Barclays boss Bob Diamond resigns over LIBOR fixing scandal

Here's the statement released a short time ago by Barclays:

Board changes

Barclays today announces the resignation of Bob Diamond as Chief Executive and a Director of Barclays with immediate effect. Marcus Agius will become full-time Chairman and will lead the search for a new Chief Executive. Marcus will chair the Barclays Executive Committee pending the appointment of a new Chief Executive and he will be supported in discharging these responsibilities by Sir Michael Rake, Deputy Chairman.

The search for a new Chief Executive will commence immediately and will consider both internal and external candidates. The businesses will continue to be managed by the existing leadership teams.

Bob Diamond said "I joined Barclays 16 years ago because I saw an opportunity to build a world class investment banking business. Since then, I have had the privilege of working with some of the most talented, client-focused and diligent people that I have ever come across. We built world class businesses together and added our own distinctive chapter to the long and proud history of Barclays. My motivation has always been to do what I believed to be in the best interests of Barclays. No decision over that period was as hard as the one that I make now to stand down as Chief Executive. The external pressure placed on Barclays has reached a level that risks damaging the franchise - I cannot let that happen.

I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth. I know that each and every one of the people at Barclays works hard every day to serve our customers and clients. That is how we support economic growth and the communities in which we live and work. I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question.

I leave behind an extraordinarily talented management team that I know is well placed to help the business emerge from this difficult period as one of the leaders in the global banking industry."

Commenting, Marcus Agius said, "Bob Diamond has made an enormous contribution to Barclays over the last 16 years of distinguished service to the Group, building Barclays Investment Bank into one of the leading global investment banks in the world. As Chief Executive he has led the bank superbly. I look forward to working closely with the Chief Executives of our businesses and the other members of the executive Committee in leading Barclays world class businesses in serving our customers and clients and delivering value for our shareholders."

Hastie Group labourers still high and dry in United Arab Emirates. Yet to receive a cent in payouts.

By Business editor Peter Ryan - EXCLUSIVE

Five weeks after the collapse of the Hastie Group, 1,000 staff based in the United Arab Emirates (UAE) have been left in the lurch, with their former managers forced to support them out of their own pockets.
Listen to the story broadcast on this morning's edition of AM.

In Australia, about 80 per cent of the 2,700 workers made redundant are now back working for other contractors, having received their full termination entitlements.

But the 1,000 mainly Indian and Bangladeshi labourers are yet to see a cent of their entitlements, known locally as gratuities, after Hastie's bank account was drained of $3 million just days before administrators were appointed.

And a small group of Hastie managers, who have been using their own money to help abandoned employees, claim they have been left high and dry by the administrators.

Hastie's general manager in Abu Dhabi, Darren Hunt, is one of four bosses left in the country, and like his workers, he feels abandoned.

He says managers have been left in the lurch and are standing by foreign labourers at their own personal expense to meet food and housing costs.

"I think that what has happened is criminal," he told AM.

"The three senior managers have absconded the country, left 940 employees in the Middle East.

"There is a humanitarian issue where we have got to accommodate people, we've got to provide food.

"We've got no funds to do that, we've got no access to do that and we've got no signatures to do that. I think there is a humanitarian issue and I think these people have got no morals doing what they've done."

"We are incurring, you know, daily expenses to try and make sure we do the right thing by these people.

"My personal expenses to date to Hastie are 90,000 dirhams which is probably 15,000 pounds, $30,000, I've got no chance of recovering."

Mr Hunt claims Hastie's Australian-based administrators have ignored offers to help sell assets and call in debts to open up the money pipeline to help pay out local employees.

"I've had interested parties in buying Hastie International Abu Dhabi, which was a profitable business, which had limited liabilities, and had quite a large debt in the market that was due and could have been collected," he said.

"That debt alone would have paid for all this to be administered properly and the business closed down properly."

The Hastie Group's joint administrator Craig Crosbie sympathises, but rejects those claims.

"We've actually asked that the management over there to articulate exactly what assets they are talking about but you know, none of that has been forthcoming unfortunately," he said.

And Mr Crosbie says he does not have the power to treat Hastie's foreign workers the same as Australians.

"In Australia in the circumstance we've got, we can make an application to the Federal Government and they step in and pick up these entitlements, which if we didn't have there would be a number of Australians who would be in the same boat as what these people in the Middle East are," he said.

But Darren Hunt will not be trying to sell that explanation to his workers.

"Get your arse to the UAE and help us with this situation, you know. It is unacceptable," he said.

Fairfax Media shares flat as investors weigh Gina Rinehart threat to dump shares if board bid rejected

Fairfax chairman Roger Corbett closes boardroom door on Gina Rinehart

Statement from Fairfax Media chairman Roger Corbett 27 June 2012

Gina Rinehart's showdown with the Fairfax Media board has the potential to further damage the company as it rolls out a painful editorial restructure at the Sydney Morning Herald and The Age.

By closing the boardroom door on Gina Rinehart -  for now at least - Fairfax chairman Roger Corbett is sending the message that the definition of editorial independence has to be a collective view rather than that one tailored to the interests of individual powerful directors or investors.

Listen to my analysis broadcast on this morning's edition of AM.

I understand the Fairfax board remains concerned that Mrs Rinehart made no acknowlegement of the existing charter and certaintly doesn't accept the charter is binding on the Board.

