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OSBORNES ERROR
ISSUE 1,814 THURSDAY 7 FEBRUARY 2013
THREE LIONS,
ONE UPSET
England beat Brazil: Sport P26-27
See Page 5
Certified Distribution
from 26/11/12 to 30/12/12 is 127,678
RBS took a 390m fine for Libor fid-
dling yesterday after watchdogs found
that 21 staff had colluded with rivals
over four years to fix the key market
interest rates for the benefit of their
own financial positions.
Traders offered each other steaks and
sushi in exchange for entering false
interest rates to drive the Japanese yen
and Swiss franc interest rates up and
down for their own gain.
Investigators found almost 100 writ-
ten requests for rates to be fixed,
including instant messages boasting of
the money made from the scheme.
Yesterday RBS was fined 87.5m by
the UKs Financial Services Authority,
$325m (207.6m) by the US
Commodity Futures Trading
Commission and $150m by the US
Department of Justice.
Investment bank chief John
Hourican also lost his job, forfeiting
4m in bonuses and shares despite not
being involved with or aware of the
Libor fiddling.
The majority of the staff involved in
or aware of the scam have been fired
or have resigned. A handful of
staff who were peripherally
involved remain. The fine is
above the 290m paid by
Barclays but below UBSs
$1.5bn, in part because RBS
did not push down rates to
falsely flatter the banks
position during the
credit crunch.
BY TIM WALLACE
15 September 2009
Yen Trader 1: can we lower our fixings today please
[Primary Submitter]
Primary Submitter: make your mind up[,] haha, yes
no probs
Yen Trader 1: im like a whores drawers
5 December 2007
Yen Trader 2: FYI libors higher again today [...]
YenTrader4: 'ucksake. keep ours low if poss. don't
understand why needs to go up in yen
Yen Trader 2: no reason dude[,] [Bank C] and [Bank
D] went high yest
Yen Trader 4: send the boys round []
Yen Manager: pure manipulation going on
20 August 2007
Senior Yen Trader: this libor setting is getting nutss
Bank A Trader: im puzzled as to why 3m libor fixing
not coming off after the FED action []
Bank B Trader: [UBS] is lending dolls through my
currencies in 3 month do u see him doing the same
in urs []
Senior Yen Trader: yes[,] he always led usd in my
mkt[,] the jpy libor is a cartel now [..]
Senior Yen Trader: its just amazing how libor fixing
can make you that much money []
Senior Yen Trader: its a cartel now in london[.] they
smack all the 1yr irs ..and fix it very high or low
4 December 2008
Swiss Franc Trader: can u put 6m swiss libor in low
pis?
Primary Submitter: NO
Swiss Franc Trader: should have pushed the door
harder
Primary Submitter: Whats it worth
Swiss Franc Trader: ive got some sushi rolls from
yesterday? [...]
Primary Submitter: ok low 6m , just for u
Swiss Franc Trader: wooooooohooooooo[,] 0.01 %?
thatd be awesome
Primary Submitter: 1.33
Swiss Franc Trader: perfect u r a nice man
14 May 2009
Swiss Franc Trader: pls can we get super high 3m
super low 6m. PRETTY PLEASE!
Primary Submitter: 41 & 51
Swiss Franc Trader: if u did that[,] i would lvoe [sic]
u forever
Primary Submitter: 41&55 then...
Swiss Franc Trader: if u did that i would come over
there and make love to you[,] your choice
Primary Submitter: 41+51 it is
22 November 2010
Senior Yen Trader: hey ...you think we be able to con-
vince [Primary Submitter] to change the libor today?
Yen Trader 1: i can try
Senior Yen Trader: need to drop 3mth Libor and hike
6m Libor he dropped 6m by 2 bps last Friday
Yen Trader 1: at the moment the FED are all over us
about libors
Senior Yen Trader: thats for the USD?
Yen Trader 1: yes
Senior Yen Trader: dun think anyone cares the JPY
libor
Yen Trader 1: not yet[,] i will walk over ot [sic] them
25 November 2010(audio recording)
Primary submitter: Morning, [Senior Yen Trader]? Hi,
[Primary Submitter].
Senior Yen Trader: Yeah, how are you?
Primary submitter: I'm pretty good sir. Very Good.
We're just not, we're not allowed to have those con-
versations on [instant messages].
Senior Yen Trader: Oh, sorry about that. I didn't
know. (laughter)
Primary Submitter: (laughter)
Senior Yen Trader: Oh because of the, the BBA thing?
Primary Submitter: Yes, exactly.
Senior Yen Trader: ah, ok ok. So yeah, leave it with
me, and uh, it won't be a problem.
NOTES ON A SCANDAL
ALLISTER HEATH: Page 2; Page 4
n n
n The instant messages RBS traders sent as they rigged Libor
RBS boss Stephen
Hester has
apologised
MARK KLEINMAN ON THE CHANCELLORS COSTLY MISTAKE
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
UK in line for fresh tax hit
following 2015 election
CHANCELLOR George Osborne may
be forced to hit UK citizens with yet
another swathe of taxes after the
next election, in order to fill the hole
in the countrys finances.
Current budget plans imply total
real term cuts of 33.2 per cent in
unprotected departmental spending
between the 2010-11 and 2017-18 fis-
cal years, the Institute for Fiscal
Studies (IFS) pointed out in its green
budget yesterday.
But since such a level of cuts could
be extremely politically difficult, the
government may choose instead to
cut into unprotected departments,
welfare for the elderly, drop its fiscal
targets, or hike taxes.
And typically new governments
have hit the populace with about
7.5bn of taxes after being voted in,
the IFS claimed, giving the incoming
government in 2015 a potentially
tempting precedent.
The IFS report also looked into the
taxation of higher earners, after the
coalition have called on those with
the broadest shoulders to bear the
biggest burden.
The top 20 per cent of households
by income paid around half of all
taxes, with the top 50 per cent pay-
ing close to four fifths. And looking
at net taxes taxes minus benefits
the size of the burden on higher
Buyout firms seek 10bn EE bid
Buyout firms have accelerated talks with
lenders to secure funding for possible
10bn bids for EE, the UKs largest mobile
phone operator, in what would be the
biggest private equity-backed acquisition
in Europe since the financial crisis. The
efforts have picked up in intensity in the
past week amid buoyant credit markets
and in the wake of mega deals such as the
$24bn buyout of Dell, raising hopes a
debt package of up to 7bn could be
raised to fund such an acquisition, people
with knowledge of the talks said.
Cantor in talks over Seymour Pierce
Cantor Fitzgerald is in late-stage talks to
buy lossmaking Seymour Pierce, in a deal
that would secure the future of one of the
Citys oldest stockbrokers. Talks on a deal
were continuing late into last night.
Commodity hedge funds lose assets
Commodities hedge funds surrendered at
least 20 per cent of their assets last year
after investors pulled out large sums
following the sectors worst annual
performance in more than a decade. The
average commodity hedge fund lost 3.7
per cent in 2012.
Hundreds lose jobs at IT firm 2e2
Administrators overseeing the sale of 2e2,
the failed IT services company, yesterday
dismissed 627 staff after failing to find a
purchaser for the firm. Administrators are
now seeking a deal with O2, the mobile
network, that could save about 100 jobs.
M&S starts selling online in China
Marks & Spencer is selling online in China
for the first time after signing a deal with
Taobao, the worlds second-largest e-
commerce website.
