China's statement on rejecting Coke's Huiyuan bid

BEIJING, March 18 (Reuters) - Following are highlights of a statement by the Chinese Ministry of Commerce on its decision to reject Coca-Cola's (KO.N) $2.4 billion bid for China's top juice maker, Huiyuan Juice (1886.HK).

The ministry released the statement on its website.

(For a more detailed text, in Chinese, please double-click on: here )

STATEMENT TEXT:

"Following an investigation, the Ministry of Commerce determined: the concentration involved in this proposal would have an unfavourable impact on competition.

"Following concentration, Coca-Cola may have been able to use its dominant status in the carbonated soft-drinks market to use bundling and tie-ins of juice beverage sales or to set other exclusionary transactional terms, with the concentration restricting market competition in the juice beverage market and leading to consumers being forced to accept higher prices and fewer choices of products.

"In addition, due to restrictions on market entry by existing brands, potential competitors would have found it hard to surmount an outcome tantamount to restricting competition.

"Furthermore, the concentration would have narrowed the room for survival of medium and small-sized domestic juice firms, creating an unhealthy impact on the competitive structure of China's juice beverage market.

"To reduce the negative impact of the concentration on competition, the Ministry of Commerce negotiated with Coca-Cola about appending restrictive terms and asked the bidder to offer a feasible resolution proposal.

"Coca-Cola expressed its own opinions about the issues raised by the Ministry of Commerce, and submitted a preliminary resolution proposal and a revised proposal.

"After evaluation, the Ministry of Commerce believes this revised proposal still could not effectively reduce the negative impact on competition of this concentration. Therefore, based on Article 28 of the Anti-Monopoly Law, the Ministry of Commerce has made the decision to forbid the deal.

"The Anti-Monopoly Law review is meant to protect fair market competition and guard the interests of consumers and the public.

"The Ministry has received 40 applications since the Anti-Monopoly Law was launched on August 1, 2008, and the Ministry has, in accordance with the law, looked into 29 of them, out of which 24 cases have been decided upon (before this case).

"Among those, 23 cases were approved without any conditions; for the one that would have excluded and restricted competition, the Ministry talked with the applicant, and the applicant provided a solution for reducing restrictions on competition and made promises, for which the Ministry finally approved the deal with a restrictive condition of reducing unfavourable impacts on competition."

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Geithner Vows to Recoup AIG Bonuses as Lawmakers Express Fury

March 18 (Bloomberg) -- Treasury Secretary Timothy Geithner told congressional leaders the U.S. will recoup executive bonuses paid by American International Group Inc. as outraged lawmakers raced to take back such payments from all companies getting federal bailouts.

Geithner, who has come under fire from Congress over the AIG payments, said in a letter to lawmakers last night the government will recover the money by requiring it be repaid from company operations and deducting the amount from the next $30 billion in aid being provided to the insurer. He also said the government will work to accelerate the “wind down” process of restructuring AIG.

The senior members of the Senate Finance Committee from both parties proposed taxes totaling 70 percent on bonuses at AIG and other companies getting federal money during the U.S. financial meltdown. House Speaker Nancy Pelosi directed committees there to draft several alternatives and said her chamber may consider a bill as early as this week. Other lawmakers introduced their own plans.

“Millions lost their jobs; it’s an outrage that the people who somewhat caused this problem are now paying themselves bonuses,” Senate Finance Chairman Max Baucus, a Montana Democrat, said yesterday in Washington. He and ranking Republican Chuck Grassley of Iowa also proposed limiting some forms of deferred compensation to $1 million at companies getting bailout funds.

New York-based AIG paid $165 million in executive bonuses after taking taxpayer-funded bailouts totaling $173 billion. AIG also budgeted $57 million in “retention” pay for employees who will be dismissed, according to a March 2 filing to the Securities and Exchange Commission.

Liddy Testimony

AIG Chief Executive Officer Edward Liddy testifies today before a subcommittee of the House Financial Services Committee. Panel Chairman Barney Frank said yesterday the government has a stronger legal case to reclaim the AIG bonuses now that the government owns a majority of the company.

“I think the time has to exercise our ownership rights,” Frank told reporters. “And then say, as owner, ‘No, I’m not paying you the bonus. You didn’t perform. You didn’t live up to this contract.’”

Geithner’s letter said Treasury lawyers determined that it would be “legally difficult” to prevent AIG from paying the bonuses because they were required by contracts.

