facing foreign investors in 
Russia. Prof. Yasin says the 
government must take the lead 
In insuring foreign and domes- 
tic investors in order to get 
growth going. . . 

When Mr Chernomyrdin 
travels to Naples to attend the 
G7 summit with President 
Yeltsin next month, he will be 
renewing pleas for foreign 
investment He will also be 
pressing . for early negotiations 
for an IMF standby credit of 
$3bn and a long-term resched- 
uling of Russia's $80bn of for- 
eign debt 

Although the west has been 
s idelined In its importance to 
domestic reforms since the rad- 
icals tried and foiled to cany 
out shock therapy, with west- 
on support, the good will trf 
the western financial commu- 
nity remains crucial to Rus- 
sia’s balance of payments. The 
IMF has calculated that Rus- 
sia, which has overestimated 
Its trade surplus for this year, 
tew* an external financing gap 
of J25bn in 1994, compared to 


Russia has been unable 
to coma to any 
arrangements over the 
$ 26 bn it owes 
commercial banks 


$L5hn last year. 

- Because af the way in which 
the foreign debt was con- 
tracted, with bnnche&up matu- 
rities, an inordinately heavy 
burden of debt pay- 
ments -$14^bn Of principal 
and gfibn in interest -fells due 
tins year. Rut of that burden 
has already been alleviated by 
an agreement this - month 
rescheduling $7bn, in debt owed 
to the Paris Club of creditor 
governments in 1994. 

So for, however, Russia has 
been unable to come to airy 
arrangements over the $26bn it 
owes commercial banks 
because of its refusal to accept 
that banks should be able to 
seize state-owned assets tf it 
defeults an payments. Mr Ser- 
gei Dubinin, the acting finance 
minister, hopes nonetheless 
that Russia will be able to res- 
chedule "all our debts on a 
long-term basis” this autumn. 

For all the present govern- 
ment’s shortcomings. Prof. 
Yasin may be right in arguing 
that political realities mean 
there is no realistic alternative 
to the present team in Moscow. 
Hie says that because Russia is 
not a dictatorship, but a 
democracy, albeit an Imperfect 
one, “people find reforms diffi- 
cult to put up with. They 
expressed themselves in the 
December 12 elections." 

But here ties the main weak- 
ness of a government which 
has been better able than its 
radical predecessors to pro- 
mote political stability in the 
short term. The danger, ahead 
of elections scheduled for 1996, 
is that it lacks the vision and 
expertise to promote the wider- 
ranging reforms required for 
longer-term stability. 



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IWANCUL TIMES MONDAY JUNE 27 1994 


til 


RUSSIA III 


Russia remains a militarised state, writes John Lloyd 

Malign legacy resurfaces 


The military accounts for ymw > 
2.1m men and women in Rus- 
sia: police and paramilitary 
account for another lm. 
remains, as the Soviet Union 
was, a militarised state in 
which the ratio Of men under 
arms exceeds that of most oth- 
ers. 

It fo a reflection of the mili- 
tarisation of a state which was 
geared to an aggressive - and . 
defensive - posture vis a vis an 
encircling world. It Is ftliyipyl 
greatly, but the legacy of the 
huge defence machine is not 
swept away in. an instant. 

This year, the third since 
Russia’s independence, has 
seen that malipi legacy of a 
co mm u ni st state which 
regarded most others as poten- 
tial enemies impose its impera- 
tives upon the present in a par- 
ticularly sharp form. 

The legacy is not just one of 
bases an over Russia and over 
much of the former Soviet 
Union: it is also one of an 
industry whose best plants 
were geared to produce weap- 
onry, and whose best engi- 
neers, technicians and scien- 
tists were set to work on 
military output and research. 
The .former Soviet war effort, 
hugely weakened but basically 
uirreformed. now presorts the 
struggling government of Rus- 
sia with one of its greatest 
tests. 

This test may be divided into 
three parts: 

• First, to redefine the role of 
the Russian military in the 
post-cold war world; 

• Second, to restructure the 
armed farces; 

• Third, to wean industry 
away from a dependence on 
military orders towards 
responding to the civilian mar- 
ket 

The first of these has begun. 
Russia’s military doctrine has* 

frpan pnihlinhAri a hng w 

breakthrough - and although 
it contains some difficult pas- 
sages as the right to intervene 
in conflicts affecting neigh- 


bouring states, it generally 
takes account of Russia’s 
changed circumstances. How- 
ever, it presents guidelines 
rather than describing what 
the military is actually doing: 
not surprisingly, for that is 
still evolving. 

Russia, as its leaders have 
often said in the past three 
years, has no enemies: even 
the intercontinental mis- 
siles - Russia still has 39.000 
nuclear warheads - have been 
symbolically detargeted from 
the OS and other Nato coun- 
tries. However, it remains 
doubtful about cooperation 
with new. friends - especially 

Russia has intervened 
In Georgia - first on the 
side of the Abkhazian 
rebels — unofficially - and 
■ now as art officially 
'sanctioned 
peacekeeping force 

with Mato, for so long the clos- 
est antagonistic the Warsaw 
Pact military affiance which 
the. Soviet Uhkmdominated. 

Mato has proposed a Partner- 
ship for. Peace, a- loose group- 
ing 'in. which the former com- 
munist --states would draw 
closer to their former antago- 
nists; stage joint exercises but 
fell short of joining Nato itself. 
Russia seems likely to com up 
In context with most other for- 
mer Soviet states, but only 
after long hesitation and with 
many reservations. 

T foagfy regards itself still as a 
superpower winch, in nuclear 
terms, it certainly is; as a 
regional leader, which it also 
is; as a country yttii Hahio 
to be isolated by surrounding 
states. Russian military tradi- 
tion lmy mrtnraTfo 

the vulnerability of the flat 
open spaces of western Rnssfa 
to invasion. Now, with its bor- 
ders closer to Moscow than 
they have been far centuries, 
Russia feels vulnerable. 


1" — — — - ■ ■ ■ ■ 

I KEY FACTS | 

Aim n 

17.075.4 so km i 

Pnfmtntinn 


.148.8 mfflon 1 

Ib^^Shri. 

President Boris Yeltsin 1 



.Rouble 1 

Exchange rate — - 

$1=415 Rbs (24/12/92) 


__$T *1247 Rbs (28/12/93) 

ECONOMY 

-3882 

1803 

Total OO P (Rbs bn) 

18.093 

162,300 

Real GDP growth (%) 

-19.0 

-12.0 

Annual % growth h 



Real Incomes \ — 

-44.8 

+163 

Ratal sates *. - 

-54.4 

+4.6 

Industrial production. 

■ -18D 

. -16.0 

Fixed Investment * 

-40.0 

-16.0 

Ofl production — 

-13.6 

-11.8 

Gas production .. 

-0.3 

-3-6 

Foodstuffs production 1 .. — 

-21.5 

-5.6 

Average month*/ foliation (%) — 

39.4 

20.7 

Govt budget as % GDP 



Revenue — — 

37.8 

25.7 

Expenditure. — 

42.5 

35.3 

Balance. . 

-4.7 . 

-8.6 

Govt bond yield (%) * 

a a. 

as 

Inter-bank rate (%) 4 

112 

17.6 

Total employment (mftftona) 

72.0 

71.0 

Industrial •mptoyment (mflSons). 

21.5 

20.8 

Vacancies (DOOs) 4 . 

307 

352 

Unemployment (DOOs) 4 

982 

1.085 

No. companies privatised 4 

46,816 

88.000 

Trade (Sbn) 



Current account balance 

-1.3 

11.1 

Exports. 

42.4 

43.0 

Imports. 

.37.0 

27.0 

TVade balance. — 

5.4 

16:0 

1 (1) Deflated by the CPI. (2) Exdodes large extra-budgstay funds I 

off-budoet Interest rate subskfies, import subsidies. 


1 (29 Using constant (pec 1990) prices. (3) Constant 1991 prices. 

1 5) Dec. 92^3. Govt started issuing 3 month bonds in May 1893 

Source; Russian Economic Trends. Vo 1 3, No. 1. 

! 

1 Whurr PubBshem UcL Tet. 071-359-5973. Fax 071-226-5290. . , 



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deprived of protection. 

ft hag attem p ted to solve this 
problem by making agree- 
ments with the neighbouring 
states to have their borders 
policed by Russia as well as 
native border guards. It has 
also intervened in Geor- 
gia— first on giHa of thg 
.Abkhazian rebels - unofficial- 
ly - and now as an officially 
sanctioned peacekeeping force. 

ft retains an army in the Tra- 
nsdnestr area of Moldova to 
protect the Russian-speaking 
population there. Its troops 
shore up the regime in Tajiki- 
stan and guard its border with 
Afghanistan. -And. they hold 
bases in all republics which 
are of the Confedera- 

tion of Independent States, 
except Azerbaijan ~ and there 
they are pressing for at least 
one, as a condition of halting 
-file Armenian advances in that 
country.' w - 
V The troops have, however, 
been withdrawn, from Lithua- 
nia; agreements have been 
signed to withdraw from Lat- 
via; and in . Estonia, negotia- 
tions are proceeding with, the 
target date for final with- 
drawn! set at the end of 
i August : • 

The Russian general staff 
.broadly accepts the teed for 

dwng B And 1 him hgclftwt Hut 



General Pawl Qrachaytestobwed 
vfBorouriyfor mow fteoiiprcee 

. ' . v 'S. ,. 

Partnership for Peace,- How- 
ever, it bias had to dSay joint 
US-Russian exercises" Which 
should have taken- {dace in 
Russia this twraiih because of 
nationalist pressure, especially 
from parliamentary deputies. 

Decades of isolation and of 
regarding the west as an 
enemy have left deep marks. 
While cooperation continues, 
Hu> - Unfits of it have become 
much clearer rite year. 

Though an agreement signed 
earlier this year between Rus- 
sia and Ukraine under US aus- 
pices to bring the nuclear 
weapons from Ukraine to Rus- 
sia. is being obsemd/txfnsider- 



The mStwy i 


i« co iw cj r1pttofoa,«»iouch with a draft much raducad from S ov ie t M in w ifoe to wMe ep read eroeton 


noun* ftMw 


able woaxies remain over stock- 
piles nf ynd h iolo g fad 

weapons m Russia -stockpiles 
which, western analysts fear, 
may not be wholly accounted 
for by the Russian authorities. 
Research may even be cootirca- 
mg unknown to these authori- 
ties or to which they are delib- 
erately blind. 