Other big instituational investors are also known to have expressed concerns that a single board member blessed with special powers would set a dangerous precedent.

But some observers believe the issue of independence is just one part of Fairfax Media and Mrs Rinehart exclusion on the basis of the charter ignores other experience she could bring to the Board.

The media analyst Roger Colman of CCZ Equities says the current damaging game of boardroom poker needs to be decided by shareholders at the next annual general meeting.

"The board is backing the wrong horse in respect to that charter of editorial independence at metro markets," Mr Colman said.

"I think Gina should put it to the test at the next AGM and just see if she has the backing. She'll find out what the shortfall is and if she's got to buy more stock progressively over the next year and a half to two years, she should go for it.

"It's no different to Tony Abbott asking for an election against Julia Gillard. I mean, go to the people.

"This dispute has got to be settled in a single numerate count of shareholders votes."

Mrs Rinehart has not withdrawn her threat to dump all or part of her 18.67 percent stake in Fairfax if her demands for three board seats and editorial sway are not met.

There are concerns that any backlash could further undermine the Fairfax share price which hit a record low of 53.5 cents a share earlier this week.

But other big institutional investors might also be buyers.

They could well be concerned that their investments could be harmed if any erosion of editorial independence gets in the way of the survival strategy currently under way at The Age and Sydney Morning Herald.

Falling fortunes: Fairfax share price year to 28 June 2012. Source: Bloomberg

Fairfax Media boss Greg Hywood defends Board's right to hire and fire. Confirms Rinehart discussions but says appointment a matter for Fairfax board.

By Business editor Peter Ryan

The chief executive of Fairfax Media says board members are entitled to debate the editorial direction of the company and make collective decisions about the appointment of editors.

However, Greg Hywood told AM this morning that individual directors or major shareholders did not have a right to tell journalists or editors what they should write.

Listen to the extended interview here.

Mr Hywood's comments on boardroom decisions and editorial independence come as Fairfax Media staff learn the details of the company's restructure which will see 1900 jobs axed, printing presses closed and The Age and Sydney Morning Herald converted to tabloid formats.

The Fairfax boss also confirmed he had "a terrific meeting" with the mining magnate Gina Rinehart who, as the single biggest shareholder, is so far refusing to honour Fairfax's charter of editorial independence.

"I mean she asked very pertinent questions about the company. We gave her a briefing about the company. It was an admirable meeting. It was a good meeting," Mr Hywood said.

However, Mr Hywood said he had no discussion with Mrs Rinehart about her bid for seats on the Fairfax board or a say in the company's editorial direction.

" We didn't discuss any of those issues. I mean, whether or not Mrs Rinehart comes onto the board or not is a board issue and, you know, we'll leave it at that," Mr Hywood said.

But the embattled publishing boss has this message for staff or Australians concerned about Fairfax's future under any new ownership.

"There's been a lot of speculation around editorial independence in relation to Fairfax. That will always stay. That is the core of this company."

At the same time, Mr Hywood defended Mrs Rinehart's right to be a vocal investor in Fairfax Media.

"Oh look, I think she's interested in journalism. She's interested in, you know, the future of Australia. She has her own opinions about that and she's entirely entitled to them. So I don't think there's anything controversial in that at all."

But Mr Hywood clarified the role of boardroom deliberations at Fairfax Media and the hypothetical scenario of how Mrs Rinehart's opinions would be managed if she secured one or more board seats.

"Look she's our major shareholder. As I said, whether or not she joins the board is up to the board. And if you're a board member editorial discussions are always held within board meetings," Mr Hywood said.

"What doesn't happen is it doesn't translate into board members telling journalists what they should or shouldn't write and that's our practice.

"The board is pre-eminent. The board operates collectively. No individual director can determine what the board does or doesn't do.

"And certainly, if someone buys the entire company and has more than 51 per cent of the company that's a different issue."

Mr Hywood refused to speculate on the scenario of Mrs Rinehart joining the board or the outlook for his role as chief executive if the mining magnate makes a full takeover bid.

"That's entirely speculative and hypothetical," Mr Hywood told AM.

Fairfax Media shares were 2.2 percent higher in late morning trade after hitting an intraday low of 53.5 cents yesterday.

Gina Rinehart threatens to dump Fairfax Media stake if boardroom demands not met. Shares at record low of 53 cents on ultimatum.

The mining magnate Gina Rinehart has threatened to dump her majority stake in Fairfax Media unless her demands for three boardroom seats and editorial sway are not met.

The ultimatum raises the stakes in Mrs Rinehart’s standoff with the Fairfax Media board which remains adamant it will not be bullied into capitulating for the demands.

In another dramatic days for the Australian media industry, Mrs Rinehart also increased her stake in the Ten Network further confirming her widening role as a media player.

Meanwhile, Andrew Holden was named as Editor in Chief at The Age after yesterday’s dramatic departure of three top editors.

Listen to my analysis broadcast on AM and an extended interview with the newly-appointed Editor in Chief of the Sydney Morning Herald, Sean Aylmer.

Listen to my updated analysis broadcast on The World Today which covers the development that David Leckie had stepped down as chief executive of Seven West Media.

Fairfax Media loses three editors in one day as digital survival struggle gets real

Analysis: Desperately seeking a survival strategy at Fairfax Media

By Business editor Peter Ryan

This article first appeared on The Drum at ABC News Online

There's an element of desperation in today's announcement from Fairfax Media that three top editors have decided to quit on the same day.