Repayment Requirement

“We will impose on AIG a contractual commitment to pay the Treasury from the operations of the company the amount of retention rewards just paid,” Geithner wrote. “In addition, we will deduct from the $30 billion in assistance an amount equal to the amount of those payments.”

He also said criticism of Liddy is “unjustified” because the contracts were in place before he took over at the company last year.

The political heat generated by AIG bonuses indicates declining public and congressional support for shoring up beleaguered financial institutions with government funds, and may make it tougher for President Barack Obama’s administration to win approval for future bailouts.

Obama this week chastised the insurer for awarding the bonuses to staff of the derivatives unit blamed for the firm’s near collapse in September. New York Attorney General Andrew Cuomo said he’ll subpoena AIG for details on the payouts.

Answers Sought

Senate Banking Committee Chairman Chris Dodd of Connecticut said he wants the Federal Reserve, which is overseeing AIG’s bailout, to explain how it will resolve the situation.

“I would recommend they give back those bonuses,” Senate Majority Leader Harry Reid, a Nevada Democrat, said on the Senate floor. “We as a Congress are not defenseless.”

Pelosi said she directed the Financial Services, Judiciary and Ways and Means committees to draft legislation this week that would recoup misspent public funds from companies that received taxpayer assistance.

She said options include authorizing the U.S. attorney general to reclaim “prior and future excessive compensation” payments, barring retention bonuses at companies getting Treasury funds, and recouping the money through tax laws.

“Most appallingly, while millions of Americans struggle through this economy, those who have received the largest measure of taxpayer assistance from the Treasury Department have shown no restraint,” Pelosi said in a statement.

Taxes on Bonuses

The tax on bonuses proposed by Baucus and Grassley would apply to amounts over $50,000 paid starting Jan. 1, 2009, and to the full amount of any retention bonuses. The proposal would force AIG and other companies to pay overseas employees’ share of the excise tax.

Baucus said he believed the tax would succeed in recouping “most of the bonuses” paid by companies that get federal bailout funds.

House Ways and Means Committee Chairman Charles Rangel said he opposed using the tax code to take back the bonuses.

“It is tough, to me, to think of the tax code as a political weapon,” Rangel said in an interview. “I would hope and assume we have alternatives to the tax code” for taking back bonuses. He said he was working with other lawmakers to develop a “legislative response to this problem.”

Wyden, Snowe

Senators Ron Wyden, an Oregon Democrat, and Olympia Snowe, a Maine Republican, said in a statement the AIG bonuses might have been avoided if Congress had earlier adopted their amendment to force companies that use bailout funds to pay excessive bonuses to either return the money or pay a tax on it.

Also among lawmakers announcing proposals to recoup bonuses paid by AIG and other bailout recipients were Democratic Representatives Carolyn Maloney of New York Earl Blumenauer of Oregon.

Senator Charles Schumer, a New York Democrat, said in a speech on the Senate floor that he, Reid and other lawmakers sent a letter to AIG’s Liddy asking executives to return the bonuses to their “rightful owners.” He said if the money isn’t refunded, Congress will pass laws to “tax these bonuses at a very high rate.”

The disclosure on expenses for “employees expected to be terminated” may signal AIG is planning staff cuts after leaving employment unchanged last year, according to regulatory filings.

“As part of restructuring the company, we will ultimately eliminate jobs that are, at the moment, critical to maintaining ongoing operations and winding down certain businesses,” said Christina Pretto, an AIG spokeswoman.

For more news: http://www.bloomberg.com/apps/news?pid=20601087&sid=a_TbsRunotbQ&refer=home

Free Tax Help Saturday

Free tax preparation will be available for people earning $42,000 or less this Saturday, March 21, straight from the source itself, the Internal Revenue Service. Such help could be especially valuable for new homeowners -- often buying a home moves you from the simple Form 1040-EZ to the much more complex Form 1040. And this year, tax credits for new buyers could add an additional layer of paperwork.

You can get assistance from more than 250 local IRS offices, which usually don't work weekends, plus about 1,000 community tax-prep volunteer partners. Go to the IRS Web site to find an office near you.

IRS Commissioner Doug Shulman, in a printed statement, also urged taxpayers in financial trouble to seek help from the IRS, regardless of their income. "If you think you owe taxes and can't pay, please come in and talk to us about it. There are steps we can take to help." Those steps might include an installment payment plan or a deferred payment plan. Calling the IRS can help people avoid incurring the extra penalties and interest that make it more difficult to catch up with your tax bill.