The military remains a con- 
script force, although with a 
draft much reduced from 
Soviet times due to widespread 
evasion. Morale Is said to be 
low in all services; budget cuts 
have limited mrawngftg and the 

state of readiness is thought to 
be low. The official aim is a 


professional army, but the 
resources to transform it are 
lacking. This has meant a huge 
overs u pply of officers and gen- 
erals compared to other ranks 
while the officers remain very 
often badly housed and sporad- 
ically paid. 

Military industry suf- 
fered in the past two years 
from very deep cuts in subsi- 
dies orders: at the 
time, military conversion has 
been limited. The current mili- 
tary budget for 1991, set at 
Rbs4D,OQObn, would make up 
about one third of total budget 
expenditure, but is stiR said by 
the top commanders to be too 


low to preserve the army in a 
reasonable condition. General 
Pavel Grachev, the defence 
minister, has lobbied vigor- 
ously for mure resources and 
fire struggle is not yet over. 

Politically the military 
remains hugely Influen- 
tial - especially after the Octo- 
ber events of last year saw it 
intervene on the side of the 
president against the parlia- 
ment. The need to preserve its 
loyalty may wan dictate extra 

spending and will further delay 
necessary reforms. Its tradi- 
tional loyalty and subservience 
to civilian leadership has not 
yet been broken, but the dan- 


ger is greater than before. 

The positive side is that it 
has successfully and peacefully 
withdrawn from eastern 
Europe and, in doing so, from 
the Baltics. Its discipline has 
held and it is no longer auto- 
matically favoured by the 
authorities - indeed, in some 
respects It has suffered dispro- 
portionately. 

The challenge facing it over 
the next few years is to 
reshape itself into a force capa- 
ble of guaranteeing national 
security, while regaining a 
spirit and an efficiency which 
would in turn ensure that It 
remained outside of politics. 





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IV 


"IT a * T MONDAY JUNE 27 1 994 


RUSSIA IV 


Commercial banking is coming of age, writes Leyla Boulton 

End of the Wild West free-for-all 


Russian commercial banking, 
one of the festest-growing sec- 
tors of the economy, is coming 
of age - as is the country's cen- 
tral tank, which only recently 
began. faking seriously its role 
as guardian of die country's 
fhrenrial health. 

As the central bank gets to 
grips with banking supervision 
and responsible monetary pol- 
icy, the country's 2,214 banks 
may finally be embarking on a 
transition from a Wild West 
free-for-all to competition, con- 
solidation, and regulation. 

In the latest sign of changes 
to come, President Boris Yelt- 
sin only two weeks ago gave 
up attempts to keep western 
competition out of the domes- 
tic market and reversed 
restrictions on half a dozen 
western banks licensed to set 
up full banking subsidiaries in 
Russia. 

The licences, issued by the 
central bank almost a year ago 
in an attempt to attract west- 
ern investment and banking 
know-how to Russia, had been 
effectively frozen under fierce 
pressure from some powerful 

Pnwiim Tmnh^ 

“Bringing in foreign banks is 
like saying ‘Let’s invite foreign 
police to Russia to deal with 
crime 1 ," says Mr Garegin 


Tasunian, chairman of Techno- 
bank and deputy chief of the 
Association of Russian, Banks 
(ARB). Technobank and. other 
ARB members had lobbied for 
blanket protection against 
western banks for at least a 
tew years more to give “Rus- 
sian Wiping time to stand (HI 
its own two feet”. 

But apart from bringing In 
foreign banks to raise stan- 
dards through increased com- 
petition. the Russian central 
bank has also begun to turn to 
the task of restructuring and 

The growth of banking 
since the break-up of the 
old Soviet Union’s state 
banking monopoly has 
been prodigious - and 
virtually unregulated 

monitoring the health of 
domestic commercial banks. 

The growth of Russian, bank- 
ing since the break-up of the 
old Soviet Union’s state bank- 
ing monopoly in the late 1980s 
has been prodigious - and vir- 
tually unregulated. 

Mr Dmitry Tulin, deputy cen- 
tral bank governor, reckons 
that with a 72 per cent return 
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sector of the Russ Ian economy. 

Benefiting from wild cur- 
rency fluctuations, high infla- 
tion and, until recently, ridicu- 
lously cheap central bank 
credits, hawking 1 in Russia haw 
been tantamount to a licence 
to print money. 

But the boom days may be 
numbered since the central 
bank began charging positive 
interest rates on loans to com- 
mercial frywiEfl intended to sup- 
port industry, ag riculture and 
Russia’s northern territories. 

This form of state subsidy, 
first attacked by Mr Boris Fyo- 
dorov, the former flmmM min- 
ister, was intended to act as a 
sort of industrial policy but is 
now recognised as ineffective 
and opai to corruption. 

The central bank Itself says 
its o fficia l goal is to phase out 
so-called directed credits alto- 
gether so that its resources are 
allocated only by a new system 
of auctions introduced this 
year. It auctioned off 13 per 
emit of total first-quarter lend- 
ing to commercial banks of 
Rbs2,700fon. 

Meanwhile, in a welcome 
move to wvafep a clear distinc- 
tion between lending an ^ sub- 
sidies, Rbs6JXX)bn ($3bn) which 
started off the year as “credits" 
earmarked for agriculture have 
already been incorporated info 
the 1994 budget as straight sub- 
sidies. 

Another improvement for 
consumers is that Sberbank, 
the national savings bank, has 
been paying positive interest 
rates on savings accounts for 
the first time since the value of 
citizens' savings were wiped 
out by price liberalisation in 
January 1992. 

In an attempt to flush out a 
p roliferation of «t»hw institu- 
tions which, to quote Mr Tulin, 
are Just “pretending to be 
banks”, the central bank 
decreed from January 1995 a 
20 -fold increase in banks’ mini- 
mum capital requirement. 
Under the old threshold of 
RbslOQm, he says that entre- 
preneurs could “choose 
between buying a new car and 
setting up a bank”. From 1999, 
the threshold win rise further 
from Rbs2bn to the equivalent 
of Ecu5m - the present mini- 
mum requirement for hanka in 
the European Umon. 



Victor Gerashchenko: concern 
about the hsrttt) of the Industry 

The Tpflip game of small 
hawks and financial institu- 
tions has been, to attract the 
savings of fdtivpng using deceit- 
ful advertising promising very 
high interest rates. 

As long as they can continue 
to attract funds, such institu- 
tions may be able to keep their 
promises to investors for a 
while. But as soon as the new 
money runs out, the danger is 
that if they have not already 
ran off with depositors’ money, 
such institutions will simply 
collapse. 

Id an attempt to preempt 
such dangers - which take on 
important dimensions in a 
country where viewers are 
used to believing everything 
they see on television -Presl- 

Many tools for assessing 
credit risk do not apply. 

The most popular 
methods for recovering 
loans from bad 
borrowers remain violent 

dent Yeltsin earlier this month 
issued a long-awaited decree 

harming- riiahrniftg t advertising. 

But a potentially more seri- 
ous threat to the banking sec- 
tor comes from bigger hawks 
owed large sums of money by 
ailing enterprises which hap- 
pen to be their shareholders 
and may for the first time be 
allowed to go bankrupt The 



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Fyodorov: heads sub-committee 
an central bank reform 

threat in this case is of a “dom- 
ino" effect of bank crashes pre- 
cipitating business collapses 
across the economy. 

For the first time In post- 
Cammunist history, the central 
bank withdraw licences from 
19 banks last year. Another 21 
lost their licences for nan-com- 
pliance with central bank regu- 
lations in thft first ha lf of tins 
year alone. 

“There have been no major 
banking scandals so far 
because we have been dealing 
with small banks, with very 
few individual customers, and 
very small companies as cli- 
ents,” says Mr TtiUn. 

But he reveals that 40 banks 
now being investigated for 
potential trouble indude same 
among Russia’s top 50 to 100 
hanlw although, he bartona to 

add, none of them are 
well-known, internationally. 
Seme of the problems are the 
result of “classical mistakes” 
by. banks which, for example, 
invested too much in real 
estate, including their own 
new premises, at the expense 
of liquidity. Other hanks were 
caught napping by the central 
bank's sharp increase in inter- 
est rates from negative levels 
of 100 per cent to now positive 
rates of about 200 per cent 

Despite the problems, the 
banks’ wealth has attracted 
not just the keen interest erf 
Russian organised crime, 
which launders money through 
the banks without controls, 
and is behind contract kfrrtng g 
of bankers who resist extortion 
attempts. At a time when 
industry is starved of capital, 
certain politicians, including 
Mr Oleg Soskovets, the first 
deputy prime minister, have 



que Menu. Moscow representa- 
tive for Banque Nafrmate de 
Paris. “But for the moment 
this is an economy without 


A commercial bark woitar changes figure* showing the US dollar 
excha ng e rate outside the entrance to a private bank In Moscow wkw 


issued veiled threats about the 
need to force hanks to lend to 
the “productive sector of the 
economy”: 

Any attempts to force banks 
to lend by legislation will not 
work,” retorts Mr Victor 
Gerashchenko, the Soviet-era 
central bank chairman, who 
until last year expressed more 
concern about the health at 
industry than tile health of the 
rouble or the banks. 

Except when they are acting 
as transmission belts for state 
loans to companies, the banks 
as a rule do not provide 
medium or long-term loans 
because of high inflation/ still 
at about 10 per cent a month, 
and a lack of security for such 

lemting - 

Typlcal is the loan portfolio 
of luoambank, one of the lead- 
ing private Russian commer- 
cial hanim. Last year, only 3 
per cent of its rouble loans 
were for mors than a year. 


with 75 per cent up to six 
months. 

Although President Yeltsin 
promised that the arrival of 
foreign banka would make it 
easier for entrepreneurs and 
industry to barrow money at 
low rates, the western banks 
also see obstacles to lending in 
Russia. 

“We are prepared to land to 
Russian companies if we can 
get security,” says Mr Damlm- 


Apart from the fact that 
most clients do not have a 
track record, many standard 
tools for assessing credit risk 
do not apply in Russia, and the 
most popular methods for 
recovering loans from had bor- 
rowers remain violent 

The only companies which 
can raise bank finance in Rus- 
sia today are involved to trad- 
ing and Russia’s more lucra- 
tive exports. 