Coalition scraps plan to end GCSEs
The governments plan to scrap GCSEs and
replace them with a new baccalaureate
qualification has been shelved because of
significant opposition from the Lib Dems.
GCSEs will instead be reformed.
BT launches phone to block cold calls
BT has started producing a landline phone
which should block up to 80 per cent of
unwanted calls. Users will be able to block
all calls from international or withheld
numbers, as well 10 extra numbers.
Pinterest seeks $2.5bn valuation
Online scrapbooking site Pinterest is in
talks to raise a new round of financing at a
$2bn to $2.5bn valuation. Global user
visits to its website hit 48m in December,
up from 9m a year earlier
Open source smartphones in October
Smartphones running the open source
Ubuntu operating system will be available
to customers beginning in October 2013.
British firm Canonical has made a version
of the Linux-based software for mobiles.
PRINTING money should not be
taboo, outgoing City watchdog boss
Lord Turner said last night, as it
can be beneficial in small doses.
The Bank of England currently
boosts the money supply through
buying gilts, with most economists
holding that printing cash instead
could lead to hyperinflation like in
Zimbabwe or early-1920s Germany.
But departing Financial Services
Authority head Lord Turner said
the Bank should go beyond
quantitative easing (QE) gilt
buying and actually print money.
Turner calls for
money printing
Chancellor George Osborne has failed to react to a 65bn hit to borrowing forecasts
2
NEWS
BY BEN SOUTHWOOD
BY BEN SOUTHWOOD
To contact the newsdesk email news@cityam.com
N
O wonder trust is at a low ebb
in Britain today. Two major
institutions RBS and the NHS
have been shown to have
failed. We devote much of our front
page to some of the shameful emails
sent by the traders involved in the
Libor rate-rigging scandal; this has
been another disastrous day for the
Citys reputation, with the hundreds
of thousands of honest people who
work in financial services yet again
seeing their reputation tarnished by a
minority of idiots.
Meanwhile, a devastating 1,782 page
official report has exposed the worst
ever scandal in the NHS yesterday, one
which led to a horrendous number of
unnecessary deaths. Five other hospi-
tals are to be investigated. Its a huge
and deadly affair. In both cases, unfor-
tunately, the coalition has mishan-
dled its response.
EDITORS
LETTER
ALLISTER HEATH
Coalition mishandles its response to Libor and NHS scandals
THURSDAY 7 FEBRUARY 2013
First, RBS. George Osbornes state-
ment that taxpayers wont be paying
the Libor fine, bankers will is mis-
leading. The nationalised banks
accounts are not consolidated within
the governments accounts. There
was never any chance of extra cash
being transferred from taxpayers to
RBS as a result of the Libor fines, as
much of the discussion and language
used yesterday implied. Also, the fines
were levied by the authorities on the
bank, not on staff.
The only things that should matter
are punishing individuals who do
wrong, discouraging others from so
doing and ensuring that all banks
have the right systems in place to
reduce the chances of future deba-
cles; maximising the tax receipts gen-
erated from RBS and its staff; and
maximising the value of the publics
82 per cent stake in RBS, which even-
tually needs to be reprivatised.
The first point can only happen if
the government is seen to be very
tough with those who manipulate
markets. There needs to be far more
criminal prosecutions of white collar
crimes and jail sentences. As to the
second point, reducing bonuses of
staff who were not involved in the
scandal will prove to be a direct hit to
the taxpayer, as pay is subject to high
levels of income tax and national
insurance. Demoralising RBSs
excuse whatsoever for the absurd
manipulation is that the FSA made
it clear that the direct impact of
actual manipulation of the Libor fix
on UK retail consumers is likely to be
minimal.
Tragically, the same is not true of
the NHS scandal. Banks needed to
change their practices and clearly,
so does the UKs health service, which
is in desperate need of structural, cul-
tural and managerial revolution. Yet
it doesnt seem as if anything will
really change, for all of yesterdays
posturing. The coalition needs to be
as tough on failing hospitals as it has
been on corrupt bankers though in
both cases it needs be objective and
cool-headed, rather than endlessly
resorting to demagogy.
remaining employees will do nothing
to boost the banks long-term value
and share price. Of course, retaining
cash could in theory boost the banks
value but market capitalisations and
balance sheet assets are two very dif-
ferent things. The fact that key man-
agement decisions such as pay
awards are now openly being taken
for political reasons will do more to
depress RBSs long-term value than
any retained cash will do to bolster it.
Of course, the government, as RBSs
main shareholder, may genuinely
believe that pay is still too high in its
bank, and that lowering it would
boost profits sustainably and hence
long-term value. In that case, it
should order its executives to pay well
below market rates for all positions,
permanently and test its hypothesis.
It would be a disaster, but so be it.
The only good news and that is no
earners is even clearer. The top 10 per
cent pay nearly three fifths of net
taxes, while the top 20 per cent pay
over four fifths.
The top 30 per cent effectively pay for
all the benefits both cash and in
kind afforded to their other seven
deciles, the IFS said.
But if the government did want to
claw in yet more funds from the
wealthier members of society, the IFS
said, it would be wise to step away
from stamp duty land tax, which the
think tank described as a bad tax,
because it taxes transactions, imped-
ing economic efficiency. A better
option would be to update council tax
through a complete program of revalu-
ation as the current system is based
on 22-year-old house prices.
The IFS said property taxes were
much more difficult to avoid, and had
significantly less harmful distor-
tionary effects on economic activity.
But a mansion tax, such as that pro-
posed by the Liberal Democrats would
not bring in much revenue, the think
tank said, as it would focus on a tiny
minority of properties in the top band
of council tax.
SELF-EMPLOYMENT has boomed
through the slow economic recovery,
driven by an influx of middle-aged
men, according to data out yesterday.
Since 2008, 367,000 more UK
residents have become self-
employed, the Office for National
Statistics (ONS) said, bringing the
total to 4.2m, an all-time record.
The average age of this 4.2m
cohort is 47, the ONS report showed,
while 70 per cent of them were men.
Cab drivers, builders, carpenters, and
farmers were the top four trades
cited in yesterdays figures.
Brits employ
selves in dip
BY BEN SOUTHWOOD
Find your next step at
WHAT THE OTHER PAPERS SAY THIS MORNING
CITYAMCAREERS.com
n The Institute for Fiscal Studies (IFS) has
dug into the figures and found that since
the 2010 spending review, government
borrowing has worsened by 65bn above
forecast but it has made only 1bn of
adjustment to counter this worsening.
n The cyclically-adjusted current budget
deficit, which underpins chancellor George
Osbornes fiscal mandate, is based on the
Office for Budget Responsibilitys (OBR)
estimate of the output gap how much
spare capacity there is in the UK economy.
But output gap estimates vary from 0.8 per
cent of GDP to six per cent of GDP if the
OBR estimate were wrong, the government
would need either drastically more or less
consolidation. There is huge uncertainty.
n The deficit is going up, not down. Like-
for-like borrowing with one-off changes
stripped out is set to rise 4bn in 2012-13,
compared to 2011-12, the IFS say.
n Unprotected sectors will face cuts
totalling almost a third over the whole
planned austerity period (2010-11 to 2017-
18), if the government adds in no more tax
hikes, and refuses to cut into welfare
spending on the elderly, or the NHS,
education or foreign investment spending.
n Whatever promises they make,
governments tend to hit their subjects with
tax hikes worth around 7.5bn in the year
after they are elected.
n Public sector workers of the same age
and with the same level of experience and
education as those in the private sector are
currently paid two to eight per cent more.
n If the Eurozone breaks up, government
debt could rocket above 100 per cent of
GDP very quickly, from only around 40 per
cent before the crisis.
n The top 20 per cent of earners already
pay around 80 per cent of net tax.