The new tax credit for first-time home buyers is only one of the measures that can make filing this year's return more complicated than you're used to. Folks at the IRS say they expect job losses to make more people eligible for the Earned Income Tax Credit, which results in an average benefit of $2,000 to those who qualify.

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Nokia streamlines operations; expects nearly 1,700 employees to be affected globally

Nokia Corp.announced further actions it is taking in Devices and Markets units and also in its Corporate Development Office and global support functions. The company said it expects these plans to affect nearly 1,700 employees globally. Further, Nokia stated that it continues to seek savings in operational expenses.

The company said it plans to scale sales, marketing and technology management to match the pruned portfolio and global consumer demand, address marketing and other activities that will no longer be integral following Symbian acquisition. The company also plans to streamline the Devices R&D organization and grew efficiency in certain global support functions.

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Obama tries to halt AIG bonuses

President Barack Obama said Monday that he will seek ''every single legal avenue'' to block the payout of $165 million in bonuses to executives of disgraced insurer American International Group, a company that U.S. taxpayers are bailing out.Obama unleashed his criticism in the White House East Room, eclipsing an event where he announced $15 billion in new help for small businesses.

Before promoting those steps, however, Obama went after AIG, blaming its woes on executives' ''recklessness and greed,'' and asking, ``How do they justify this outrage to the taxpayers who are keeping the company afloat?''It was unclear whether Obama thinks the government has authority to take back AIG's bonuses, or instead is primarily seeking to position himself to keep in step with public outrage.

The Financial Products division, which did the most damage to the company's standing, is based in London. It sold billions of dollars worth of credit-default swaps, complex insurance-like financial instruments, which ultimately AIG couldn't fund. Most of the bonus money was earmarked for about 400 employees in that division.AIG officials and administration officials, including Larry Summers, the head of the White House National Economic Council, previously indicated that the bonuses appeared to be protected by contract law, especially British law.

`HARD TO UNDERSTAND'

AIG is receiving about $170 billion in taxpayer assistance and is now about 80 percent taxpayer-owned. Federal officials moved to save it in September because they thought its failure would take down the global financial system since AIG insured the assets of so many major financial institutions.

''Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay,'' Obama said.Obama said that given the taxpayer assistance AIG is receiving, he would ask Treasury Secretary Timothy Geithner ``to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole. . . . This is not just a matter of dollars and cents, it's about our fundamental values.''

White House spokesman Robert Gibbs said that Obama inherited the contracts AIG signed last year under former President George W. Bush. ``We can't change everything in the past. We will do all that we can.''

FRONT, BACK DOORS

Late Sunday night, AIG released the names of companies on the other end of its swap transactions. Its business partners were mainly major U.S. and foreign banks, adding to the public's rising sense of injustice over the bonuses, since taxpayers are now bailing out the banks both through the front door with government loans and the back door via support for AIG.

New York Attorney General Andrew Cuomo also turned up the political heat on AIG on Monday, demanding that it identify all employees receiving the bonuses, their job descriptions, performance records and copies of their work contracts. He issued subpoenas late Monday. In a letter to the company, Cuomo said he wants to determine if the bonuses amount to ''fraudulent conveyances'' under New York law, and that the contracts might be unenforceable because fraud was involved.

`OUTRAGE'

Obama used his bully pulpit to push for corporate responsibility. He also was seeking, however, to separate himself from unpopular corporate excesses. A new Pew Center poll released Monday showed that Obama has begun to suffer declining public support because of the economic crisis.

''The president shares the public's outrage on this,'' Gibbs said.Lawmakers on Capitol Hill sounded off, too.

''At a time when millions of Americans are losing their jobs and trying to make ends meet, it is outrageous that a company that has been bailed out by the taxpayers for its mistakes would turn around and pay its executives such a staggering sum of money,'' said Sen. Russ Feingold, D-Wis. Other lawmakers from both parties said much the same.

Added House GOP Leader Rep. John Boehner of Ohio: ``The latest revelation about AIG executives receiving millions in bonuses while taxpayers continue to bail out the company with hundreds of billions of dollars is outrageous and the clearest example yet of why an exit strategy is essential. The administration should pursue all means of recovering these bonus payments and present Congress and, more importantly, taxpayers an exit plan as soon as possible.''

A House Financial Services subcommittee scheduled a Wednesday hearing on AIG.