But the picture may slowly 
begin to change. In a project 
inspired by Mr Fyodorov when 
he was still in the government 
last year, the European Bank 
for Reconstruction and Devel- 
opment is trying to encourage 
banks to lend to small busi- 
nesses which could play an 
important role in the country's 
economic recovery. 

For example. NMuegorodsky 
Bs nldrsky Dam, a commercial 
bank in the reformist province 
of Nizhny-Novgorod, has 
already been lent $500,000 
under an EBRD scheme which 
consists of lending funds to 
Russian banks which agree to 
pick up half the cost of loans 
which do not get repaid. 

But the *narn hope of har- 
nessing banks to economic 
growth is for the authorities to 
stick to their new-found finan- 
cial orthodoxy, while making it 
easier for banks to laid money 
to companies -for example by 
improving the courts 1 ability to 

TiaraTto mrntnanrial rtis putpg 

Prof Yevgeny Yasto, chief 
economic analyst for President 
Yeltsin, says that the govern- 
ment is examining ways of 

iTW p Trin g hanks agalnri- landing 

risk. 

Meanwhile, the central bank, 
whose own irregular practices 
were revealed in a Coopers & 
ly brand audit two years ago. 
faces the prospect of external 
supervision on its own activi- 
ties. Mr Fyodorov, the former 
finance minister who now 
heads parliament’s sub-com- 
mittee on central bank reform, 
has, together with commercial 
b anks , drafted a new law 
winch inter aha would create a 
supervisory council to monitor 
the central bank’s perfor- 
mance. 


*4S5pMGQMF!ior 


Sovcomflot is a Russian Joint stock commercial enterprise wfth 
headquarters in Moscow, established in 1988 with a share capital of 
USD 400 min. 

Sovcornflofs main activity o sNpowrring, ship operating and 
management, sale and purchase and freight brokerage. 
fThe Company Is a member of the Russian Chamber of Commerce and 
Industry, strfcowner member of the Baltic and International Maritime 
Council (BlMCO). 

The fleet controlled by Savcomlkrt Consists of 79 vessels of mkt. 
tons DWT and Includes tankers, OBOs, bulk, container, timber, 
product carriers, multipurpose ships and passenger vessels. 
Sovcorntiot vessels are under supervision of world known ■ 
Classification Societies such as: Bureau Veritas, Germanicher Lloyd 
AG, Lloyd's Register of Shipping, Register of Shipping (Russia), Det 
Norsks Veritas Ctesstffcafion A/S. The average age oflhefleet is less 
than 5 years. 

Address 1/4 Rozhdestvenka sir-, 

103759, Moscow, Russia 
Phone: 926 1434 
Tatac 411170 
Fax: 97526 37 

Chairman of the Board: Ifr. Vadhn D. Komflcrv 


AMALGAMATED INTERNATIONAL TRADE 
INVESTMENTS LIMITED 


a LondtxvtMeed advisory team la looking for a pmAmlonal consultant or 
■ le a de r of a email dyn am ic tarn, wfih axporlanco In trade and export 
finance and a good knowtedfie of foe Engfish language, to appoint as our 
•otaJUn ASSOCIATE M RUSSIAN CAPITAL MARKETS acting as part- 
time associate to advise during nagofiattona in Russia and the tamer USSR 
to p romote our corporate finance buskins in euch ooteUrtea. 

Please me* « lax in: 

AMALGAMATED INTERNATIONAL 
TRADE INVESTMENTS LIMITED. 

76 St John Street, 

London EC1M4DR 
Facrtmfle no. 071 - 480 10B8 



CHATEAU HOLDINGS GROUP LIMITED 
this is your way to Russia. 


Merchant and Investment Banking. Commodilies, Trade and Finance, 
Oil - Fenffizm - Steel - Cotton - Lumber. 

Industrial Machinery Export, Otnmmer Plzxtocw and food. Marketing 
and Distribution. Real Estate - New Yoric . Moscow. 


160 East 61 Start 
New Yotk. NY 10021 
Tet (212) 8882000 
Fax: (212)8883995 


Moscow, Russia. 
NcairovitdwDMKfaadn3 
Entrance 2JF1oor 2, 

TeL- (7-0*5) 200331372094209 
Fax: (7-095) 200 4728 Tbc4U63« 


GOSINCOR 


ggr State Investment Corporation 


GOSINCOR State Investment 
Corporation. was established in 
February 1993 by a decree of the 
Russian President with tbo purpose 
of fulfilling regional as well as 
federal projects and programmes 
for the restructuring of Russia's 
economy. 

To realise this task Gosincor 
attracts foreign investments sod is 
esta b li s hing a capital gram system 
to cover against political risk by 
means of a security fund backed by 
state property. 

The authorised capital of the 
corporation is SI .25 billion. Yuri V. 
Petrov is the Chairman of 
Gosincor. 

/tfam SaU a 'Fffyftv-' 

- expertise, contests, realisation 
and financing of investment 
projects and programmes; 

- insurance of investment proj ects 



- export of raw materials under 
special quotas granted by the 
Russia Federal Government; 

- trust operations; 

- organisation and holding of a 


- teaching and training of 
managers and specialists ■ in 


The corporation includes a number 


of companies 
(most of them are 
joint stock 
companies - e.g. 
Gosincor-Trust, 
Gosincor Trade 
House, Gosincor 
Lottery) which provide investment 
activity in wains fields. 

Gostaoor has rcgrstard a company 
abroad to ins arc foreign 
investments against political risk. 
The company's funds which arc 
held outside Russia can protect op 
to S350-400 million of investments. 
The investor's commercial risk wjp 
be covered by an insurance 
company which is being established 
in Russia, 

Gosincor is a founding member of 
the Investcredit joint stock bank 
which includes 35 regional banks. 

In co-operation with the Rossian- 
American Batik Forum Gosincor 
has organised training of Russian 
managers of commercial and state 
banks at The Academy for 
Advantage Studies in Banking and 
Finance in the USA. 

The GOSINCOR State 
Investment Corporation is ready 
to enter into mutually co- 

operation with any of the 
anemationa] Biu mmI institutions. 


Tel: (7-095) 204 1718. 208 9944; Fwc (7-095) 207 6936 



NEFTEGAS 


~ Leader in Russian Oil Trade ~ 


The opening up of the Russian energy sector ; following the abolition of export controls - 
quotas and licenses - for oil and oil products , by the Russian President, presents some very 

lucrative opportunities for international investors. AO Neftegas has been in the oil trading 
business for a long time and possesses invaluable expertise and strategic contacts within this 
immensely profitable, but complex sphere. We are currently seeking partners in the West to 
finance joint operations and expand our activities in oil trading as well as to invest in 
projects in energy infrastructure such as oil storage and loading facilities on the Black Sea. 

Please, contact; Mr. Arthur Papikian, Assistant Director, International Finance 
AO NEFTEGAS, 21/1 Stanislavsky SL Moscow, Russia 103 009 
Tel: 229-74-44, 929-70-44 (direct line) Fax: 229-95-96 


3 




i 







RUSSIA 


I n three days' time, Russia 
wjil have completed the 
most ambitious privatisa- 
tion programme in history 
»»* than 11,000 stateowned 
enterprise, accounting for 70 
per cent of Russian industry, 
win have been sold to the pub- 
lic for 148m vouchers distrib- 
uted free of charge to every 
Russian citizen. 

Under a new government 
programme which has yet to 
be approved by parliament, a 
second phase of privatisation 

■ dlle tO hpfrln aftni- Tiihr 1 u 


sell remaining state -owned 
stakes in privatised companies 
for money only. 

However, as Mr Anatoly 
Chubais, deputy prime minis- 
ter responsible for privatisa- 
tion, observed earlier this 
month: "The great battle for 
privatisation has clearly been 
won, but the battle over the 
assessment of its results is 
only Jort starting". 

For . Mr Chubais, the only 
radical reformer still in office 
two years after the launch of 
market reforms in Russia, the 
wider challenge of protecting 
his legacy is daunting. Assum- 
ing that he manages to stay in 
office, it consists of nothing 
less than ensuring the s urviva l 
of hundreds of companies 
thrown into marke t reform at 
the deep end by privatisation. 


“I know what to do to mak» 
things right,” he said recently. 


to do it I cany responsibility 
for it too." 

Already, however, his legacy 
is being attacked by conserva- 
tives such as Mr Yuri Luzhkov, 
the mayor of Moscow, who 
claim it has aggr a vated the cri- 
sis of Russian industry, set for 
a 25 pa cent drop to output 
this year. Even better-managed 
factories are starved of the cap- 
ital they need to modernise. 


mi 1*4 OULIIVC 1U CL 

more competitive environment. 
Companies owe each other 
Rbs22,ooobn in unpaid debts 
- their own way of subsidising 
each other in order to avoid 


Leyla Boulton reviews the privatisation programme 

Thrown in at the deep end 


the harsh realities of market 

economics. 

Although he cannot be held 

responsible for the high Infla- 
tion and the lack of a struc- 
tural policy which are prolong- 
ing the agony of Russian 
industry, Mr Chubais faces a 


more promising companies 
benefit from privatisation. One 
is to force bankruptcies and 
reorganisations at c ompani es 
which are badly managed and 



Mmgm > 


wzfcyi?;::,? - r ‘ TTr *^ r - v- 13553 ®* 




have foiled to restructure of 
their own accord. The other is 
to encourage investment in 
companies with the prospects 
and the will to change. 

The "mass” privatisation 
ending this month achieved a 
qualified success hi •tfatfafac 


hULOU of 1 1 1^1 ^ am VUL W 

achieve. 

The first was political: to 
dramatically lessen the over- 
weening role of the state in the 
economy, and mate the shift 
from state planning to capital- 
ism irreversible: Giving away 
vouchers entitling citizens to a 
share of toe nation’s wealth, as 
well as enabling workers and 
managers to acqufrait a dis- 
count of up to 51 percent from 
their workplaces, wak designed 
to create grass roots support 
for market reforms hi the face 
of opposition from parliament 
and old-style industrial manag- 
ers. 