The imperative for Fairfax to act - and to act quickly - underscores how critical the coming days and weeks will be to the ultimate survival of Fairfax's two once-great metropolitan mastheads, The Age and The Sydney Morning Herald.

Working journalists usually come and go, and it's certain many will be leaving Fairfax more frequently than usual.

But the departures of Peter Fray and Amanda Wilson from the SMH and Paul Ramadge from The Age mark a dramatic turning point for the traditional and closely guarded power positions of editors and editors-in-chief.

Until today, those two fiefdoms carried often unquestioned editorial powers and distinct editors and editors-in-chief highlighted the rivalries and critical points of difference between The Age and the SMH, and the well-worn debate about pre-eminence between Australia's two biggest cities.

This afternoon's appointment of Sean Aylmer as editor-in-chief and Darren Goodsir as director of news at the SMH signal revamped editorial roles that dilute the powers of traditional Fairfax editors with decisions about national and international coverage ceded to a centralised hub.

While Fray, Wilson and Ramadage are leaving with dignity and no criticisms of the restructure which has claimed their careers, it is highly likely the weakened powers and the prospect of slashed budgets, major sackings and depleted journalistic firepower made a healthy redundancy package slightly more palatable.

Tomorrow's editorial revamp to be announced for The Age will be closely watched for confirmation on whether the editor-in-chief role remains or whether it is to come under a nationalised umbrella in Sydney.

A well-connected Fairfax observer says the latest dramatic developments show the editorial changes are, at the very least, "disruptive" but a necessary survival strategy for staff, investors, readers and advertisers.

The observer, close to Fairfax institutional shareholders, declined to be named but told the ABC the speed of the restructure confirms the stakes are high with Fairfax shares hitting a new low of 55.5 cents a share during the day. I was told,

Greg Hywood [Fairfax chief executive] and Roger Corbett [Fairfax chairman] really do have their backs to the wall.u can sense the desperation. Why else would you be unfolding this so quickly? They know that the company might not survive unless they engage in radical restructuring.

The biggest risk in this strategy is that they might actually accelerate the decline of print media. It's dramatic - switching from broadsheet to tabloid, taking some grunt out of your journalism, making advertisers less certain. This could exacerbate the decline.
In the end, this is mainly a downsizing exercise and managing the transformation of a big company into a small company.

However, today's announcement helps Fairfax deal with another threatening deadline in the shape of Gina Rinehart and her bid for three Fairfax boardroom seats along with a say in the hiring and firing of editors.

The initial appointments of an editor-in-chief and a director of news confirm that Fairfax is serious about major change, locking-in key editorial positions before Mrs Rinehart ups her 18.67 percent stake in the company.

But will this be enough for Fairfax's best loved mastheads to survive?

The key, according to one Fairfax watcher, is for the company to stop talking about the future and the beginning of a "new era" and to accept that the new digital world probably started at least 10 years ago.

Peter Ryan is the ABC's Business Editor, contributing to a range of ABC News programs including the flagship radio current affairs program AM. He tweets as @peter_f_ryan

Sydney Morning Herald & The Age editors to leave as Fairfax Media accelarates survival strategy

Fairfax sackings on hold - for now - after industrial umpire steps in. Moral and legal obligation to consult ignored, unions complain.

Listen to my coverage of the ACTU's submission to Fair Work Australia broadcast on The World Today.

Stephen Conroy says Fairfax Media and News Ltd restructures highlight "beginning of the end" for print newspapers. Says weekday hard copies dead in five years.

By Business editor Peter Ryan


The dramatic restructures at both Fairfax Media and News Limited in recent days have put traditional printed newspapers on not much more than life support.

But this morning, the Communications Minister Senator Stephen Conroy said the accelerating events marked the beginning of the end for hard copy editions.


"The print newspaper is under enormous pressure and what you're seeing here is possibily the beginning of the end for the print newspaper," Senator Conroy said.

Speaking on Channel Nine, Senator Conroy described the rapid demise highlighted by Fairfax Media and News Limited restructures as "a very sad day".

Listen to my analysis and Senator Conroy's comments broadcast on this morning's edition of AM.

Read the ABC's rolling blog on the restructures at Fairfax and News Limited.

He called newspapers "venerable" institutions that "played a vital role in democracy."

But Senator Conroy signalled he was on a death watch with this prediction for traditional weekday editions.

"I wouldn't be putting money betting that there'll be print newspapers during the week in five years time. There's a very tough time in the print media sector at the moment."

Senator Conroy was speaking after New Limited revealed its digital future yesterday which includes plans to shrink 19 divisions to just five without putting a number on job cuts.

The move follows Fairfax Media, which announced on Monday that 1900 positions would be axed, the Sydney Morning Herald and The Age would go tabloid and printing presses in Sydney and Melbourne would be closed.

Senator Conroy has also expressed his concern at Gina Rinehart's bid for three Fairfax board seats and the opportunity to influence the editorial direction of key mastheads.

"I think the readership of Fairfax, the Sydney Morning Herald and The Age, would be in crisis if any owner was using a paper to promote their own overall commercial interests. This would be a disaster," Senator Conroy said.