THE IFS GREEN BUDGET
VIRGIN Medias new owners yesterday
pledged business would continue as
usual, despite the telecoms firms
chief executive announcing he would
step down.
After signing a $23.3bn (14.9bn)
agreement to buy the company, boss-
es at Liberty Global played down sug-
gestions of massive investments in TV
rights that would heighten Virgin
Medias competition with Rupert
Murdochs BSkyB.
Liberty, which said it would become
the worlds leading broadband com-
munications company on complet-
ing the deal, announced the
acquisition yesterday morning.
Virgin Medias chief executive Neil
Berkett, who has led the company
since 2007, shortly after its formation,
announced he would step down once
the deal is finalised. Berkett, who has
built up a sizeable bundle of Virgin
Media shares and options, will pocket
$65m, rising to as much as $85m,
when he leaves.
Im not a very good number two,
Berkett said yesterday. Libertys chief
executive Mike Fries said he had not
started the process of appointing a
successor. Fries said Virgin Media
New owners of
Virgin Media to
avoid TV war
BY JAMES TITCOMB
would keep its branding, and that he
was not planning a major change of
strategy. Virgin Media currently pays
Sky to offer some of its channels on
Virgin Medias own service, rather
than competing for sports and movie
rights, and Fries said this relationship
with Sky would continue.
I think Neils done a terrific job
building a strong relationship with
Sky. We dont see any reason why that
would change or why Virgin Media
needs to compete with Sky for that
premium content so I dont see any
significant changes in strategy, Fries
said.
His comments were echoed by John
Malone, the billionaire chairman
behind Liberty Global. Malones entry
into the UK telecoms market created a
new rivalry with Murdoch, whose
News Corp owns 39 per cent of BSkyB,
after the two had vied for control of US
media companies in the early 2000s.
But Malone pointed to a long history
of co-operative relationships with News
Corp yesterday. The deal came as
Virgin Media posted a slight annual rise
in customers to 4.9m, and said it had
moved more people on to triple-play
contracts, in which they take landline,
broadband and pay-TV services.
Virgin Media chief Neil Berkett will leave the company with a payout of up to 54m
BOTTOM
LINE
MARC SIDWELL
THE DEBATE: Page 19
n n
THURSDAY 7 FEBRUARY 2013
3
NEWS
cityam.com
Results that show why Malone made his move
A
NOTHER day older and deeper
in debt: thats Virgin Media,
with its new soon-to-be-owner
Liberty Global announcing a
plan to add $3bn (1.9bn) to its
existing 5.723bn net debt pile.
Overall, however, the deal makes a
great deal of sense for the UKs
quadruple-play specialist, as I
discussed yesterday.
An understandable interest in the
nuts and bolts of the deal itself
drowned out Virgin Medias results
yesterday, but its numbers for the
last quarter of 2012 and the year as a
whole are worth considering.
Revenue for the year was up 2.7
per cent, slightly missing some
analysts forecasts. However, the
crucial consumer divisions
performed as expected. Virgins
business segment was to blame,
down 4.5 per cent year-on-year last
quarter, on declining voice revenue
and wholesale data revenue. And
even here, over the whole of the year
it was up 5.2 per cent year-on-year,
accounting for almost a third of
group revenue growth.
Free cash flow was down 4.9 per
cent for the year and 1.4 per cent in
the quarter. That doesnt seem to sit
with the praise for the firms ability
to generate free cash flow in the
official press release for the
acquisition. However, the fall was in
line or better than analyst
predictions and driven by further
investment in Virgin Medias core
asset: its broadband infrastructure.
Virgin Media has 1.7m contract
mobile customers, versus 4.89m
consumer cable customers. Since its
business model needs customers to
lock in for multiple services, that is a
problem. But consumer cable
customers are booming: net
additions went from 5,600 in 2011 to
88,700 in 2012. It is also notable that
41 per cent of gross broadband
additions are paying extra to get top
speeds. John Malone, Liberty
Globals chairman, has made a
natural addition to his group. Just
dont mention his rivalry with Skys
owner Rupert Murdoch.
VIRGIN Medias $23.3bn (14.8bn) sale to
Liberty Global saw a host of banks and
lawyers poring over the books, with the deal
funded by an enormous mix of bonds and
loans. The deal will see Virgin Media take
2.3bn of debt the biggest junk sale in
Europe since 2010 with Libertys loans on
the deal equivalent to 2.9bn. This required
some heavy work from the two companies
advisers. Virgin Media was advised by its
house broker Goldman Sachs, with manag-
ing directors Peter Gross and Mike Smith
working on the deal in New York where the
agreement was signed late on Tuesday
night. Also working on the deal on Virgin
Medias behalf was JP Morgan in the UK,
with the banks London co-head of technol-
ogy, media and telecoms investment bank-
ing David Lomer leading the team. Lomer,
who has been at JP Morgan and its prede-
cessors since 1997, has worked on a variety
of deals around Europe, including the initial
public offering of Dutch cable rm Ziggo in
March last year. Lomer has spent most of his
JP Morgan career in media M&A, and was
made co-head of the division last year.
Leading the JP Morgan team in New York
was Ben Berinstein, the banks US co-head
of corporate nance advisory. Liberty
Globals lead nancial advisers were New
York boutique investment bank Liontree
advisors, while Credit Suisses Marisa Drew,
co-Head of the banks global markets solu-
tions group, led the team in London.
New Yorks Milbank and Fried Frank were
legal advisers to Virgin Media, while
Shearman & Sterling and Ropes & Gray
worked for Liberty Global.
ADVISERS LIBERTYS HIGHLY LEVERAGED TAKEOVER
PETER GROSS AND
MIKE SMITH
GOLDMAN SACHS
STATE-BACKED bank RBS struck a
two-year deferred prosecution deal
with US authorities, admitting
responsibility and paying an extra
$100m (63.8m) as one condition of
the settlement agreed yesterday.
The banks Japanese arm pleaded
guilty to one charge of wire fraud
under the deal with the American
Department of Justice (DoJ), while the
deferral agreement with the parent
group covers charges of wire fraud
relating to Swiss Franc Libor and an
antitrust violation on Yen Libor.
Traders did not fiddle US rates but
some of the activity went through the
US, giving the authorities power to
fine the bank.
The wrongdoing took place from
2006 to 2010, two years after chief
executive Stephen Hester took con-
trol. But he maintains senior man-
agers and regulators were unaware at
the time as they were more focused
on preventing the giant institution
from collapsing.
RBS wants to
move on from
Libor scandal
BY TIM WALLACE
We are also determined to correct
the broad range of control and risk
management failures that originated
in RBS during the financial boom
years. Libor manipulation is one exam-
ple, he said.
But Hester conceded it would be dif-
ficult to fully stamp out the cosy rela-
tionships in the sector: In trading
culture there was a mateyness, meet-
ing in City bars, he said.
It is not a case of senior managers
from different banks gathering
around the table, but a risk of traders
having discussions they shouldnt.