Given the inability ctf a weak 
and oM-fastdoned state bureau- 
cracy to make managers act in 
a more market-orientated way. 
the second goal was to force 
enterprises to change their 


behaviour simply by exposing 
them to market forces; 

But partly because of the 
government’s reluctance to 
apply hard budget constraints 
to enterprises, many are doing 
nothing to adjust paying work- 
ers to come to work while 


flow of foreign, investment 
needed by Russian companies 
to acquire not Just new tech- 
nology to replace outdated and 
Tru»fWHftT\t equipment but busi- 
ness know-how, has perhaps 
proved the most successtoL 
Most of the leading foreign 


are simply waiting for some- son to build an industrial pres- 
thing to happen”, as Mr Vladk ence in Russia have begun 
mir Shcherbakov, a former doing so only thanks to Mr 


Soviet minister who aow heads 
a privatisation fond, put it 

T here have also beat 
some cases of privatisa- 
tion producing positive 
changes in management One 
example was provided by the 
Vladimir Tractor Plant ehrlier 
this year. There, institutional 
investors elected as chief exec- 
utive officer a former deputy 
director of the plant with a 
degree from Harvard Business 
School- in ozder to begin toe 
restructuring which an old- 
style director had tried to 
avoid by borrowing money to 
pay wages and supplying goods 
to insolvent customers. 

The third aim , to focftttate, a 


Chubais’s voucher auctions, 
not least because this has 


proven easier than trying to 
negotiate deals with govern- 
ment officials. -Such “strategic" 
investors have typically 
acquired minority stakes in 
Russian companies occupying 
the markets they would like to 
join - mostly in consumer 
industries such as food-pro- 
cessing, alcoholic beverages, 
clothing and tobacco. There 
has also some growing interest 
from western fond managers, 
attracted if nothing else by 
rod-bottom prices and hopes 
of a high return on a high-risk 
investment 

Although figures are hard to 
come by, Mr Chubais says that 
foreign equity Investment 
totalled $T-5bn last year and 







u'ftsrrt'ft.- 






could roach $4bn this year. 

Privatisation has itself gener- 
ated the momentum far some 
of the further reforms which 
are necessary to ensure Its suc- 
cess. The overnight appearance 
of millions of small investors 
and of thousands of private 
companies starved of invest- 
ment has created a double 
imperative for the development 
of efficient capital markets. 

This means establishing 
ground rules for everything 
from the protection of minority 


suaieuuiaias, auveras- 

tog standards, company disclo- 
sure, and self-regulating pro- 
fessional associations to run 
reasonably transparent mar- 
kets. 

Mr Jonathan Hay, a US 
adviser to the Russian privati- 
sation ministry [whose formal 
title is Committee for the Man- 
agement of State Property], 
believes that the very success 
of privatisation depends on the 
development of capital mar- 
kets. "The whole assessment of 
privatisation will be tied to 
this. If companies cannot get 
access to capital markets, the 
view will be that privatisation 
was an awfol thing' to do. If 
they do, people will say that 
privatisation laid the basis for 
the rebirth of the Russian 
economy and Chubais will 
become a folk hero." 


Mr V Vi: 


T he advertisement, outside the gates 
of recently-privatised Uralmash, 
Russia's biggest heavy en giwwwing 
company, promises great hope for the 
foture. “New Times, New Ideas. New Fron- 
tiers. Uralmash — the Guarantee of Your 
Success.” 

But the reality at the factory in Presi- 
dent Boris Yeltsin's home town of Yekater- 
inburg gives less cause for cheer. Mr VIo- 
tor Korovin, Uralmash ‘3 41-year-old 
director, finds adjusting the wwnpariy to 
the new circumstances of Russia’s 
economy tougher than he expected when 
it was privatised last year. 

Mr Korovin is one of a breed of younger 
managers who have welcomed radical 
market reforms. His grievances, which are 
not the winnings of old-style managers 
who have no idea of how to cope, shed 
useful light on the long-term problems fac- 
ing the flagships of Russian industry. 

For all its reformist zeal, Uralmash is 
caught to a vicious squeeze -by its sheer 
size, built up in the Soviet past when big 
was beautiful and quality irrelevant, and 
by a dearth of investment finance to mate 
It more competitive for the fixture. 

Far from warning that fixe company is 
on the verge of collapse, as many directors 
do when they try to squeeze subsidies 
from the government, Mr Korovin says 
Uralmash will survive - but will ccaxtinue 
a gradual decline. 

“There is no money fin: investment and . 


PROFILE: URALMASH 


Grievances shed some useful light 


fids means we are not looking after our 
fotare,* he says. “Far a good businessman, 
for someone who wants , the company to 
- flourish, this is a c atas trophe." 

. Monthly inflation, which has been low- 
ered from 30 per cent last year but is still 
high at 10 per cent, discourages invest- 
ment while prohibitive interest rates dis- 
courage bank-borrowing. Meanwhile, 

. many of Uraimash's potential customers 
are caught in a web of mutual debts, 
caused by the government’s failure to 
impose financial discipline on companies 
for fear they will go bust Uralmash itself 
owes, and is owed, some RbsiShn. 

In his fight to control costs, Mr Korovin 
has already begun painful re st r u ct ur ing. 
The workforce has contracted from 28,000 
to 19,000 - with some of the departures vol- 
untary hut others compulsory. Mr Korovin 
has also closed down or mothballed entire 
sections of the 5 sq km plant He expects 
his output to toll by another 30 per cent 
fids year- roughly tn line with a 25 par 
cent drop forecast for industrial output as 
a whole but lew than file 40-plus per cent 
faQ forecast for machine-tool plants such 


as bos. He agrees that much of this is 
necessary sHmmtog- “We have to pay for 
the [Communist] system we had fin: 70 
years". But he believes that fids year’s 
contraction th output -to a third of what 
the company produced to 1987 -is “the 
limit - beyond which we cannot afford to 
go”. 

And even if it pares its own costs fur- 
ther, Uralmash is unlikely to be able to 
finance investment from its own funds. 
Having made a pre-tax profit of Rbsl3hn 
last year, Uralmash paid RbsS^bn in 
taxes, and spent most of the rest an wages, 
workers' housing and working capital. To 
appease the workforce, which acquired 
half the company during privatisation, it 
spent another billion roubles on dividend 
payments which other shareholder s would 
have preferred to plough hade into the 
company. Very little was left for capital 
investment which Uralmash. needs to 
replace inefficient, worn-out equipment 

Adding injustice to injury, it Is "affiriaT 
enterprises such as Uralmash rather than 
Russia's booming unofficial economy, 
which carry the brunt of taxation to Rus- 


sia. In ad dj Hn p , many ctf th«n continue to 
finance a heavy burden of so-called social 
assets - such as housing, hospitals, and 
kindergartens - which elsewhere in the 
world are taken in charge by the state. 

Mr Korovin has made an energetic start 
in paring these so-called “nan^oduefive 
assets.” But despite these efforts, Ural- 
mash still spent RbsLSbn out of its pre-tax 
profits on the upkeep of housing built for 
its workers but no longer exclusively occu- 
pied by them. 

T he best deal which Mr Korovin could 
squeeze out of the regional adminis- 
tration was a promise that it would 
take an 30 per cent of these costs this year, 
50 per cent next year, and the whole lot in 
five years' time. 

The changes which this former Commu- 
nist youth movement leader has already 
pushed through have led to his growing 
unpopularity among a demoralised work- 
force which accuses him of uncaring capi- 
talist exploitation. “He does not strive for 
fixe working class,” said Sasha, a 24-year- 
old worker. 


But as one of the few managers who did 
not try to block outside investors from 
buying into the company when it was pri- 
vatised, Mr Korov i n appears to be disap- 
pointed with, the kind of support he has 
received from his own capitalist backers. 

He says Mr Kakha Bendukidze, a 
Moscow entrepreneur who acquired 1&5 
per cent of the company when it was pri- 
vatised, has not, tor example, provided 
him with the sort of financial expertise 
and advice he bad hoped for. A deal he 
engineered to supply equipment for fixe 
development of Russia's huge copper 
deposit at Udokan. in eastern Siberia may 
also be at risk because the Russian entre- 
preneur who wan the tender to develop it 
is having trouble raising the finance 
needed to build the mine. 

Having sought strategic partnerships 
with western engineering companies, Mr 
Korovin has tried to gat around foreign 
investors' reluctance to invest directly in 
Uralmash by setting up joint ventures 
with the tikes of Caterpillar of the US. But 
these are taking time to translate into 
contracts for orders. 


Meanwhile Uralmash is quickly losing a 
competitive advantage due to cheap Rus- 
sian raw materials which are now clim- 
bing In price towards world levels. 

Mr Korovin, like many industrialists, 
argues that the government must at least 
create minimal conditions for him to suc- 
ceed. In the absence of a coherent Indus- 
trial policy from the government, he 
recently convinced it to repay debts owed 
by Russia to Bulgaria with Uralmash 
machinery. The benefit for the govern- 
ment would be to assess the machinery’s 
value to world prices but pay Uralmash 
only up to TO per cent of that amount 

However, an official from the local 
administration, Mr Yevgeny Grachev, 
berates Uralmash for not doing more to 
help itself. He says the company is doing a 
poor job mattering what it produces, and 
should drastically slim down its range of 
products anyway. 

“Our big tragedy is that everybody is 
watting for economic and political stabil- 
ity, perfection of the banking system, and 
tax improvements,” claims Mr Grachev. 
To which Mr Korovin’s assistant, present 
at the interview, replies that “this is all 
easier to do than it sounds”. 

For the time being; Mr Korovin’s pessi- 
mism about the future seems better 
founded than the bright hopes he started 
off with a year ago. 

Leyla Boulton 


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VI 


FINANCIAL TTMT^ MONPAY JUNE 27 1994_ 


RUSSIA VI 


A fter 18 months in power, Mr Victor 
Cbenuunyrdin has succee ded in . 
becoming the second roost powerful 

man in the country and has remained the 
most elusive. The Russian premier, 
appointed in December 1992 when pressure 
from the then Congress of People’s Dep- 
uties forced Mr Yegor Gaidar from his role 
as acting prime minister, has apparently 
changed greatly while appearing exactly 
frie 

His first year was hard. He took over a 
cabinet which may have been shorn of 
Gaidar bat still bad many “Galdarttes" in 
it. In the key economic posts, whose con* 
tacts with the western financial Institu- 
tions and advisers were much better than 
his and whose distrust of him was mani- 
fest These ministers still had the presi- 
dent’s ear a V A were thus able at times to 
circumvent their ostensible boss. 