"I would urge Ms Rinehart to sign the the charter of independence, accept that the Fairfax newspapers are not there to be a cheer squad for your own commercial interests."

In another development, the Australian Competition & Consumer Commission, said it would be reviewing News Limited's $1.97 billion proposed to buy James Packer's 25 percent stake in the pay television company Foxtel.

The deal, if approved, would give News Limited a 50 percent share of Foxtel with the other hald controlled by Telstra.
　
Twitter: @ peter_f_ryan

News Limited restructure a massive cultural change for staff and editors; 19 divisions shrink to five; but Kim Williams says print won't be abandoned

Stop Press? Fairfax Media's third biggest investor warns The Age & Sydney Morning Herald could close if restructure fails.

By Business editor Peter Ryan

Gina Rinehart's pursuit of editorial influence at Fairfax Media along with three boardroom seats seats is just one of the war fronts the embattled publisher is facing at the moment.

Now the third biggest holder of Fairfax stock is warning that the Sydney Morning Herald and The Age in Melbourne could be closed if the restructure announced on Monday fails to turn the company around.

Listen to the interview broadcast on this morning's edition of AM.

The funds management group Allan Gray, which holds a nine percent stake, says Fairfax might be forced to sacrifice its metropolitan mastheads to focus on the more profitable rural publishing and digital businesses.

Allan Gray's managing director, Dr Simon Marais, told AM that The Age and The Sydney Morning Herald were in real jeopardy as Fairfax faces hard truths.

"I think the reason you buy Fairfax is not for the metro papers. They've got lots of other assets. And I think the other assets are probably worth more than the current share price," Mr Marais told AM.

"What the market's effectively saying is the metro papers are already worth less than nothing. They're a liability. But if that continues you'll probably just shut them down at some point. I think that's a real possibility."

Dr Marais identified standalone businesses outside of Fairfax's traditional publishing as worth saving such as Trade Me, Domain.com and Stayz.com.

Dr Marais made no apologies for taking a brutal approach to Fairfax's future given Monday's restructure which will axe 1900 jobs, close printing presses and convert The Age and SMH to tabloid formats.

And he signalled concerns about media diversity in Australia were an important but side issue for investors.

" I think over time if you don't have a good product you won't be able to sell it. But I think at some point it's unfair to expect a small portion of investors, mainly super funds, to pay for media diversity," Dr Marais said.

"I think the reality to people must be if you stop buying papers you won't have those papers."

Dr Marais said he was "neutral" about Gina Rinehart's bid for three boardroom seats and the right to intervene on editorial matters.

" You never have a right to a boardroom seat. But I think all other things being equal, it's better to have somebody with a lot of shares being a director than somebody that has no shares," Dr Marais said.

" I think if she say the board is being deficient or inefficient, and it's probably a reasonable thing to make, then I think one should listen to her."

But Dr Marais signalled he was concerned that Mrs Rinehart's bid for editorial sway could be damaging to the product.

"I think if you don't have an independent newspaper it's unlikely that people will buy it after a while so you could damage the value of it.

"But I think on the other hand she does make a fair point in saying she thinks a lot of the journalism and the articles we see are nice to have but they're not generating revenue and they should be culled. And we would agree with her on that stance."

Fairfax Media has been briefing a range of institutional investors about the restructure and its importance to the future of the company.

Fairfax Media shares dived 8.5 per cent yesterday to 59 cents, which is close to its record low.

　

　

Twitter: @peter_f_ryan

Singo backs Gina Rinehart for Fairfax Media board; says charter of independence is 'double dutch'.

Gina Rinehart confidante and former Fairfax board member, John SIngleton has backed the mining magnate's bid for three seats on the Fairfax Media board.


The colourful media proprietor has rebuffed criticism of Mrs Rinehart's growing majority ownership of the company and has supported her right to influence editorial agenda.


In a wide-ranging interview broadcast on the ABC's AM program, Mr Singleton described Fairfax's charter of editorial independence as "double dutch".


In another development today, a source close to the Fairfax board said Mrs Rinehart's demand for three boardroom seats was "unacceptable" that that the board "would not be bullied" on the issue of editorial independence.

Fairfax Media confronts digital future; 1900 jobs dumped, SMH and The Age to go tabloid.

Read the entire Fairfax Media announcement issued to the Australian Stock Exchange here.

 Follow a blog on today's developments from ABC News Online.



Greek cliffhanger victory to New Democracy delays Eurozone exit - for now.

The victory for the pro-bailout parties in Greece came as a relief to global financial markets which had been factoring in a possible break-up of the Eurozone.

But the wafer-thin victory to New Democracy will do little to end the uncertainty surrounding Greece especially with Germany unlikely to ease the austerity that came with the bailout.

Here's my analysis from this morning's edition of AM.

Here's an updated story broadcast on The World Today.

Wayne's Week. Jobs surge in May on top of stellar March quarter GDP. Cash rate falls. Can it last?

GDP surprise. Aust economy expands by 1.3 percent in last quarter, defying doomsayers. Dollar surges.

In the reporting of economic data, both official and private, journalists have become accustomed to expect the unexpected.

 

Today, expecting the unexpected  turned out to be a good policy when the Australian Bureau of Statistics surprised analysts by reporting economic growth in the past quarter of 1.3 percent and 4.3 percent year on year.

Even so, the reliability of the ABS data is being questioned by some economists given the patchwork nature of the economy.