RBS, headed by Stephen Hester, expects a fine in future for anti-money laundering failures
THURSDAY 7 FEBRUARY 2013
4
NEWS
cityam.com
Royal Bank of Scotland Group PLC
6Feb 31 Jan 1 Feb 4Feb 5Feb
330
335
340
345
350 p
342.10
6Feb
CHANCELLOR George Osborne
yesterday claimed a victory for
taxpayers as the bank said its
bonus pool would be reduced and
previous payouts to bankers
clawed back in light of the fine.
Over the weekend Osborne
called for staff to pay the fine, and
RBS said yesterday roughly 300m
will be cut from pay packets.
What happened at RBS and
other banks is totally
unacceptable, Osborne said. At
my insistence, the bankers, not the
taxpayers, will pick up the bill.
But RBS chairman Sir Philip
Hampton said the decision had
already been made before the
chancellor demanded it.
Meanwhile influential
backbench MP John Mann called
Bankers lose bonuses to cover
huge interest rate-fixing fine
BY TIM WALLACE
for the bank to fire everyone
related to the scandal.
This fine does not go far
enough. All the staff that were in
charge at the time and had
knowledge of what was going on
should be removed, said the
Labour member of the treasury
select committee.
But the bank argued not all
those involved deserve to lose
their jobs.
Of the 21, six were fired over the
scandal and eight had left before
they could be punished. Another
was fired for an unrelated matter
and six have been disciplined.
RBS argues a final warning is
appropriate in some cases one
graduate recruit was caught up in
the emails after two months at the
bank, leading managers to deem a
warning the best solution.
RBS investment banking head has
lost his job and around 4m in
bonuses and shares because
he is the senior banker
closest to the Libor fixing,
rather than because he
was involved.
Chief executive
Stephen Hester said a
head near the top of the
bank had to roll to show
bosses are accountable for
the actions of their
Hester sorry investment chief
Hourican took fall for debacle
BY TIM WALLACE
departments.
And he said John Hourican
fitted the bill as the wrongdoing
happened in his department, but
to go any further up the bank
would take the blame too
high up and cause
unnecessary damage.
It is very tough on
John it happened a long
way down his
organisation, said Hester.
But it is right that senior
management
accountability has to
be accepted. It is
right for John
to lose his
job.
John Hourican first joined
the giant bank in 1997
DEUTSCHE Bank is believed to have
suspended five traders over its
ongoing internal investigation into
Euribor manipulation.
The German lender suspended
two others late last year for
involvement in Libor rigging.
Upon discovering that certain
employees acted inappropriately, we
have suspended or dismissed
employees, clawed back unvested
compensation, and will continue to
do so as we complete our
investigation, it said at the time.
The traders worked on Deutsche
Banks money market team in
Frankfurt.
Euribor probe
at Deutsche
BY CITY A.M. REPORTER
HSBC was forced into its biggest
restructuring in almost 150 years
because the banks complex structure
made it attractive to criminals, its
chief executive admitted yesterday.
Our structure was not fit for pur-
pose for a modern world, Stuart
Gulliver told the parliamentary
commission on banking stan-
dards. Our geographic footprint
became very attractive to
transnational criminal
organisations, whether
they are terrorist in origin
or criminal in origin.
HSBC was in December
slapped with a $1.9bn
(1.2bn) fine, the
largest ever imposed
on a bank, following a
US investigation into
its Mexican and US
operations.
The probe made scathing
Gulliver admits
HSBC was too
large to police
BY HARRY BANKS criticism of HSBCs anti-money-laun-
dering systems and found its lax con-
trols allowed two drug cartels to move
$881m through the bank.
Weve crushed our reputation with
the Mexico events, Gulliver said. The
behavioural stuff of what went on in
Mexico is absolutely shocking to us.
After taking the banks helm at the
start of 2011, Gulliver took much of
the control out of the hands of coun-
try managers.
Its the biggest organisational
change in this firm since 1865
and we did it to deal with the
weaknesses, he added.
Some senior people have
been removed from the
bank for values breaches
in the last two years, but
Gulliver said there were
rewards on offer as well
as penalties.
IN BRIEF
Ex-Northern Rock chair joins Lords
n The 5th Viscount Ridley, chairman of
Northern Rock when the bank collapsed
in 2007, was yesterday elected to the
House of Lords after an unusual by-
election vote. There are 92 hereditary
peers left in parliaments upper
chamber and when one dies as Earl
Ferrers did last year a vote is held to
replace them with another hereditary
peer from the same party. Ridley
topped the poll of 26 other Tory peers
and can now influence legislation.
JP Morgan pares back wages
n JP Morgan is reported to be paying
its investment bankers and trading staff
three per cent less for 2012 as a lack of
large deals dented the banks fees. The
bank, which was also knocked by the
London Whale trading loss, will impose
a larger share of the bonus pain on
more senior staff, according to
Bloomberg.
Anglo Irish Bank to be liquidated
n The former Anglo Irish Bank is
expected to be liquidated in order to
reduce the Republic of Irelands debt
burden. The move, subject to ECB
backing, would mean that Ireland no
longer has to make 3.1bn annual
payments on a 28bn note used to bail
out the bank in 2008. Instead the debt
will be transferred to the Central Bank
of Ireland, enabling the state to make
more gradual repayments.
Stuart Gulliver said HSBCs
reputation was crushed
THURSDAY 7 FEBRUARY 2013
5
NEWS
cityam.com
Mark Kleinman is the City editor of
Sky News @MarkKleinmanSky
D
EPUTY heads must roll. Its
impossible to decrypt
yesterdays Libor-rigging
settlement between Royal Bank
of Scotland (RBS) and regulators in
the UK and US without being
reminded of that immortal phrase.
John Hourican, who will step down
as the boss of RBSs investment bank
at the end of April, is entitled to feel
hard done by. By the admission of
regulators and RBS board members
alike, he had no case to answer over
wrongdoing at the bank, much of it
outlined in luridly self-interested
messages disclosed yesterday.
Nevertheless, those close to him
say he had accepted that his
departure had become necessary to
satisfy the political desire for a scalp.
It is the right thing to do, he told
staff. The jobs that many of us do
are well paid and with high reward
comes a greater responsibility. He
hadnt anticipated the bloodthirsty
way George Osborne would pursue
the 4m in deferred share awards he
had earned in previous years.
INSIDE
TRACK
MARK KLEINMAN
Osborne does the wrong thing while Hourican takes the fall
Hourican is not an impoverished
man, and his career is far from over:
indeed, his track record at RBS,
generating more than 12bn of
profit for the investment bank
during his tenure, will leave him
well-placed to land another top job
in the industry. Yet while he will
move on, for RBS and Osborne,
Houricans rather brutal treatment
augurs badly.
The groups investment bank still
has a balance sheet with 60bn in
assets, a number not dissimilar in
scale to the GDP of a small country.
Recruiting capable leadership for
the unit has just been rendered next
to impossible, particularly if as was
being noisily suggested at RBSs
investment bank headquarters on
Bishopsgate yesterday some of
Houricans closest lieutenants follow
him and jump ship.
It is hard not to interpret this
meddling as creating a permanent
impairment to the value of
taxpayers stake in the bank.
Osborne walked into the Treasury
in 2010 confident that he would soon
be trumpeting the recovery of
taxpayers money from Lloyds and
RBS. His politically-myopic actions
resemble those of a man repeatedly
jamming his finger on the self-
destruct button.