Moreover, be stumbled badly on his first 
ap pwnrawp as prime minister - calling for 
price controls and then being forced to 
back down after an outcry from his own 
ministers. 

He was close to the powerful industrial- 
ists’ lobby headed by Mr Arkady Volsky, 
a n d as a former chairman of the gas 
monopoly Gasprom and an energy minis- 
ter in both the Soviet and Russian govern- 
ments, he knew and shared many of their 
concerns. 

He dearly opposed many of the mea- 
sures and proposals of his ministers - sid- 
ing with Mr Victor Gerashchenko, the 
chairman of the Russian central bank, and 
protecting him from presidential dismissal 


PROFILE: Prime Minister Victor Chernomyrdin 


Remarkable progress and transition 


in favour of Mr Boris Fyodorov, then 
ffnanrw ministe r: calTfng the privatisation 
pro gramme akin to Stalinist collectivisa- 
tion; agreeing with Mr Gerashchenko 
to scrap pze-1993 banknotes in a currency 
reform which took place while Mr Fyodo- 
rov was out of the country and without bis 
knowledge. 

It became accepted- since it was pro- 
mulgated by the radicals and to a degree 
confirmed by the prime minister's actions 
- that he was at best a reluctant reformer, 
mu whose instincts remained with Soviet 
industry and with at least a corporate if 
not a command economy. Uneasy before 
most audiences, he tended to reiterate the 
need for hard work as an antidote to the 
country's evils. 

It was the clash between the president 
and the Russian Supreme Soviet, culmin- 
ating in the latter’s suppression by force 
last October, which revealed how far Mr 
Chernomyrdin had succeeded In creating a 
position for hims elf independent of both 
Mr Yeltsin and his cabinet co l l e agues and 
with its own power and influence. He 
remained sffleni for some days after Mr 
Yeltsin banned the Supreme Soviet in Sep- 
tember-then came out with an expres- 
sion. of solid support wbich clearly carried 



CtNmamyrdfei: posKamd Hbmetf wet before 
ffw parttomintwy nfcactfcwn mOwwiBlwr 

i&gbt and which appeared to speak fora 
body of centrist opinion of the kind the 
radicals could not reach. 

Mr Chenmmyrdm it was who went with. 
Mr Yeltsin to the Min fa tiry of Defence in 
the early hours of October 4 last year, 
after the pro-parliamentary forces had 
attacked the mayoral offices ami the TV 
centre, to argue the generals into giving 


the order to their nearest troops to come 
to the rtefaw** of the capital -and of the 
executive power. Mr Yeltsin’s own 
account-in his memoirs The View from 
the Kremlin - has Mr Chernomyrdin 
directly challenging the defence ministar. 
General Pavel Gachev, to take upon him- 
self the responsibility of ordering in the 
tanks. 

Mr Yeltsin’s appreciation of him is gen- 
erous, befitting someone who has shown 
conspicuous loyalty to his president - “the 
prime minister brought a refreshing note 
TTvfn the atmosphere of market reforms, 
which in feet continued ft was an accent 
on. reliability, permanence, stability. . . The 
political pressure on the government lifted 
dramatically. . . The hard, authoritative 
prime rptetater created a bulwark for the 
president’s policies, a second centre of 
power that cemented together all the dif- 
ferent government groupings.” 

With the apparently unassailable sup- 
port of the president behind him, Ms Cher- 
wvmy ri U ti positioned himself wen before 
th e parh amrotar y rfweHnna tau t December. 
Da iwnf ra st to many of his ministers — in- 
cluding Yegor Gaidar, by that time 
returned to foe cabinet as Jtds first deputy 
-he was not seeking office: instead he 


the remaining reformists in the 


received the endorsements of a number of 
Ids rahtwt. members to as pre- 

mier whoever worn . 

When the result turned out to be a 
swing to the right and left extremes, with 
no am group in the ascendancy, Mr Cher- 
nomyrdin benefited hugely. The radicals, 
after a brief struggle, left the cabi- 
net - with the sole exception of Mr Ana- 
toly Chubais, the privatisation minister. 
Mr ChernomyKtin, with: his own choice as 
first deputy in Mr Oleg Soskovets, a simi- 
larly taciturn workahoHc, had for the first 
time bis own government 

I t was widely assumed he would bring 
in a different programme: after aH, he 
had commented immediately following 
the election that there must be “an end to 
market romanticism.” But what followed 
that remark was an extraordinary turn- 
around: to date, Mr Chfl o mmyrdin has not 
only refrained from diluting the radicals' 
programme, he has actually advanced it 
- retaining a tight squeeze cm credit, keep- 
ing down inflation, forcing the central 
bank to impose more discipline and keep 
real Interest rates Ugh, approving (In Rus- 
sian conditions) a very tight budget with 
low expenditure on the military and pro- 


T his “maw” Mr Chernomyrdin -bis sup- 
porters would say ft was always there 
- took some time to be obvious, bat 
impressed when it did- ft was enough to 
.convince Mr Michel Camdessus, the man- 
aging director of the International Mone- 
tary Fond, to goto Moscow in March and 
after talks -and a hunting expedi- 
tion- with the prime minister, to extend 
to his government a $L5bn loan. 

m an article written for the Financial 
Times last month, Mr Chernomyrdin 
revealed himself not just as a man deter- 
mined to carry on reforms, but as one who 

took pleasure from the conmrereialteatkm 
of the cities, privatisation of businesses, 
and the signs of enterprise among his fel- 
low citizens. If be is still presenting a false 
reformis t Image, he is doing It very well 
. and keeping it up for a long time. 

He has dearly conceived a taste to the 
power, he could not have expected would 
be his: and he may join the other combat- 
ants for the president's chair when it 
becomes vacant in two yearn time at the 
end of Mr Yeltsin’s term. He does not 
enjoy high popularity ratings -he is too 
much associated with hard economic 
times- but he may be able to succeed to 
the rather tattered mantis of Yeltsin and 
pose as a centrist able to unite the nation, 
ft has been a remarkable progress and a 
remarkable transition - and Mr Cherno- 
myrdin appears to have a way to run yet 

John Uoyd 


F or the first time after 
seven decades of gross 
mismanagement by Com- 
munists who put Russian agri- 
culture on its knees, Russian 
peasants are finally being 
given the <- H nTV><> to put t hings 
right themselves. 

A new reform programme 
introduced in the Nizhny-Nov- 
gorod province and decreed a 
blueprint for the whole of Rus- 
sia, is based on the premise of 
Mr Boris Nemtsov, the local 
governor, that "the Russian 
people are a lot cleverer than 
the country’s leadership gives 
them credit for”. 

A dear system for collective 
and state forms to reorganise 
into more efficient private 
units is so simple and so prom- 
ising that it prompts questions 
as to why Russia’s rulers have 
come up with it only now, and 
only after the intervention of 
foreigners. But although he 
has been accused of bowing to 


foreign ‘'imperialism”, Mr 
Nemtsov has nothing hut 
praise for the International 
Finance Corporation, the 
World Bank’s private invest- 
ment arm, which developed the 
plan together with Russian 
agricultural experts. 

"The foreigners did what 
Russians conldn’t do. They car- 
ried an idea through to its logi- 
cal conclusion,” says this ener- 
getic 84-year-old chief of a 
province often described as a 
laboratory for economic 
reform. In Russia, we have 
lots of ideas but little capacity 
to see them through.” 

Another reason for the fail- 
ure of previous attempts at 
reform has been a fierce ideo- 
logical debate over private 
land ownership. Since the col- 
lapse of Communism, agricul- 
ture has been held hostage to 
battles between radicals seek- 
ing to break up state and col- 
lective forms, and conserva- 


Recent agricultural reforms are full of promise, writes Leyla Boulton 

Opportunity for the peasants 


fives who oppose private prop- 
erty and call for more subsi- 
dies. 

Farm subsidies pushed 
through by the country's pow- 
erful agrarian lobby consume 
up to 10 per cent of national 
budget expenditure. Although 
agriculture has recorded a 
much milder drop in output 
thaw indus try - and Russia has 
even begun catting back grain 
imports - prices remain high, 
quality poor, and distribution 
uneven. 

Farmers are unable to use 
their land as collateral for 
bank loans to develop- A poor- 
ly-developed trade infrastruc- 
ture and a backward, over- 


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monopolised food-processing 
industry mean waste, high 
costs, and a raw deal for Rus- 
sian consumers. Even when 
peasants manage to bypass 
•midrfitwnwn atwi take their pro- 
duce directly to town, they 
usually have to pay protection 
money to racketeers. 

A middle course followed by 
Mr Boris Yeltsin since his eteo- 
tfon as president three years 
ago sought to encourage the 
development of a new class of 
private formers without forc- 
ing the break-up of collective 
and state forms. This meant 
that some city dwellers and 
peasants were able to obtain 
land from state reserves and 
existing collective and state 

farms 

With generous infections of 
cheap credit, up to 300,000 pri- 
vate forms appeared around 
the Russian countryside. But 
old state and collective forms, 
ordered to "reorganise” with- 
out instructions on how this 
should be done, remained basi- 
cally unchanged: costly to 

maint ain and namocre nffidtent 

than before. 

President Yeltsin, having dis- 
solved the conservative parlia- 
ment last autumn, sought to 
adopt a more active land 
reform policy and issued a 
decree overturning a five to 10- 
year moratorium on the resale 
of land imposed by the old par- 
liament. In a December refer- 
endum - the results of which 
have since been queried but 
not reversed - he pushed 
through a new constitution 
laying down private property 
as an lTMliepflhle rig ht. 

At the same time, however, 
prospects for further reform 
appeared to receive a setback 
When December elections also 
returned a parliament domi- 
nated by ultra-nationalists, and 


neo-communists. A newly-re- 
shuffled government, shorn of 
radicals, promptly announced 
protectionist import tariffs, 
new subsidies for agriculture, 
and old-style outpat targets 
specifying, for example, that 
Russia should produce 39bn 
eggs this year. 