The main contributors to the surprise growth was household expenditure (0.9 percent) and private engineering construction (0.8 percent).

The main industry contributor was mining (up 2.3 percent), financial and insurance services (up 1.7 percent) and technical services (up 2.8 percent). The ABS says each of those areas added 0.2 percentage points to GDP.

The Treasurer Wayne Swan grabbed the opportunity of positive news, describing Australia as "an island of growth amid global uncertainty."

The Australian dollar surged when the news hit the market at 11.30am, rising one US cent.

Reserve Bank cuts cash rate to 3.25 percent as Board signals it's alert but not alarmed about Europe.

Hastie Group subsidiary sold a week after collapse saving 134 jobs

By Business editor Peter Ryan

Administrators sifting through the collapse of the Hastie Group have announced the sale of a company which will save 134 jobs.

A week after Hastie Group failed putting 2,700 jobs in jeopardy, the administrators PPB Advisory have finalised the sale of the plumbing and hydraulics business, Cook & Carrick.

Hastie Group bought the Tullamarine-based Cook & Carrick in July 2007 for $18 million in an early phase of its expansion. A spokesman for PBB was unable to confirm a sale price or the name of the buyer.

However, the current sharemarket volatility and investor caution about a global downturn is making the sale of assets under the Hastie Group umbrella difficult.

At the time of the purchase in 2007, Hastie billed the acquisition as “another significant step in Hastie’s growth as a major building services group.”

Hastie and its 44 subsidiaries were placed in administration last week after a $20 million “accounting irregularity” derailed negotiations with banks to recapitalise the company.

Hastie posted a loss of $149 million in the six months to December and its share price tumbled from $9 last year to 16 cents before shares were suspended in April.

Administrators also dealing with the potential sale of Hastie’s overseas assets, including those in the United Arab Emirates where 1,500 staff are yet to receive termination entitlements.

The ABC reported last week that Hastie’s top three executives in the UAE last the country on 28 May after A$3 million was transferred from Dubai to Sydney.

Twitter: @peter_f_ryan

US jobs gloom, Eurozone fears, China slowdown: investors strap in for a rough ride



This morning's opening dive for the All Ordinaries Index  source: Bloomberg

 Some economic figures come and go with little effect but the jobless statistics out of the US at the weekend have had serious economic ramifications.

The dismal employment outlook in the US is adding to fears that the world could be on the brink of a sharp economic slowdown.

US employers added only 69,000 jobs last month and even the US President says that's not enough.

Australia wasn't able to avoid the fallout from the US, with the All Ordinaries Index diving as much as 1.85 per cent this morning.

Listen to my analysis from this morning's edition of AM.

Last month, the theme was "sell in May and go away."

Now the race could well be in for a new saying in June given the gloomy global outlook.

As a measure of fear, money continues to pour into US Treasury bills (now at their lowest yield in around 200 years) and gold was higher at US$1625 an ounce earlier this morning.

The growing concerns about the US, Europe, China and parts of emerging Asia are likely to combine to prompt a cash rate cut when the Reserve Bank board meets tomorrow.

Some economists are tipping rates to stay on hold at 3.25 percent, but the bets are centering on a 0.25 percentage point cut with JP Morgan revising its cash rate prediction early this morning.

Hastie transfers millions from Middle East, top bosses leave, workers' entitlements in jeopardy

The ABC has learned that as many as 1,500 Hastie Group workers in the United Arab Emirates may have lost not only their jobs but also their entitlements in the company's collapse late last week.

Listen to the story which I broke for the ABC on The World Today.

Read the story on ABC News Online.

Their termination entitlements are in jeopardy because more than $3 million was transferred from Dubai to Australia in the days before administrators and receivers were brought in.

The company's top three executives, who signed off on the money transfer, then left Dubai on fears they may be detained.

On May 20, as Hastie Group executives tried to negotiate a new deal with their banking partners, Hastie International electronically transferred 11 million dirhams - more than $3 million - from their local bank in Dubai to ANZ Bank in Sydney.

The transfer document shows the move was signed off by Hastie's regional finance manager Nathan Davidson and Gary Allen, the regional human resources manager.

It is understood that the transfer was ordered by Hastie's head office in Sydney because of the fragile nature of the company and rapidly evaporating cash flow.

This has left Hastie's head office in Dubai with little or no money to cover the entitlements of around 1,500 workers, some of whom are expatriate Australians.

There is no suggestion of unlawful activity, however Mr Davidson and Mr Allen left Dubai on Monday, when administrators were officially appointed in Australia.

Another top executive, Robert Kirkham, who has had a long history with Hastie, also departed, because of the very real risk that once word of the Hastie collapse hit, those managers faced the prospect of being detained under strict laws in the United Arab Emirates about the need to cover worker entitlements.

Hastie Group collapse puts 2,700 jobs in jeopardy

Facebook and banks sued over alleged selective briefings before listing

“We think that people’s lives are going to be better and really that the whole world will function better when there’s more information and understanding out there”.

That's a direct quote from Facebook founder and chief executive Mark Zuckerberg in a marketing spiel leading up to the social networking company's sharemarket listing. 

But the meaning of "more information and better understanding" could be crucial as burned shareholders accuse Facebook and its lead underwriter Morgan Stanley of hiding weakened growth forecasts before the US$16 billion public offering.