MOSCOWS COMING
The listing of Russias main index,
which published its flotation price
range this week, offers a clue to the
ROLLS SIMON ROBERTSON BOWS OUT
Fortunately for Sir Simon Robertson,
he is a young 71. In recent months,
he has needed to be. As deputy
chairman of HSBC and chairman of
Rolls Royce, the former Goldman
Sachs partner has had a full in-tray
dealing with corruption probes of
varying existential significance.
His workload is about to lighten.
Rolls May AGM will be Sir Simons
last after eight years at the helm.
People close to the company say it
has used MWM Consulting, the
headhunter, to conduct a global
search for his successor. Expect an
announcement from the aero-engine
manufacturer in the coming weeks.
Kremlins view of those corporate
emigres which have tapped capital
markets in London and New York.
Even at the bottom of the
indicative price range, the Moscow
Exchange will be valued at a
comparable level to its London rival.
One early candidate to list on it
could be Megapolis, a Russian
tobacco distributor which had
harboured hopes of floating in
London last year.
I understand that the UK Listings
Authority raised reservations about
some of the individuals involved in
Megapolis. The companys plans were
quietly dropped, according to one
insider familiar with the deal. Its
next move will give an indication
about the threat posed by Londons
newest rivalry.
FINANCIAL adviser Hargreaves
Lansdown was the FTSEs biggest
blue chip riser yesterday after report-
ing record revenue and profit for the
second half of last year.
However it warned a new govern-
ment initiative to boost lending
would compress revenue margins for
the outfit over the rest of this year.
The company, co-founded by Peter
Hargreaves and Stephen Lansdown
in Bristol in 1981, leapt to a record
share price high in trading yesterday
after delivering a 30 per cent jump in
profits on revenues of 140.3m for
the six months ending December
2012.
Hargreaves, who still sits on the
companys board as executive direc-
tor, said customer trust and the com-
panys cost consciousness and
efficiency had helped maintain its
momentum over the period.
However, he warned that the gov-
ernments continued support for the
Funding for Lending scheme (FLS)
would hit short-term revenue from
cash margins at the company.
As margins decline we will need to
Markets cheer
bumper profits
at Hargreaves
BY MICHAEL BOW
accelerate our business, he told City
A.M.
The FLS was designed to give banks
access to cheaper money to boost
lending but has subsequently led to
banks cutting interest rates paid to
UK savers. The firm predicts this will
result in a reduction on the revenue
margins of its cash balances into
2014.
Hargreaves yesterday criticised the
interference of FLS and other mone-
tary policies such as quantitative eas-
ing and said the market should be
left on its own to operate.
The FLS is allowing a few people to
soldier on paying their mortgage but
what we need are thousands of repos-
sessions to get the house prices down.
The market should be allowed to
cleanse itself, he said.
The company, which offers a super-
market-style approach to picking
investments for retail investors, built
its assets under administration by 30
per cent over the half year. They now
stand at just over 30bn. The compa-
ny also increased its interim dividend
from 5.1p to 6.3p on the back of the
success. The firm first floated on the
stock exchange in May 2007.
Co-founder Peter Hargreaves said the market should be allowed to cleanse itself
SWEDISH group Handelsbanken
recorded solid growth in 2012
with international expansion
driving profits, the institutions
annual results showed yesterday.
Post-tax profits jumped 18 per
cent to SEK14.5bn (1.46bn) with a
10 per cent rise in interest income
providing much of the boost.
Expenses increased five per cent
with staff costs up eight per cent.
UK profit rose 56 per cent to
SEK1.02bn, headcount increased
25 per cent to 133 and branch
numbers rose 28 per cent to 133.
Handelsbanken
UK profits leap
BY TIM WALLACE
VINCENT Tchenguiz yesterday
released details of his claim for
over 200m of damages against the
Serious Fraud Office (SFO) over its
botched investigation into him.
The court filing, which relates to
a high profile raid on Tchenguiz
and his brother Robert in 2011 over
their dealings with failed Icelandic
bank Kaupthing, accuses the SFO of
false imprisonment, malicious
prosecution and misfeasance in
public office under the agencys
former director Richard Alderman.
SFO faces 200m
Tchenguiz claim
BY KASMIRA JEFFORD
THURSDAY 7 FEBRUARY 2013
6
NEWS
cityam.com
While rst half prot is very close to our forecast, revenues are 2m
higher and importantly, assets under administration are 1.5bn (i.e. four per
cent) above our expectations. In addition, the equity market has been
very strong year to date. We are revising our forecasts upwards.
ANALYST VIEWS
18
THURSDAY 7 FEBRUARY 2013
THOMAS CAWSTON
NHS failures will stay common until
we hold management accountable
verse, from the leaders right through to
the frontline. A system of targets, and
the registration system for hospitals at
the time, may have been partly to
blame. The wider NHS system also
failed to pick up on this, and checks
and balances didnt work effectively.
The Francis Report hit the nail on the
head in its diagnosis of what went
wrong at Mid Staffordshire hospital.
And its greatest legacy will be how it
might prevent such failures from hap-
pening again.
But with the dust still settling on the
last reorganisation of the NHS, Francis
refrained from demanding yet another
overhaul. Instead he called for a funda-
mental culture change in the health
service, with a relentless focus on the
patients interest. He offered 290 rec-
ommendations on how this could be
achieved. These ranged from simplify-
ing national regulation, introducing a
duty of candour for all doctors and
nurses, to teaching staff the impor-
tance of compassion.
There is not one culture in the NHS
that needs to be transformed, however.
While an NHS culture failed patients at
Mid Staffordshire, an NHS culture at
other hospitals in England delivered
high quality care. Leading institutions
like University Hospitals Birmingham
and Salford Royal have clear commit-
ments to patient safety and patient
care now. Their staff already have a
commitment to candour and compas-
sion.
Unlike Mid Staffordshire, these hospi-
tals have also taken steps to be better
employers and introduced active per-
formance management of staff. At
Salford, the performance of staff is
measured according to achievement
and values, ranking employees from
role model to unsatisfactory. The
quality of nursing care in each ward is
measured, performance is ranked and
the responsible staff held to account.
There is no secret to high quality care. It
is simply down to strong and effective
leadership of doctors and nurses.
While the failures at Mid
Staffordshire were supposedly the
result of cost-cutting in the NHS, other
hospitals have been able to improve
quality at the same time as saving
money. Elite institutions have reformed
services to deliver safer and better care,
often through reducing medical errors
and complications, which in turn
improves efficiency. Managers have
taken the initiative to develop their
own positive cultures, and have not
waited for a mandate from on high.
The Francis report shines a penetrat-
ing spotlight onto the failures of the
NHS. But national efforts to improve
quality too often shift responsibility
away from those who should take con-
trol the chief executives and boards.
As the report rightly recognises, it is
individual NHS organisations that
should be responsible for their own
quality rather than government impos-
ing central control.
Pioneering hospitals have trans-
formed themselves to achieve higher
quality, but the rest are in danger of
falling further behind. If failing institu-
tions cannot develop cultures of excel-
lence for their staff, there should be a
clear system of consequence for the
management. One option must be the
takeover of whole hospitals by new
organisations, whether run by the pub-
lic or private sector.
It is unlikely the Francis report will be
the last word on problems in the NHS.