AIG CASTS SHADOW

The AIG flap overshadowed Obama's announcement of help for small businesses, which was warmly welcomed. His latest economic rescue package will waive fees for small-business loans, buy up to $15 billion in securities linked to loans guaranteed by the Small Business Administration, and require monthly reports from large banks and quarterly reports from other banks on small-business lending.

For more news: http://www.miamiherald.com/business/story/953480.html

Bernanke Outshines Obama Team With Defense of Government Effort

March 17 (Bloomberg) - President Barack Obama’s economic team finally found its voice -and it belongs to Federal Reserve Chairman Ben S. Bernanke.

Bernanke’s March 15 appearance on CBS Corp.’s “60 Minutes” - the first televised interview by a Fed chief since 1987 - gained praise from experts who drew a contrast between his defense of government efforts to fix the financial system and the sometimes-floundering efforts of Obama’s top economic aides to explain to the public what they were doing, and why.

“I have been waiting for months for someone in authority to give a straight-talk speech to the American people about how we got into this mess and how we’re going to get out of it,” said Alan Blinder, a former Fed vice chairman who is now a professor at Princeton University in New Jersey.

“Maybe the Fed chairman is not the most natural choice, but someone had to do it,” he added.

Only hours before Bernanke staked his claim as validator- in-chief for Obama’s policies, two of the president’s top economic advisers, National Economic Council Director Lawrence Summers and Council of Economic Advisers head Christina Romer, were strafed with television talk-show questions about insurer American International Group Inc.’s granting of employee bonuses after receiving $173 billion in aid from the government.

Yesterday, Obama, 47, was forced to revisit the issue, pledging to pursue every legal avenue to get AIG to roll back the $165 million in bonuses.

Opposition to Bailouts

For the administration and the economy, more is at stake than message management. Blinder and other economists said a lot more taxpayer money would be needed to rescue the battered banking system. Yet with public opposition to bailouts high and mounting, winning congressional support for such a step won’t be easy.

The administration’s response to the AIG bonuses was the latest misstep for the Obama White House, which has struggled to develop a consistent message on the economy.

On Feb. 10, a speech by Treasury Secretary Timothy Geithner on a plan to repair the banking system disappointed investors, sending the Dow Jones Industrial Average down almost 400 points.

After warning for weeks that the economy was headed for further trouble, the administration recently shifted course as the stock market nosedived, first emphasizing the steps it would take to tackle long-term problems such as health care, then touting the near-term benefits of the economic recovery package.

AIG Bonuses

To spread their message, the president and his top advisers took to the airwaves last week with speeches, forums and interviews, only to end up playing defense this week on AIG.

Obama senior adviser David Axelrod said the administration has two tasks when it comes to tackling the banking problems.

The first, he said, “is to talk honestly with the American people about why it is important to have a stable credit sector.” The second “is to send a very strong message to the financial sector that the days of Gordon Gekko are over,” Axelrod said, referring to the financier in the 1987 film “Wall Street.”

The range and variety of messages in recent weeks demonstrates the challenges facing the White House, said Stuart Rothenberg, editor of the nonpartisan Rothenberg Political Report in Washington. The administration lacks a main messenger on the economy; it is speaking to competing constituencies: Main Street and Wall Street; and it is caught between trying to put a positive spin on the economy while hinting things may get worse, he said.

‘Barrelful of Problems’

Obama has “a whole barrelful of problems both in terms of message and messengers and competing constituencies,” Rothenberg said.

In the interview, Bernanke warned the U.S. would need to take politically difficult steps to fix the financial system. “The biggest risk is that we don’t have the political will,” he said.

Congress approved a $700 billion bank bailout package in October after the House of Representatives rejected a first proposal. The Obama administration has suggested it may need an additional $750 billion.

That will be a hard sell. Only 48 percent of Americans support the initial package, according to a Pew Research Center poll conducted March 9-12. Pew associate director Carroll Doherty said support may erode further following the news about AIG.

Unlike Summers and Romer, Bernanke wasn’t asked about AIG’s decision to hand out bonuses to its employees, which wasn’t reported until after the segment was taped.

‘Slammed the Phone’

Still, Bernanke, 55, said the AIG bailout was the event that made him the angriest since the crisis began in August 2007. “I slammed the phone more than a few times on discussing AIG,” he said.

The Fed chairman said he made the decision to appear on television because of the severity of the economic crisis. “It’s an extraordinary time,” he said. “This is a chance for me, I think, to talk to America directly.”