In the lawsuit, Morgan Stanley, Goldman Sachs and JP Morgan Chase are accused of disclosing the new forecasts to "preferred" investors rather than the entire sharemarket.

There are also claims, yet to be proven, the Facebook's underwriters provided verbal advice of downgraded forecasts in pre-IPO roadshows.

Facebook has only be trading on the tech heavy Nasdaq exchange for four days, but its reputation is sinking as fast as its share price which ended higher today at US$32 but 18 percent lower than the $38 listing price.

The lawsuit, which could easily turn into a class action, has been referred to the Securities & Exchange Commission and is certain to be scrutinised by the US Senate Banking Committee which is primed to jump on any perceived misbehaviour on Wall Street.

The question now is whether selective verbal briefings from underwriters or advisers amounts to illegal behaviour that borders on insider trading.

John Coffey, Professor of Law at Columbia University in New York says despite the difficulty of proving illegal or unethical behaviour, US regulators have a lot to work with.

"There is something strange and probably inappropriate about allowing selective disclosure in public offerings," Professor Coffey told the BBC this morning.

"What is curious here and what has the SEC offended is that there may have been this special discrimination even within the class of institutional investors under which some got better information than others and they have sued on that recently in the case of Goldman Sachs.

"I think that probably Morgan Stanley is going to seek a quick settlement because this is relatively embarrassing for it."

Some analysts have pointed to "guilt by association" issues for competitors but today the social media success story Linkin was 2.2 percent higher and others like Pandora and Groupon also closed in positive territory.

Thomson Reuters has summed up the value proposition for social media investments, tracking an investment of US$1,000 from listing day to their closing price on 21 May.

Litigation to one side, the Facebook listing reminds investors to avoid hype from commentators and to pay attention to risk factors outlines in prospectuses.

Australia a growth leader, but Eurozone worries a potential shock: OECD

Australia's economy is predicted to outperform most of the developed world over the next two years, despite growing tremors from Europe.

The Organisation for Economic Cooperation and Development has also welcomed the government's committment to a budget surplus.

But the OECD's latest report paints a gloomy picture for Eurozone with warnings that the debt crisis still has the potential for an economic shock.

I took a close look at the latest report card on this morning's edition of AM.

Read the report here.

The OECD says Australia's fundamentals are strong that that the economy will outpace much of the developed world at 3.1 percent in 2012 and 3.7 percent in 2013.

However, the top growth performers in 2013 are forecast to be Chile (5.1 percent), Turkey (4.6 percent),  Korea (4 percent), Mexico (3.8 percent) and Israel (3.6 percent).

Not surprisingly, there is a negative growth outlook for the original PIG economies of Portugal, Italy, Greece and Spain. Ireland (which became a second I in PIIGS) is tipped to grow by 2.1 percent in 2013.

Facebook fizzer? Shares close underwater as investors unfriend The Social Network

Facebook has only been trading on Wall Street for two days, but already investors appear to have hit the "unfriend" button.

Shares in the social networking company have closed well below the issue price of US$38 amid concerns that Facebook might initially struggle to make much money.

Facebook shares sank as much as 14 percent at one point to US$33 before closing a little better at US$34.03.

Here's my analysis from this morning's edition of AM.

Unfriended: Facebook shares over first two trading days


So it is too early to say the Facebook float is more sizzle than sausage? Probably.

However, some commentators had been talking up a "stag" listing for Facebook, fuelling expectations that technology company surges last seen in the dotcom boom might return.

The reality was that Facebook's underwriters had to step in a buy on when trading opened on day one to keep shares above the US$38 listing price.

Today's selling wiped an estimated US$19 billion off Facebook's market value, leaving red faces on Wall Street and retail investors with burnt fingers.

The challenge now is to promote Facebook's long term value and attraction to advertisers as the dreaded "monetise" word takes on a new meaning for social networking.

High noon: Qantas competes with Craig Thomson as it announces 500 job cuts

The announcement hit the Australian Stock Exchange at 11.58am as political, business and aviation writers waited for the embattled and exiled Labor MP Craig Thomson to address the House of Representatives in Canberra.


As Mr Thomson began his defence of the various allegations before him, news flashed in red over the financial wires that Qantas had decided to consolidate its heavy maintenance operations - and that Tullaramarine and Avalon in Melbourne were the biggest losers.

Listen to my analysis on The World Today broadcast shortly after the announcement to the ASX.

It may well have been a coincidence, but the timing had the potential to create the perception that it was a classic diversion spin strategy to minimise fallout from the latest chapter in the survival of Qantas.

Responding to questions about the timing of the announcement, Qantas chief executive Alan Joyce said because of the market sensitive nature staff and unions were briefed simultaneously. 

Not surprisingly, the Transport Workers Union has accused Qantas of attempting to deflect attention by announcing the job cuts as Mr Thomson spoke.

"Their spin doctors are again working overtime to avoid responsibility of downsizing and outsourcing a very successful airline," according to TWU national secretary Tony Sheldon.

Qantas shares closed flat at $1,43 after briefly rising to $1.45 on the news of the sackings.

The share price is a fare cry from the $5.34 reached in November 2007 after Airline Partners Australia made its failed bid.

Status update: Facebook an "unlike" on first trading day

In the dotcom boom more than a decade ago, technology companies became known for their "stag" listings when they hit the sharemarket on day one.