But the government’s lack of 
a coherent strategy for agricul- 
tural reform had Prime Minis - 
ter Victor Chernomyrdin 
embracing the Nizhny-Nov- 


Moscow says it is about 
to submit to parliament 
a land code 


gorod project as a model for 
the whole of Russia last March. 

The government has since 
drawn up instructions spelling 
out how local authorities in 
other provinces can reproduce 
the scheme. Moscow also says 
it is about to submit to parlia- 
ment a land code, setting out 
the ground redes for a land 
market 

Relying on the greed of peas- 
ants rather than compulsion 
from cm high, the Nizhny-Nov- 
gorod scheme is strictly volun- 
tary. The scheme, bowing to 
peasants' suspicions of outsid- 
ers, for the time being restricts 
the distribution, and subse- 
quent re-sale, of agricultural 
land to local farmers. 

These two elements make 
the programme much more dif- 
ficult to challenge politically. 
The programme also differs 
crucially from Russia's Initial 
system of encouraging individ- 
ual formers because it does not 
rely on the good will of local 
bureaucrats or collective farm 
chiefs. Once a farm has opted 
to reorganise, each worker gets 
a property entitlement certifi- 



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cate whose value is calculated 
according to an individual's 
length of service. Before equip- 
ment, stocks and land. are auc- 
tioned a S, farmers wishing to 
work together in a private 
partnership have an opportu- 
nity to pool their entitlements 
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selected tractors and Land. 

This miwm tihat rather than 
systematically breaking up 
fen-mu into inefficiently small 
individual units -as was done 
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scheme allows formers them- 
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forms are likely to be most 
effective. 

The first results of the reor- 
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bring closely studied by other 
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cheva, 39, the energetic chief of 
Mbshkinskoye, one of eight pri- 
vate forms spawned by the 
reorganisation of the Sixty 
Years of October collective 
form. “It Is better to try rather 
wait for a gift from on 
high because Fm sure nobody 
wfll give us anything." 

She says the first results are 
encouraging. If the 300-member 
farm she heads proves 
unwieldy, she is confident that 
formers like herself will sur- 
vive by setting up smaller busi- 
nesses. Another aflkhoot of the 
programme has been the 
encouragement of enterprises 
devoted to the servicing of the 
forms themselves. 

Mr Sergei Klementiev not 
only farms land he won at one 
of the auctions with his land- 
entitlement certificate, hut has 
set up his village's first cafe, 
and takes produce to town for 
other formers such as Mrs 
Makaricheva. Another local 
entrepreneur provides Mrs 
Makaricheva with fori at half 
the price charged by the local 
state fori monopoly. 

Clearly, not all the new busi- 
nesses will succeed. Mrs Liu- 


bov Bubnova appears weighed 
down by her new responsibili- 
ties as of neighbour- 
ing Rostbk form. Of all the 
problems faring new farms, 
Mrs Bubnova suggested that 
motivation was the most sort 
ons. "They need to be a tittle 
bit more ambitious,” observed 
Mr Christopher Shape, a Michi- 
gan agricultural student work- 
ing an Mrs Bubnova's form, to 
res^rdi the results of the reor- 
ganisation. 

But Mrs Bubnova said that it 
was difficult to get people to 
work harder on her 35-member 
form when pay was “low” 
- even though the local 
monthly wage erf Rbs 150,000 is 
not too bad for Russian stan- 
dards -and often lata The rea- 
son the money was late was 
because many of her clients 
did not pay lor deliveries. 

In Nizhny-Novgorod, the 
scheme is being accompanied, 
by RbsShn this year in subsi- 
dised loans for forms like Mrs 
Bubnova’s which decided to 


ting up small food-processing 
units designed to create compe- 
tition for local monopolists 


also fed to the creation of 133 
new dairies and meat-process- 
ing businesses in the Nizhny- 
Novgorod region last year. The 
British government, which is 
financing the IFC*s work, is 
also faflpmg to establish local 
advice centres fin- formers. 

While the Nizhny-Novgorod 
project displays an impressive 
allian ce of Russian political 
will, and western te chnical 
assistance, it is clear that 
much painstaking work 
remains to be done to deliver 
similar results on a massive 
scale. 

Mr Nemtsov reckons it will 
take at feast IP years to repro- 
duce the plan across foe prov- 
ince and Russia as a whole. Dr 
Vassily Uzun, the Russian agri- 
cultural expert who is consid- 
ered the main inspiration for 
the scheme, says he will be 
glad if It takes only 20 years. 

Providing Russia's squabbl- 
ing politicians do not interfere 
with progress an the ground, 
the reform gives Russia's 
long-suffering peasants a 
unique chance to prove that 
they are capable of seizing foe 
initiative with both hands. 


M \ki: SI kl YOl 

i m)i;rst\m) i n 1 ; c n am; is 

\M> OPPOk I r\l I II S l\ 

I \STKUN 11 ROPi; 


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FINANCIAL TIMES MONDAY JUNE 27 1994 


RUSSIA VII 




.•‘’•I*--.', •' I, » | i| 

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r~'4c 


E arlier this month, Mr 
Andrei Kozyrev, the 
Russian foreign minis- 
ter, warned the US Congress 
against instating cm the imple- 
mentation of its vote to ami 
Bosnian Moslem forces. This 
would be, he said, a harbinger 
of a new great power confron- 
tation - when Russia awl the 
tJS would' again arm their 
allies in a' proxy war. He obvi- 
ously had in mind, hut did, not 
explicitly mention, the Serbs 
as Russia's proxy. ' 

This was not the Mr Kozyrev 
who became foreign minister 
in 1991 and who has stuck - de- 
spite constant rumours of 
farced resignation -to his post 
ever since. But thee country's 
mood towards foreigners has' 
changed greatly and Mr 
Kozyrev with it it is the rea- 
son for Ms survival. 

The swing to the nationalist 
right and left in the elections 
of last December is usually 
held responsible for this, but 

Only Estonia among the 
three Baltic states stifi 
has no agreement and 
the negotiations remain 
tense and mutually 
abrasive 

that is only true in part Some 
time before, the country's pefi- 
Hffiftim had begun to 
quite sharp corrections to a 
pro-western foreign policy 
which even western rii piinrmata 
thought excessive. Russia had 
rediscovered tte “i n terests* and 
it is still doing so. 

As now expressed, these 
interests include: 

• A concentration on the 
“near abroad," the Russian 
designation for the 14 other 
former Soviet states, most of 
which have a common border 
with Russia and ail of which 
are still strongly linked to it by 
economic, political and seen- 


John Lloyd sees a change in foreign policies 

Confrontation is 


rity ties.' Hie news bere, for 
Russia, the former Soviet 
states for the "Jar abroad” 
is not all bad.- although same 
cfitJa. . 

The good news is that Rus- 
sian: troops are withdrawing car 
have withdrawn from Lithua- 
nia and Latvia: only, Ratoni* '• 
among the three Baltic states 
still has no agreement (and the 
negotiations remain tense and 
mutually abrasive) - but both 

H fffa mta n »md R m qyjjm nfflriala 

stffl say they expedrone. 

Further, the states which 
maim up tha canuBomrealth ^ 
Independent States,, which 
include all fmmek Soviet coun- 
tries except the Baltics, are 
now prepared to work together 
more closely than in the first 
two years of; that organisa- 
tion's fife. They lack properly 
functioning bureaucracies to ' 
Implement the ' network of 
agreements they have signed 
between themselves -but they 
are now making efforts to mod- 
erate the burst of destructive 
protectionism In which they 
fadfiigHii immediat el y gfhar +h» 
collapse of the Soviet Union. 

The bad news is that the CIS 

IS not a wwwww wwrirrf , ftaa 

no properly working i nte r st ate 
imiiwili; Tnanfianfam or bank- 
ing agreement and most at the 
non-Russian states are 
extremely dependent on Rus- 
sia -to tiie point of being vul- 
nerable to, and suffering from, 
Russian pressure. 

For this reason, there 
remains, and win remain, great 


ambiguity about Russian mili- 
tary and security activities 
there- always interpreted by 
Russia as necessary measures 
to keep the peace and preserve 
or. bring bade stability, but 
Inte rpre te d by some at least in 
the west, and on occasion by 
the other former Soviet states, 
as more or less dangerous 
manoeuvring to further Rus- 
sian power. 

In the past year, the west 
has drawn a rough hue under 
the Baltic states, saying that 
these at least should not be 

Russia is HkeSy to be 
accepted as a Apolitical’ 
member of the Group of 
Seven advanced 
industrial ^btmtrfes in 
■ Naples next month - 

touched and must be cleared or 
Russian troops: for the rest, it 
averts its gaze. 

• An effort to strike a rela- , 
titmwhip with the US and with 
Nato which confirms Russia’s 
“great patter" status - even as 
that status is more and more 
nrytor question in any but the 
field of nuclear weapons. 

This is proving hard: 
ahfangh the Russians proba- 
bly wm sign up to the Partner- 
ship for Peace -the Nato-in- 
spired plan to bring the former 
communist countries into asso- 
ciation with it while withhold- 
ing fun membership from the 
central European states which 


M;' ' / 

few 


wish it- they do so with same 
reluctance. This is accompan- 
ied by demands for a special 
status to be recognised and 
codified and with "a .constant 
commentary that Nato should 
be subsumed into aj&uger 
organisation such as the Con- 
ference for Security and 
Co-operation In .Rome -a 
trend which coultLserv^ as a 
warning for the fUtui&>£ , 
Russia is sdso.hk^to be 
accepted as a “pUHtfouE mem- 
ber of the Group- tfjf^Seven 
advanced indnstriaL-^^D^riBS 
to Naples next i^ -e f gpsa mem- 
bersMp which wifirgiv^ts poli- 
ticians the sense -o^bwaiglng 
to a weafthy chib ‘but 1 ' which 
will impose responsfljftttifts for 
which their rsduc^dreum- 
stances badly fit them.^' 
ft wm be a further>mark of 
acceptance by the -interna- 
tional community that reforms 
continue or are at least deemed 
to continue - the other this 
year was the granting of a 
$L5bn loan by the : interna- 
tional Monet a ry Fund— but it 
comes when Russia Ir proving 
a prickly and difficult partner 
and when much comment in 
the west points to tho impossi- 
bility of a real “partnerehip” 
with a country whose interests 
are seen by itself as being so 
different from those of most 
western states. 