But if these inquiries are to become a
lot rarer, the government will need to
empower leaders, and not shy away
from holding failing hospitals to
account.
Thomas Cawston is research director at the
independent think tank Reform
www.reform.co.uk
Martin Wheatleys review was exactly
that it was quick. And it also
recognised the danger of letting Libor
slip under government control.
Public ownership would change the
relationship between the market that
created and developed Libor, and the
future evolution of the benchmark,
he argued. Wheatley realised that
public control would reduce the
incentive and ability for Libor to
adapt to the needs of market
participants; and potentially affect
the choice of benchmarks. He didnt
mention the creation of new
incentives for manipulation by
politicians.
But governments are now claiming
to help control markets by
controlling information. Financial
institutions should be ringing loud
warning bells about the dangers they
have created for themselves through
their greed. Information providers
have significant responsibilities;
responsibilities that some
shamelessly shirked. But that does
not change the dangerous reality of
long-term regulatory supervision.
We therefore need to set out clearly
the case for private financial
information provision. This shouldnt
be hard. Its virtually the same case as
for a free, independent and
competitive press. Both arguments
are based on the importance of
transparency.
And this transparency should come
from both directions. There has been
a worrying lack of reform within the
rating agencies, for instance. And the
result of this reform vacuum is that,
in Brussels, there are calls for
government-owned agencies a
terrifying prospect. But theres a
simple way this can be resolved;
companies and public organisations
can declare the amount they pay for
debt ratings in their accounts, as they
do for audits. This would start to shed
light on any potential conflicts of
interest in the rating process.
There remains a deeper issue in the
dark corners, however a lack of
competition. We need to root out, not
tolerate, cosy cartels. Issues with Libor
emerged within areas where
competition wasnt enforced. And
there are other instances of
information provision that are
blighted by poor competition. We
need clear roadmaps to drive Libor
and other information providers
towards competitive private delivery.
But are we prepared to face up to
competition?
Professor Michael Mainelli is chairman
of Z/Yen Group and co-author with Ian
Harris of The Price of Fish: A New
Approach to Wicked Economics and Better
Decisions.
MICHAEL MAINELLI
Libor needed reform but state control of market information is dangerous
In association with
ROTTERD
FARES ARE FOR RETURN ECONOMY AND INCLUDE ALL TAXES AND CHARGES. Fares are correct as of 5 February. Non-refundable, changeable for a fee. Subject to terms, conditions and availability.
19
THURSDAY 7 FEBRUARY 2013
Labours record
[Re: Why Labour is the natural party of
small business and entrepreneurs,
Wednesday]
While Chuka Umunnas vision for small
business is admirable, his ideas smack of
the same old political rhetoric. Half-baked
measures and ill thought-out plans are
hardly sufficient to mend the problems
facing British business. A temporary VAT
cut will not deliver long-term growth. And a
British investment bank will simply
undermine the ability of existing lenders
that still provide the majority of lending
to offer credit at reasonable market rates
while reflecting the risks involved.
Umunnas ideas are just more political
gimmicks.
Kyle Lecuona
I appreciate Chuka Umunnas history, and
agree with his suggestion that the school
curriculum should include some element of
business education or entrepreneurship. But
his other suggestions will only worsen
inefficiencies in small businesses. By
providing too much government support,
firms fail to grow up and compete. True
entrepreneurship demands absolute
doggedness against all odds, not freebies.
Ladi Tokosi
Umunna is living in cloud cuckoo land. If
Labour gets in again, the party will borrow
even more money and eventually bankrupt
the country. That isnt exactly conducive to
business success.
SteveSmith
M
ARK Carney makes his first
appearance in front of the
Treasury Select Committee
today. But what should the
influential committee ask
our new Bank of England governor?
It certainly shouldnt waste time
questioning his salary. Whether the
governor is paid 305,000 like Sir
Mervyn King, or 874,000 as Carney
will be, pales into insignificance
against the cost or profit to the UK
economy of a governor making the
right decisions. The Bank under King
made a hash of its financial stability
mandate, at the cost of billions. The
committee should discover how
Carney plans to improve this situa-
tion. And it must cover five areas.
First, the organisation of the Bank.
Carney was appointed as an outsider
to shake things up. And he has a
track record of doing so. At the Bank
of Canada, he replaced not only the
existing deputy governors but a
number of other senior staff when
he took office. The committee should
press him on how he intends to
change the Bank of England partic-
ularly how he will reorganise it,
given the dramatic increase in its
powers care of its additional respon-
sibilities for financial and prudential
supervision.
King had a near iron grip, with key
decisions flowing through him. But
the new job is too big for one man.
The governor should be more of a
chairman and less of a chief execu-
tive, as former Monetary Policy
Committee member Adam Posen
has recently argued. Carney must
put his own men in place as deputy
governors and give them the room to
run their respective divisions. And he
should be allowed to bring in more
people who understand financial
markets, solving one of the biggest
weaknesses of the Bank under King.
Second, the committee must ask
Does the 15bn bid for Virgin Media mark
the return of major deal-making to the UK?
YES
While the deal market has been slow over the past few years, a
recent wave of high-profile activity at big ticket prices, like
Liberty Groups 15bn bid for Virgin Media, suggests companies and
investors are regaining a taste for mergers and acquisitions (M&A).
Our research suggests that there is the capacity and appetite to do
deals, since UK companies have largely repaired their balance
sheets. The counter-cyclical activity in the power and utilities
sectors, which saw big investments at Thames Water last year and
at Sutton & East Surrey Water this week, continues. And the deal
buzz is extending across different sectors too: we expect to see
activity in consumer goods, as the big players divest non-core
businesses and seek footholds in high growth markets. The big
theme is the appeal of UK companies to international investors,
particularly from Asia. This seems like a theme that is here to stay.
Andy Cox is head of transaction services at KPMG.
Andy Cox
NO
Jon Hughes
The completion of mergers and acquisition (M&A) transactions in
2013 will pose challenges. Both the pre-bid and post-announcement
periods will continue to remain longer than the historical average,
with caution and inertia categorising the market. Value and growth
will not be created by waiting for a major upturn which is still a
long way off. Business leaders need to identify opportunities to
break into high growth economies, transform their business models
to reflect the low growth economy, and gain market share by
targeted inorganic growth. In theory, the fundamentals are there to
support increased activity: in developed markets there is an
availability of cheap corporate debt and strong cash positions, and
in emerging markets companies have cash and appetite for deals.
But in reality, M&A activity is likely to remain subdued, as executives
continue to exercise restraint before taking a seat at the deal table.
Jon Hughes is head of transaction advisory services at Ernst & Young.
The five questions
Mark Carney must
deliver answers to
Carney what he thinks the Bank can
do to further stimulate the economy.
King now talks of monetary policy
having reached its limits. But he was
just pulling the wrong levers. Carney
ought to discuss the importance of
getting bank lending growing,
rather than just buying government
bonds.
Thirdly, the committee should ask
Carney whether he intends to be
more lenient with banks on capital.
King focused on forcing the banks to
raise capital ratios. While this has
probably improved their financial
strength, it has done little to stimu-
late lending. We would like to see a
governor who encourages banks to
increase profitability through
increased lending, which has been
falling for over two years.
Fourthly, Carney has talked about
moving away from a pure focus on
inflation targeting to having more of
a growth bias. The committee should
ask him how he thinks this can best
be done, and whether he will be
push for a formal change in the
objective of the Bank of England.