Investors who took big allocations in the floats bet large, driving share prices exponentially higher before eventually cashing out at the top.

A few pundits thought Facebook might repeat history.

But it was not to be.

The social network closed US$0.23 above its listing price of US$38 per share after hitting a brief high of around US$45 per share.

Facebook dragged along the bottom towards the close and was perilously close to going underwater at one point.

So is there a wealth building future for Facebook, and can it convince investors that it can monetise the product beyond a fad?

One shouldn't forget a Nasdaq computer glitch that delayed orders and degassed the fizz, but Nasdaq's boss says it made little or no difference to the share price performance.

Investors want to know if Facebook is more sizzle than sausage.

Europe Central Bank cuts Greek financial lifeline as fears of Eurozone exit loom

Global stocks have taken another fall on the increasingly likelihood that Greece will be forced to exit the Eurozone.

The European Central Bank has decided to temporarily stop lending to Greek banks to limit its exposure.

The currently jitters are set to worsen in the countdown to fresh Greek elections in mid-June.

Listen to my analysis of the breaking developments from this morning's edition of AM.

Corporate watchdog reveals more cases of insider trading

The Australian Securities and Investments Commission says there have been more breaches of insider trading in the past three years than in the entire preceding decade.

Listen to my interview with ASIC deputy chairman Belinda Gibson broadcast on this morning's edition of AM.

In the three years to December last year, ASIC won 11 convictions for insider trading, with another seven cases yet to be decided.

In the prior decade to 2008, ASIC won 10 insider trading cases and lost five.

In a sign of a rise in illegal trading, ASIC says it is receiving around 200 alerts a day in relation to suspicious trading activity regarding the use of privileged information unavailable to the general market.

ASIC deputy chairman Belinda Gibson told AM and ABC News 24that the rise in prosecutions can be put down to greater surveillance by the regulator and in some cases greater temptations for investors.

"We're much better at looking for those cases and prosecuting them. What we have done since 2008 is really focus on the integrity of the markets and focus on detecting bad conduct and bringing the perpetrators to account," Ms Gibson said.

"I think that there is more opportunity as the market deepens. There is more opportunity where transactions become more sophisticated and more of the people we call gatekeepers have access to otherwise confidential information.

"Many of the cases we've brought are against employees of gatekeepers who are seeing other people's information and trading on it. are accountants, There are the investment advisors, there are the stock market registry providers - all those people that are intermediaries in bringing a corporation to the market."

Ms Gibson refused to rule out the use of telephone taps to trap insider traders under new powers given to the corporate watchdog in 2010.

Heads begin to roll at JP Morgan after US$2 billion trading loss

Heads have started to roll at the Wall Street banking giant JP Morgan Chase after revelations that it lost two billion US dollars in a failed trading strategy.

One of the bank's most senior executives is retiring after the London-based division she oversaw took bets that went horribly wrong.

Listen to my story broadcast on The World Today.

The heavy losses have raised serious concerns about excessive risk taking by banks and whether greater regulation is needed.

President Obama has also weighed in and he urged Wall Street to impose tighter regulations on risk.

Australian dollar heading back to earth, but dramatic correction not expected

The Australian dollar has dropped to its lowest level against the US currency this year as investors return their money to safe-haven currencies amid fears that Greece will exit the eurozone.

Here's my analysis from this morning's edition of AM, and I took a closer look at the various factors on The World Today.


Source: Bloomberg

Financial markets and European banks are preparing for Greece to leave the 17-member currency bloc as its struggles to form a coalition government weigh on global equity and currency markets.

The Australian dollar is trading just above parity with the greenback, and at 9:50am (AEST) was worth 100.2 US cents.

It was last below parity in December, when the collapse of the eurozone appeared likely.

Although the dollar is weakening, Thomson Reuters senior currency analyst John Noonan says he does not expect it to fall below 98 US cents.

JP Morgan loses US$2 billion bet as risky trades unwind

The Wall Street banking giant JP Morgan Chase has revealed a shock US$2 billion dollar loss caused by a financially disastrous hedging strategy.

Listen to my analysis broadcast on The World Today.

The surprise losses have been linked to risky bets made by a trader in London that, according to insiders, became too big to unwind without rocking financial markets.

In a humiliating admission, JP Morgan chief executive Jamie Dimon has described the errors as "egregious" and "self-inflicted".

The scandal comes as US banks rebuild their shattered reputations after speculative bets on the US housing market sparked the global financial crisis.

As recently as last month, JPMorgan executives told investors they were "very comfortable" with positions held by the bank, raising questions about how much was known by senior management - and when.

The revelations are also likely to fuel debate about president Barack Obama's sweeping reforms of Wall Street.

From the news blooper vault - a recovery that deserves a gold medal

Business slams scrapping of company tax cut

The Government's decision to scrap the one percentage point cut to the company tax rate has not surprisingly angered business groups.

The anticipated relief for 700,000 businesses was flagged in the Henry Tax Review and was an original trade-off for the mining tax.

But the Treasurer has told the business lobby to blame the Coalition and the Greens for threatening to block the lower 29 percent.

Here's my initial assessment from ABC News 24's budget night coverage.

This morning, I interviewed Peter Anderson, the chief executive of the Australian Chamber of Commerce & Industry, about the company tax backdown and asked whether he blamed the Coalition for threatening to block the legislation.