Russia wishes to be both of 
Europe and out of it: although 
western Europe, and in partic- 
ular Germany, remains the sec- 
ond most important focus of its 



diplomacy after the CIS, It can- 
not forget its Euraaan nature 
and cannot take its place as 
simply a bigger, more eastern, 
European state. 

# Its relations with the coun- 
tries to its east and south have 
generally improved. Chi- 
na-now its largest trading 
partner -presents no quarrels 
for the first tfma for many 
years and seems as i n t ere sted 
as is Russia in p res e rv in g good 
neighbourly relations. Visits 
by Mr Ydttste and Mr Victor 
Chernomyrdin, the prime min- 
ister, confirmed the impor- 
tance of the relationship. 

India 1m no lon g er as Close 88 


it was when it sought to use 
the Soviet Union to balance 
western influence on it - but 
there is no tension. Of the lead- 
ing states to the east, only with 
Japan does suspicion and a cer- 
tain animus remain , ar preaapd 
over the Kurile Islands or 
Northern Territories taken by 
the Soviet Union at the end of 
the last war, and whose return 
Japan demands before it puts 
its diplomatic relationship 
with Russia an a normal foot- 
ing. 

For the rest of the world, 
Russia has largely withdrawn. 
The former Soviet satellites 
find little interest and no sup- 


port from a state now forced to 
weigh expenditure much more 
carefully than in the past, and 
with no ideological profit to be 
pinwi from buying their alli- 
ance. 

Before this year, this with- 
drawal was accompanied by a 
commensurate absence from 
many of the theatres of the 
world where the most impor- 
tant states, above all the US, 
woe playing a mediatory or 
controlling role. In the past 
year, however, Russian diplo- 
macy has agate become more 
active — insisting on being 
taken into account in the for- 
mer Yugoslavia, in the Middle 


East and in the present crisis 
in North Korea. 

In each case it has proposed 
distinctive approaches and 
though often posing a chal- 
lenge has so for been accom- 
modated without major ruc- 
tions. Mr Kozyrev’s challenge 
over Bosnia, however, raises 
the question of how long this 
win wunHnue to be SO. 

Russia has, in this past year, 
shown It will advance Its inter- 
ests. It has not so far pushed 
these to direct confrontation 
with those of other leading 
countries with whom it has a 
new-found friendship. But the 
possibility now exists. 


'-***■4* 




,i ■ ' ** 

I * n ’ 


J ' r 


T he Hire of Russian gold Is 
finally paying off with a 
start to foreign invest- 
ment in one of the country’s 
most closely-guarded indus- 
tries. 

Over the past month, two 
unprecedented gold-mining 
deals have cleared. final hur- 
dles to more than a third of a 
billion dollars’ worth of 
investment. The Russian gold 
mining industry, previously a 
state-owned monopoly , found 
itself starved of capita] foDow- 
iug the coQapse of the Soviet- 
era command-economy. As a 


TMNsmtrArm 


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Leyla Boulton on developments in the gold-minjng sector 

Better investment climate 


result, gold output in a coun- 
try which Is the world's sec- 
ond-largest producer, has been 
steadily faffing. TUs in turn 
has forced Russia, despite its 
deep-rooted tears of "selling 
off the fondly silver”, to look 
abroad for finance for bigger 
projects .requiring sophisti- 


oactoMm 


cated technology and vast 
amo unts of capital. 

Dozens- of Russian compa- 
nies have already won con- 
tracts to develop smaller 
deposits concentrated mainly 
in Siberia. Bat.the two foreign 
deads, for bigger and more dif- 
ficult deposits, are the first of 


their kind following the suc- 
cessful conclusion of more 
them two years of negotiations. 

After altering its initial plan 
to meet objections from Rus- 
sian authorities. Star Mining , 
a small Australian exploration 
rn uii f mny , has all but finalised 
a deal to develop Snkhol Log 



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(Dry Gulch), Russia’s largest 
hardreck gold deposit ft has 
promised to invest XXSOm in 
Lenzoloto, the local Sibmlan 
producer tn which ft bolds 31 
per cent up from an initial 
proposal to invest flSOm. Hie 
aim of the project is to raise 
Lemoloto’s annual production 
to 2m ounces in six years, 
about three-quarters of which 
would come from Sukhoi Log. 

Earlier Ibis month, the Over- 
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struction and Development 
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loans and investment guaran- 
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Tfw project soon ran into 
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Kubaka deposit in Russia’s 
Far East The tender for the 
project was won last June by a 
Joint venture between Cyprus 
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five regional mining compa- 
nies. 

But responding to compa- 
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cover against expropriation 
and political violence. The 
EBRD wfQ lend the project a 
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produce 326,000 ounces of gold 
and 255,000 ounces of silver a 
year. 

The contrasting histories of 
the two deals speak volumes 
about the gradual improve- 
ment of Russia's to vestment 
climate since the launch of 
market reforms to 1992. 

While big companies 
remained on the sidelines. 
Star -invited by Mr Boris 
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mate objection was that the 
deposit should have been put 
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Coming in later than Star, 
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Mr Boris Yatskevich, deputy 
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But having led objections to 
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bles after Star Improved their 
terms. “Today Lenzoloto, with 
7,500 employees, is on the edge 
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Hie Russian government 
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tions from local authorities in 
the eastern Siberian province 
of Irkutsk by giving than 10 
per cent of the equity tn the 
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FINANCIAL TTIVtES MONPAY JUNE27_19g4^ 


RUSSIA VIII 


LAW AND ORDER 


Fresh Rbs3,000bn 
attack on crime 


Two bomb attacks on 
businessmen in Moscow on the 
same day ibis month provided 
a brutal impute for Russian 
President Boris Yeltsin to 
declare all-out war on organ- 
ised crime. 

In broad daylight, right out' 
side Paveletsky railway sta- 
tion, the driver of the chief of 
Lcgovaz, a hjg cardealing com- 
pany, bad his head blown off 
although his boss, Mr Boris 
Berezovsky, escaped 
unscathed. The other intended 
victim, the manager of a 
smaller company, was less for- 
tunate: a car-bomb earlier in 
the day cost him his leg. 

A few days later, on Jane 10, 
President Yeltsin announced 
he had ordered the security 
services to “cleanse Russia of 
criminal filth". The interior 
minister, prosecutor-general, 
anti head of the domestic intel- 
ligence service promptly 
unveiled a new Rbs3.000bn pro- 
gramme to fight crime. Mr 
Yeltsin said they would be held 
personally responsible for its 
success in beating back crimi- 
nal forces who were trying to 
“seize control of the economy 
and push their way into poli- 
tics". 

He followed this up in mid- 
June with a presidential decree 
giving security forces unprece- 
dented powers to fight organ- 
ised crime, including the right 
to detain suspects without 
charge for 30 days and the 
right to search the premises 
ami bank accounts of any com- 
pany suspected of illegal deal- 
ings. 

The measures were promptly 
denounced as unconstitutional 
by parliament and the liberal 
media, which warned oF a pos- 
sible return to to Russia’s more 
repressive past Given an over- 
whelming public longing for 
law and order, a successful 
crackdown could prove the 
greatest votwpinner for a gov- 
ernment unlikely to deliver 


quick results on economic 
reform. But criminals’ close 
links to corrupt police and offi- 
cials provide the strongest rea- 
son to doubt the likelihood of a 
successful campaign against 
Russia’s so-called “mafia". 

The word “mafia” is widely 
used In Russia to mean any- 
thing from organised crime to 
extortion by officials seeking 
bribes. The crime problem is 
unique because of its intimate 
connections to an inherently 
corrupt economy and bureau- 
cracy inherited from the Com- 
munist £ra. 

Mr Grigory Yavlinsky, a 

More than a dozen 

bankers have been 
gunned down in contract 
killings 

renowned Russian economist 
and presidential hopeful, 
argues that the old state-run 
Soviet economy was designed 
for lawlessness. 

He says its vestiges - such as 
a reliance on personal patron- 
age, excessive discretionary 
powers for bureaucrats, and a 
very high degree of monopoly 
in the economy - need to be 
dismantled if there is any 
chance of making inroads 
agafost crime and racketeer- 
ing. 

How dangerous is Russia 
today? In term of statistics far 
ordinary crime, a big city such 
as St Petersburg is no more 
dangerous than the more 
crime-ridden cities of Europe, 
and is safer than New York or 
Washington. 

Major-General Arkady Kra- 
mariev, the St Petersburg 
police chief, says that the 
higher levels of crime in Rus- 
sia’s second city - 845 murders 
last year compared to ISO a 
decade ago -correspond more 
closely to a free market econ- 
omy than previous low levels 


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prevailing under the old police 

state. The difference between 

Russia and the west is that 
police who are underpaid, 
uninsured and demoralised are 
unlikely to do much to solve 
crimes. 

Much of the violence can be 
blamed on an antiquated legal 
Systran’s inability to meet the 
requirements of a market econ- 
omy. Because the courts take 
so long to solve commercial 
disputes, MaJ-Gen Kramariev 
says that “Judge Kalashnikov" 
remains the most reliable way 
to recover debts. 

This is true of any sphere of 
activity in Russia. But bank- 
ing, as one of the most profit- 
able businesses in an ailing 
economy, provides a useful 
starting-point for exploring 
organised crime's involvement 
in the economy. 

More than a dozen bankers 
have been gunned down in 
contract kiTHng a over the past 
couple of years but not one of 
these crimes has berai solved. 
The victims were believed to 
have rejected extortion 
attempts or to have become too 
deeply involved with unsa- 
voury customers. 

Given that Russia has no 
guidelines an money launder- 
ing, it is not surprising that Mr 



New weapons to help fight crime: a Russian poficeman with 9ram pistol, 
23mm shotgm and bulet-proof hefcnat and hoa guard mwiv 


Dmitry Tulin, deputy governor 
of the central hank, admits 

that “any hanks may hav t> cus- 
tomers related to Illegal, under- 
world activities". 