Finally, we need to know how
Carney would judge whether he has
been a success at the end of his five-
year term. How he ranks his objec-
tives will be key. Ideally he would like
put growth first and foremost, sub-
ject to inflation and financial stabili-
ty. The US Federal Reserve has
recently done this, and Carney
should follow Ben Bernankes lead.
James Barty is head of financial policy at
Policy Exchange.
JAMES BARTY
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RTN
The Labour party did not defend the NHS. It
threw money at a problem that required root
and branch reform.
@Astroreaper
As wonderful an idea as the NHS is, change
and reform is now essential. Things dont
work well for many many reasons.
@oldfashionedAM
In response to the Libor scandal, there needs
to be better accountability mechanisms and
more transparency in banking.
@neil_mp
RBS is ordered to pay fines of 390m for
fixing Libor rates, and its stock price finished
up by 1.36 per cent yesterday.
@LukasBartusevic
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11.40pmThe Late Debate 12.05am
Jackpot247: Interactive gaming.
3amHow to Save a Life?: Tonight
3.25amITV Nightscreen
5.05am-6amThe Jeremy Kyle
Show: Guests air their differences.
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmLocation, Location,
Location
9pmCHOICE How to Build a
Bionic Man
10pmFILM Dreams of a Life. 2011.
11.50pm Random Acts 11.55pm
The Undateables 12.55amToo Poor
for Posh School? 1.55amPlebs, Lies
& Videotape: Channel 4 Dispatches
2.25amTony Robinsons Gods and
Monsters 3.20amTime Team
4.15amDeal or No Deal 5.10am
Countdown 5.55am-6.10am
Kirsties Handmade Treasures
6pmHome and Away
6.30pm5 News at 6.30
7pmPolice Interceptors: 5
News Update
8pmDangerous Drivers
School: 5 News at 9
9pmCHOICE Winter Road
Rescue: The RAC is on high
alert following torrential rain.
10pmFILMThe Matrix
Reloaded: Sci-fi thriller sequel,
starring Keanu Reeves. 2003.
12.40amSuperCasino
4amHouse Doctor 4.25amHouse
Doctor 4.50amMichaelas Wild
Challenge 5.10amWildlife SOS
5.35am-6amWildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7 8 9
10
11 12 13 14
15 16 17 18 19
20
21 22
23 24
6 13 8
45
30 4
7 14 12
23 17
11 14
15 22
17 15 13
7 29
45
5 12 7
5
10
13
3
33
18
10
9
15
21
20
9
16
35
15
24
13
6
12
8
31
34
4
5
16
6
ACROSS
1 Blossom (5)
4 Cringe in fear (5)
7 Insect considered
divine by ancient
Egyptians (6)
9 Subjected to great
tension (4)
10 Ofce note (4)
11 Dissertation (6)
13 Aristocrat (4)
15 Country, capital
Lima (4)
17 Darted (6)
20 Open vessel with a
handle and a spout (4)
21 Female pantomime
character (4)
22 Mentally or physically
inrm with age (6)
23 Painful eyelid
swellings (5)
24 Victoria Beckhams
former surname (5)
DOWN
1 Place where
vehicles halt to
discharge and take
on passengers (3,4)
2 Rounded like
an egg (5)
3 ___ Vice, TV
series (5)
5 Eight-armed
creature (7)
6 Evade (5)
8 In addition (7)
12 Compress (7)
14 Make amends
for, remedy (7)
16 Perform as if
in a play (5)
18 Central area of an
ancient Roman
amphitheatre (5)
19 Port in north-
western Israel on
the Bay of Acre (5)
I
B
O
E
R V
H
U
A
4
4
4
4
F A M O U S M L
O N M I M O S A
A N X I O U S M T
M O G O B B L E
S C A N S M A X
U S E L E S S
U D T R O A S T
S K I R T S C H
U T L E G I B L E
R I O T E R A I
Y R F A L T E R
2 1 2 1 4 8
8 4 6 1 9 3 7 2 5
9 7 8 6 2 4 1 3
6 9 4 7 5 8
8 1 2 9 9 8 3
9 5 2 3 8 7 6 4 1
6 3 1 1 5 5 2
3 4 5 6 1 2
7 8 5 9 8 3 7 9
1 5 4 8 3 9 2 6 7
4 9 7 1 8 9
4
4
4
4
4
4
4
4
4
The nine-letter words were
STAUNCHED and UNSCATHED
T
E
R
R
E
S
T
R
I
A
L
S
A
T
E
L
L
I
T
E
&
C
A
B
L
E
BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
THURSDAY 7 FEBRUARY 2013
SILENT WITNESS
BBC1, 9PM
Leo, Nikki and Jack travel to
Afghanistan to identify whether
human remains are those of a British
soldier. David Caves stars.
HOWTO BUILD A BIONIC MAN
CHANNEL4, 9PM
Psychologist Bertolt Meyer meets
scientists working on technology to
replace body parts with man-made
alternatives.
WINTER ROAD RESCUE
CHANNEL5, 9PM
The RAC is on high alert following
torrential rain, and Stevie Booth faces
a new route and a race against time to
get the roads clear of snow and ice.
TVPICK
LIFE&STYLE
THURSDAY 7 FEBRUARY 2013
22
cityam.com
VALENTINES DAY GIFT GUIDE
Hit the right
note this
Valentines
weekend
T
HE CONCEPT of Valentines Day
as a time for lovers to express
their romantic desires has,
contrary to the cries of the cynics,
been around since at least the Middle
Ages.
The tradition of sending flowers and
hand-written letters has been around
ever since, albeit with the intervention
of the ubiquitous greetings card.
These days it can be something of a
minefield, strewn with fully-booked
restaurants and unreciprocated gifts
but opting out still isnt an option for
the majority of people in a relationship.
However, if you keep things simple, you
can emerge triumphant: a bottle of
champagne, a box of chocolates and a
decent meal is all it takes.
But choose wisely in this age of
online shopping, checking up on how
much your other half has shelled out to
give you the ultimate romantic evening
has never been easier.
Our guide outlines the finest options,
no matter what your price range, from
rare champagne to Michelin-starred
restaurants. And if even these dont
work, you can take solace in the fact
that the Eastern Orthodox church
celebrates St Valentines day on 6 July,
meaning you can have a second crack at
it in the summer.
Steve Dinneen
CHOCOLATES
PINK CHAMPAGNE
La Maison du Chocolat
Valentines coffret
87
lamaisonduchocolat.co.uk/uk/en
Prestat
Heart Assortment
30
www.liberty.co.uk
Godiva Chocolatier
Jaime Hayon Porcelain Box
49
www.godiva-hamburg.de
Dom Perignon
Vintage Ros 2000
248.99
www.thedrinkshop.com
Ruinart
Brut Ros
39.75
www.thechampagnecompany.com
Krug
Brut Ros
198
www.drinksdirect.co.uk
THURSDAY 7 FEBRUARY 2013
23
RESTAURANTS
1 2 3
4 5 6
1. Tom Aitkens restaurant
The Valentines Day package offers luxury
transportation to and from the restaurant, a
six-course tasting menu, a custom-bouquet
of flowers and hand-crafted chocolates.
145 per person; 020 7584 2003
2. Alain Ducasse at The Dorchester
Renowned head chef Jocelyn Herland has
created a special four-course menu, which
features dishes like marinated sea scallops
and limousine farmhouse veal lion.