The approach was successful, said Anita Dunn, a Democratic political consultant and former Obama campaign adviser. Bernanke “articulated the challenge as well as anyone in the administration short of the president has done,” she said.

“Bernanke went a long way in engendering a fair amount of confidence,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $60 billion.

The last time a sitting Fed chairman appeared on television was in October 1987, when Bernanke’s predecessor, Alan Greenspan, was interviewed on ABC’s “This Week with David Brinkley.” Greenspan later said he regretted the interview because he “made some inadvertent news.” Stocks slipped after Greenspan suggested on the program that inflation could become a problem. Two weeks later, on Oct. 19, the index recorded a 22 percent collapse.

For more news: http://www.bloomberg.com/apps/news?pid=20601109&sid=aGpBlzh8xoXY&refer=home

Summers, U.S. Lawmakers Lambaste AIG Bonus Plan as ‘Outrageous’

March 16 (Bloomberg) -Obama administration officials and lawmakers lambasted plans by American International Group Inc., the insurer rescued by the government, to dole out $1 billion in bonuses and retention pay to employees.

Lawrence Summers, director of the White House National Economic Council, called the payments "outrageous" in an interview on ABC's "This Week" program yesterday. AIG is "abusing the system," Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, told "Fox News Sunday."

AIG, which has received $170 billion in taxpayer money, succumbed to demands from the U.S. Treasury to scale back the payments. AIG agreed to reduce some retention payments in 2009 by 30 percent and tie bonuses to the company's recovery. The New York-based insurer still plans to hand out about $165 million on March 15 because of legally binding contracts, according to a person briefed on the matter.

Public anger has been stoked by revelations of bonuses paid by firms at the center of the financial-market meltdown that has plunged the U.S. into what may become the deepest recession since World War II. New York Attorney General Andrew Cuomo is investigating $3.6 billion in bonuses paid by Merrill Lynch & Co. shortly before it was acquired Jan. 1 by Bank of America Corp.

"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Summers said yesterday on CBS's "Face the Nation."

Safeguarding Taxpayer

Summers said the Obama administration's priority is safeguarding the U.S. taxpayer. "No one cares about the shareholders of AIG. No one feels the slightest obligation to people who led us into these difficulties."

Even so, the administration can't abrogate existing contractual obligations without shaking confidence in the legal system, Summers said.

“The easy thing would be to just say, you know, ‘Off with their heads,’ and violate the contracts,” he said. “But you have to think about the consequences of breaking contracts for the overall system of law.”

Frank said that starting when the Federal Reserve initiated the AIG rescue last September there should have been stricter rules on executive compensation and clearer guidelines for major financial institutions getting a government bailout.

“Clearly there was a mistake at the beginning,” Frank said on Fox. “These people who were receiving this should have been given much stricter rules at the beginning.”

‘Abusing System’

AIG is “abusing the system,” said Frank. “Any bank that thinks we’re being too tough on compensation, or trying to get foreclosures reduced, or stopping some of the lavish entertaining, they can give the money back.”

“With AIG, I would just say we need to find out, one, are they legally recoverable,” Frank added. “But I do want to find out at what point these illegal obligations were incurred, who said, and at what point, we’re going to give these bonuses no matter what.”

Senate Minority Leader Mitch McConnell, speaking on ABC’s “This Week,” said the example of AIG might be followed by other companies lining up for government assistance.

“The message here, I’m afraid, to any business out there that’s thinking about taking government money, is let’s enter into a bunch of contracts real quick, and we’ll have the taxpayers pay bonuses to our employees,” the Kentucky Republican said. “This is an outrage.”

Treasury Secretary Timothy Geithner was “really upset” by AIG’s plan to distribute the $165 million, Austan Goolsbee, a top White House economist, said on Fox. “You worry about that backlash” from the public, “but you’re also angry,” he said.

‘Not Sensible’

“I don’t know why they would follow a policy that’s really not sensible, is obviously going to ignite the ire of millions of people,” Goolsbee said. “And we’ve done exactly what we can do to prevent this kind of thing from happening again.”

AIG Chief Executive Officer Edward Liddy, who was recruited by the U.S. to run the insurer after the bailout, has vowed that the company will repay “every penny” to the U.S. of its bailout package by selling subsidiaries, and said the retention pay for talented people helps taxpayers by making the units attractive to buyers.

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