Mr Tulin, in charge of bank- 
ing supervision and restructur- 
ing, categorically rejects, 
together with other Russian 
nfffriafo and bankers, some of 
the more far-fetched western 
speculation that the entire 


banking sector is run by the 

mafia 

But while top bankers usu- 
ally have the means to protect 
thanmah ms — Mr V ladimir GUS- 
sinsky, chairman of Most- 

Bank, says his construction 
and banking group has a secu- 
rity force of 650 men -many 
smaller businesses have no 
choice but to pay up and shut 
up- 


Specfat Russian farces search a suspected black wheat we a po n* dealer 
In Moscow, n t t s w pistols and 600 rounds of a mmuniti o n wara i 

The same differences apply 
to foreign companies. Big mul- 
tinationals which are begin- 
ning to Invest in Russia and do 
not operate small cash-based 
businesses are unlikely to do 
deals with the mafia. But 
smaller outfits, such as new 
foreign, restaurants in Moscow, 
or retail outfits, are asked to 
pay protection money, and 
often do. 


Fea^s are often expressed 
that organised crime and extor- 
tion are s tifling economic 
reforms and growth. 

While problems do dis- 
courage many newcomers, the 
hardier entrepreneurs have 
simply adjusted to a business 
climate hi which most partici- 
pants find they have to break 
the law in one way or another 
in order to prosper. In this con- 


text, many businessmen com- 
plain that the mafia is less <tf a 
problem than the corrupt 
bureaucracy or over-burden- 
some taxation. 

Ur Sergei Klementiev, a pri- 
vate farmer with ft small farm 
and entrepreneur in the prov- 
ince of Nizhny-Novgorod, is 
doing exactly what bold agri- 
cultural reforms in the, prov. 
ince are designed to achieve. 
Ho is challenging the state 
trading and food-processing 
monopolies by taking milk 
directly to town to sell It mere 
cheaply to consumers. Rot be 
says he also has to pay protec- 
tion money to “small-time 
crooks” who otherwise 
threaten to damage his retail 
stalL 

However, he says paying pro- 
tection money to the same peo- 
ple on a regular basis is the 
least of his problems, in so far 
as "nobody else comes and 
as Vs for money”. Without even 
bothering to go to the police, 
he is for more concerned that 
the government should lessen 
taxation cm. his businesses. 

perhaps the main victim of 
organised crime is public opin- 
ion, which widely perceives 
market reforms as giving 
greater freedom to the “mafia” 
while impoverishing the qual- 
ity of their lives. It is for this 
reason, if only to fend off the 
ooming-to-power of more ruth- 
less extremists who promise 
summary executions and (dan 
dictatorship, that Russia must 
hope President Yeltsin can toe 
a fine line between restoring 
order and returning to the 
arbitrary rule of the commit 
nist past 

Leyte Boulton 


A GUIDE FOR VISITORS 


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D oing business in Russia 
has become in some 
ways more, in some 
ways less, taxing. The more 
first 

The Russian language is dif- 
ficult although it is a worth- 
while courtesy to learn a few 
words. Few people speak 
English and interpreters 
should be carefully chosen. 

It is thus both time-saving 
and sensible to learn as far as 
possible before trav elling what 
officialdom will require of you. 

Most international airlines 
serve Moscow and many serve 
St Petersburg. However, Aero- 
flot and the nnfopentfent com- 
panies, which have been cre- 
ated from its partial 
breaking-up. dominate the 
internal market 
These are usually bad, some- 
time very bad. Like most areas 
in which foreigners operate, 
they are charged more for the 
same low service However, 
genuinely private airlines are 
beginning - of which Transa- 
ero, with several destinations 
within Russia and the former 
Soviet Union, is the best. 
Travel agents should be con- 
sulted. 

Outside of Moscow and St 
Petersburg, food and hotels are 
at best adequate. If travelling 
widely, bookings should be 


made well in advance and con- 
finned shortly before arrival 
Elementary items, such as tow- 
els and bottled water, should 
be taken and the traveller 
must be prepared to be patient 
and to wait 

Although there Is a tradition 
of warm hospitality In most 
parts of Russia, there is little 
or none of service and polite- 
ness: thus, public encounters 
are often abrasive and can 
quickly degenerate into squab- 
bling. Sometimes shouting 
works, sometimes it makes 
matters worse. 

Negotiation and rea ching 
agreement can be harrier than 
in settled economies, although 
far from Impossible and often 
more rewarding. The underly- 
ing issues which must he care- 
fully examined are those of 
property rights, especially of 
land, legislation and taxation. 

The first can be very vague: 
that is in large part either 
because the law is vague and 
because title, even when appar- 
ently firmly vested, can in 
practice be hard to establish in 
court if challenged. The sec- 
mid, legislation, is a minefield 
of overlapping and contradic- 
tory laws which produce the 
effect of a field of struggle 
between the actors, rather 
than a reasonably ordered code 



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which defines rights and 
responsibilities. 

Taxation, which for the 
moment is seen -especially by 
the oil companies-* as usually 
the most severe problem, is 
serious because of the height 
of taxes and because of their 
variability. Companies, both 
Russian and foreign, must 
often pay taxes which can 
amount to more than their 
income: a clearly unsustaina- 
ble position winch is solved by 
evasion. 

Mr Victor Chernomyrdin, the 
prime minister, has recently 
promised to reduce taxes and 
to grant tax holidays to foreign 
investors. 

These issues can, of course, 
be clarified by reference to con- 
sultants, lawyers and accoun- 
tants, of which there are now 
many - Russian and for- 
eign- in Moscow, St Peters- 
burg and. to a much lesser 
extent, elsewhere. But the 
advice cannot solve the basic 
problem that huge confusion 
exists in all these areas. 

Last an the downside: a busi- 
ness culture is only developing 
in Russia and in the other for- 
mer Soviet states. This means 
that Russian business people 
can display one or more of the 
following characteristics: an 
extreme naivety which foreign- 
ers were and are not alow to 
exploit; extreme suspicion, 
which bedevils relationships, 
certainly at first; extreme 
on trustworthiness, which 
gives rise to the saying that 
Russian business people start 
to negotiate after an agreement 
has been signed. 

All of these views, made 
famous by anecdote, have a 
basis but they can be moder- 
ated by care and checking. The 
number of foreign companies 
- Unilever, ABB, Brown 
Boron, BAT, Proctor & Gam- 
ble, United Technologies and 
others - which are now invest- 
ing with success or the expec- 
tation of it, show that the basis 


for business and profits exists, 
albeit on a fragile foundation. 

This has led us to the upside: 
it is a function of the steady 
opening-up Of Russia and its 
neighbours which causes pain 
but which, nevertheless, con- 
tinues. Russian politicians and 
officials, whatever their past 
and present views, are - often 
reluctantly - constrained to 
work within an economy 
which is being pulled towards 
that of the world economy; it is 
no longer possible to adopt an 
autarchic policy on either 
investment or on industrial 
structure. 

A lthough Russia has been 
Independent for a little 
over three years only 
and though legislation and pol- 
icies to create a full market 
structure are even younger, it 
is already evident that many, 
especially younger, Russians 
working Jn new sectors such as 
finance and banking, have 
experienced a steep learning 
curve and are anxious to reach 
standards of professionalism 
equal to those in developed 
economies. Increasingly, these 
are the people with whom for- 
eign business visitors are 
working and collaborating. 

The influx of foreign capital, 
still slow compared with other 
developing countries, will be 
encouraged to the second put 
of this year by new laws and 
regulations prepared for the 
next phases of the privatisa- 
tion process. 

Mr Anatoly Chubais, the dep- 
uty prims minister in charge of 
privatisation, has announced 
that the new priva t isation pro- 
gramme will be designed to 
encourage much .more rapid 
and significant strategic 
investment in the privatised 
R us sian companies and has 
said that he wishes to attract 
much more foreign investment 
than he was aide to do in the 
first phase. 

Already, foreign companies 


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large anri small have taken 
generally modest shares in the 
privatised companies and there 
are signs that some of them 
are prepared to go much fur- 
ther -buying out companies, 
creating majority sharehold- 
ings and nwh'ng f partnerships 
with Russian companies in key 
market sectors. 

The experience of those few 
rampaniiy which have already 
done so shows that, in spite of 
the macro-economic problems 
afflicting Russia, good and sta- 
ble business can be done if the 
ground is well prepared. 

The development of foreign 


hotels; restaurants and shops 
In Moscow and St Petersburg 
has been rapid in the past 
three years, transforming the 
farititifta fin; visiting and resi- 
dent foreigners and for the 
growing, if still small, propor- 
tion of wealthy Russians. 
Prices are very high by inter- 
national standards and often 
are grossly out of line with ser- 
vice. However, their develop- 
ment has meant that discom- 
fort need not necessarily be an 
inevitable accompaniment of 
the business traveller. 

John Lloyd 


Stay in the 
comfort of our 
four Tsar Hotel. 


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English spooling staff? fn the heart of Moscow? This can't 
be right 

"For the business traveller to Moscow, the Rodbson 
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hope for. Whereas other hotels still display the 'Nyet' 
approach to service, *Yes 1 Can’ sums up the attitude of our 
expertly -trained staff to make your stay a real pleasure. 

Added to which, Russia's only American-managed hotel 
offers Moscow's best business facilities, including round the 
clock secretarial and translation services. (And the city's only 
colour photo -copier!) 

After the sweat and toll of the day, we've a range of 
places to unwind: Skondia and Cafe Amadeus, for eating 
cont»wifd-sfyfe; The Exchange, where we serve steaks flown in 
from the USA} and The Lobby Ban one of the places to be seen in 
town. So when your business takes you to Moscow, came to the 
place - the ffadisson Slavfandgaya Hofei and Business' Centre. 

Radisson. 

SLAVJ A N S KTAYA HOTEL 

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Moscow, Russia ' 

for your con tin ue d r es ervation, coH «m an (MOO W 1991. 


“This Must Be The Piace- 


MANNHEIMER S WARTLING 

IN MOSCOW 

Russian and International 
Business Law Practice 
including 

privatization, foreign investment 
and arbitration 

Moscow: 

Staromonetayj Pereulok 1, ent 5 
109017 Moscow, Russia 
Tet No. +7-503 230 6366 
Fax. No. +7-503 230 6312 

Contact: Bengt Sjdvall in Moscow or 
Kaj HobEr in Stockholm 

Stockholm: 

Box 1650 

111 86 Stockholm, Sweden 
Teh No. +46-8-613 55 00 
Fax. No. +46-8-613 55 01 




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