Reserve Bank cuts growth forecasts as economy softens

Bu Business editor Peter Ryan

The Reserve Bank of Australia has cut its growth and inflation forecasts as non-mining sectors struggle under the weight of a high Australian dollar.

In forecasting marginally lower growth rate of 3 per cent for 2012 and 2013, the RBA has signalled that earlier predictions were overly optimistic.

Listen to my analyis from The World Today broadcast shortly after the revision was made public.

Read the Reserve Bank's quarterly monetary policy statement here.

The central bank's latest quarterly statement on monetary policy comes three days after it cut the official cash rate by 50 basis points because of lower inflation and the need to stimulate parts of the economy.

"Although three months ago a range of indicators were suggesting that economic growth was close to trend, the outcome for 2011 as now reported was, in fact, somewhat weaker than that," the statement said.

In the previous statement, issued in February, the economy had been forecast to grow at 3 to 3.5 per cent.

The Reserve Bank also expects employment growth to "remain subdued" in the near term and has cited the high Australian dollar as a key pressure.

"There is the possibility that in the near term, labour shedding across a range of industries outside of the mining sector accelerates as firms continue to adjust to the high exchange rate, weaknesses in the property market and the effects of weaker public demand."

The Reserve Bank has also pointed to a subdued housing market and says "a recovery in housing construction is unlikely in the near term".

"What remains is for buyers to reach a point where they have sufficient confidence to commit to contracts for construction of new dwellings and for the supply side of the housing market to be responsive to demand," the RBA said.

The RBA says those conditions are needed to underpin a sound recovery in construction.

The central bank has also revised its inflation outlook to 2.5 to 3.5 per cent in the next year, with underlying inflation down to just 2 per cent from its previous forecast of 2.5 per cent, while noting the sharp fall in CPI inflation to 1.6 per cent.

The RBA expects the introduction of the carbon price in July to boost headline inflation by 0.7 percentage points in the year to July 2013.

"A key assumption made here is that there are no second-round effects owing to higher margins or wage claims," the statement says.

Backing the banks

The RBA has also confirmed claims by commercial banks that funding costs remain high.

"They remain higher than in mid-2011. At the same time, elevated competitive pressures have kept deposit rates in Australia high relative to the cash rate."

The RBA says a significant external risk to its outlook is the chance that the sovereign debt crisis in Europe could intensify and derail the global economic recovery.

"A substantial deterioration of conditions in Europe would be likely to have flow-on effects to the rest of the world," the statement said.

"A major flight from risk in global capital markets would see a marked deterioration in credit conditions and
confidence."

The Reserve Bank holds its next board meeting on June 5, and some economists are tipping a further reduction in the cash rate to 3.50 per cent.

James Hardie directors breached duties, High Court rules

The High Court has ruled that seven former James Hardie non-executive directors breached corporate law by making a misleading statement about the company's asbestos compensation fund.

In a major victory for the corporate regulator, the High Court upheld a landmark 2009 New South Wales court decision that the former board members, including high-profile former chairwoman Meredith Hellicar, breached their duties as company directors when they approved a misleading draft announcement to the stock exchange in 2001.

Listen to my interview with the chairman of the Australian Securities & Investments Commission, Greg Medcraft, broadcast on The World Today.

Read a summary of the High Court ruling here.

The statement said the company had established a fully funded compensation plan, the Medical Research and Compensation Foundation, to pay claims from people suffering asbestos diseases.

But the foundation was underfunded by more than $1.5 billion and faced bankruptcy.
The Australian Securities and Investments Commission (ASIC) won the first round in the New South Wales Supreme Court, when the directors were fined and banned from serving on boards for five years.

That ruling was then overturned by the New South Wales Court of Appeal in 2010.

But today the High Court ruled against the directors and ordered the case be returned to the appeal court to decide outstanding matters, including penalties.

In a statement, James Hardie took note of today's decision, but said it was too early to know how much the ruling would cost the company.

Reserve Bank surprises with aggressive 0.5 percentage point cash rate cut. But how much will commercial banks deliver to borrowers?



Reserve Bank certain to cut cash rate today. But how deeply will the RBA cut and what if anything will commercial banks pass on?

Paul Hogan settles with the Tax Office as Operation Wickenby pursuit ends

One of the country's longest running and most bitter tax disputes is finally over with Paul Hogan and John Cornell striking a confidential deal with the Australian Tax Office.

Listen to my interview with Paul Hogan's lawyer, Andrew Robinson, broadcast this morning on the ABC's AM.

The pair had been targeted by the ATO's Operation Wickenby which has been pursuing high wealth tax evaders.

The confidential settlement, reached on a "without admission" basis before a former High Court judge, lifts an order prohibiting Mr Hogan to travel outside Australia.

Mr Hogan was controversially banned from leaving the country at the request of the ATO after attending his mother's funeral during a two-week stand-off in September 2010.

The ATO pursued Mr Hogan for almost a decade over $150 million in unpaid tax, penalties and interest, and had alleged he used offshore tax havens.

No charges were ever laid and Mr Hogan consistently denied any wrongdoing.

The $300 million operation investigated high-profile Australians over fraud claims, and had been circling Hogan for years.

The operation has led to more than 60 charges, but the Australian Crime Commission (ACC) discontinued its criminal investigation of Mr Hogan and Mr Cornell last year.