155 per person; 020 7629 8866
3. Aqua London
Start the night sipping cocktails while taking
in the views on the roof terrace before
heading to the restaurant to enjoy the
special five-course Japanese menu on offer.
95 per person; 020 7478 0540
4. Saka No Hana
The fine dining restaurant located in the
heart of Mayfair is offering a six-course
menu featuring hassun, wagu and sashimi.
65 per person; 020 7925 8988
5. Galvin at Windows
Tuck into a six-course menu featuring dishes
like lobster cocktail and pressed terrine of
foie gras at the Michelin-starred restaurant.
140 per person ; 020 7208 4021
6. Corrigans Mayfair
Enjoy a bespoke three or four-course menu
at Richard Corrigans Mayfair restaurant. The
venue has been designed to resemble a cosy
hunting lodge, creating an intimate
ambiance to enjoy the decadent menu.
85 for three courses and 150 for five; 020 7 499 9943
THURSDAY 7 FEBRUARY 2013
Sony(April 2011)
Breach sees 77m users data
stolen, including usernames
and passwords.
Nintendo (June 2011)
LulzSec breaches Nintendos
security but the firm says no
data was stolen.
The IMF (June 2011)
Internal data is accessed in a
professional and sustained
attack on the organisation.
The CIA (Feb 2012)
Hacking group Anonymous
breaches the security of the
US federal agency.
SOCA (May 2012)
The Serious Organised
Crime Agency website is
temporarily taken down.
NYT (October 2012)
Hackers in China suspected
of infiltrating the
newspapers server.
Twitter (February 2013)
Accounts compromised at
the micro-blogging site,
including celebrities.
The Fed (February 2013)
Bankers details accessed by
Anonymous after yet anoth-
er security breach.
24
cityam.com
LIFE&STYLE TECHNOLOGY
HACK ATTACKS
HIGH PROFILE VICTIMS
dont get
D
RUG LORDS and gun-toting terrorists used to top governments most
wanted lists. Now, the face of international crime has changed and
its wearing a Guy Fawkes mask. This week hackers have been in the news
again. The Federal Reserve. Bloomberg. Twitter. No-one, it appears, is safe.
Two days ago hacktivist group Anonymous published the personal information
of 4,000 bank executives while the Fed admitted that information was stolen
from its servers during the Superbowl. Rogue hacktivists are not the only threat.
Yesterday morning, Rupert Murdoch tweeted Chinese still hacking us, or were
over the weekend in reference to the recent news that the Wall Street Journals
China coverage was being monitored by hackers. While governments and
corporations are the targets of activism and espionage, small businesses and
home computers are at risk from petty criminals trying to use our information
to steal cash. Graeme Batsman from Data Defender and Data Security Expert
(datasecurityexpert.co.uk) gave us his top six data protection tips:
1. Unplug
The Internet is the single biggest threat to
computers, so the most reliable way of
protecting sensitive data is to keep it
offline. If youve got no connection then
you can be ninety-nine per cent sure
youre not going to get hit. When it comes
to the most sensitive data, MI5, the army
and even many charities have offline
networks. These ensure that anyone who
wanted to get hold of sensitive
information would need to get in the
building to do so.
2. Invest in an internet security suite
Many people will buy a computer, which
can cost anything from 400 to 1,000, but
don't want to spend 30 to 40 on an
internet security suite. The standard
Windows firewall is ok but it doesnt
protect you from viruses and other threats.
A security suite will protect you from most
threats but be careful, there are some
rogue ones out there. Do some research
before downloading and installing, as
some can do more harm than good.
3. Update your software
New versions of software are released in
order to nullify vulnerabilities discovered
in previous versions. Make sure your OS is
up to date by downloading and installing
all available patches, hot fixes and service
packs. With Microsoft Windows XP and
upwards, it is usually done for you and
you can choose how often and what level
of updates to download and install.
4. Back up your data
This doesnt stop hackers or viruses from
getting to your data, but it does prevent
Online villains are the scourge of leading
international firms and home internet users
alike. We suggest ways to make sure you
off
TECH
TALK
ALEX DYMOKE
you from losing it. You should have some
on-site back up on an external hard-drive,
USB drive or CD ROM. Be sure to encrypt
this in case it gets into the wrong hands.
You could also back up your data off-site
using cloud software and self-manage
your encryption to ensure privacy.
5. Choose a strong, varied password
If you have the same password for all your
internet accounts, someone could get
your into your bank account just by
hacking your twitter. The ideal password
is long, complex, easy to remember and
hard to break. Try thinking of an easily
variable passphrase if you struggle to
remember long passwords.
6. Be careful what you open
Since the inception of emails, viruses have
been passed around as attachments.
Viruses still travel around by email but,
thanks to improved virus scanning,
criminal gangs are now placing links
within emails that lead to malicious
software. So the next time you receive an
email from a stranger, do not click on any
links or open any attachments. Virus
scanners are not 100 per cent accurate so
just because it says its clean, doesn't
mean it is.
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ENGLANDS top football clubs are
today expected to take a historic vote
on so-called financial fair play (FFP)
measures, but agreement could yet
be scuppered by differences over
exactly how strict they should be.
Representatives of all 20 Premier
League clubs have discussed two
different ways of reining in spending:
restricting year-on-year wage bill rises
and a rule requiring teams to work
towards breaking even.
But chairmen were last night
understood to be split over the finer
details of both plans, while some are
not in favour of either of the
proposals, which could be
implemented as soon as next season.
For a rule change to be passed, at
least 14 of 20 clubs must vote in
favour. A vote is not certain to take
place, but indications yesterday were
that months of negotiations were set
to result in one, or more likely both,
rules being passed.
Under the first proposal, believed
to have been advanced by
Sunderland, teams would be
prevented from increasing their
wage bills by more than five or 10
per cent each year. However, there is
thought to be disagreement among
clubs as to which figure should be
the upper limit.
A break-even rule, similar to that
devised by European governing body
Uefa and applied to clubs in the
Champions League and Europa
League, would require sides to spend
only what they generate.
Such a rule would take several
seasons to phase in, with clubs being
permitted to make limited but ever-
diminishing losses if covered by
cash from the owners and
ultimately break even.
Manchester United, Arsenal,
Tottenham and Liverpool, who are
among those with the biggest
revenues, are firmly in favour, but
there remain differences over what
level of losses should be permitted in
the phasing-in period.
The moves to curb spending are in
part a response to wage inflation
and the financial difficulties faced
by some clubs. New television
contracts are set to earn clubs an
extra 20m at least from next
season, and there is appetite to avoid
it fuelling further salary rises.
Fulham and Manchester City are
thought to be among those opposed
to either rule, which critics have
argued will help to cement the
dominance of the current elite.
Wrangling over
sums threatens
top clubs vote
Football broker Harris lining up
rival bid for stricken Portsmouth
CITY financier and leading
football deal-broker Keith Harris
last night emerged as the face of a
possible rival bid for embattled
League One club Portsmouth.
The south coast side, who are
60m in debt, had been expected
to be sold to the Portsmouth
Supporters Trust (PST), who were
appointed preferred bidders by
administrators PKF in November.
Portsmouths future is set to be
decided in the High Court in seven
days time, after a hearing to
resolve wrangling with former
owner Balram Chainrai was last
week adjourned for a third time.
Harris, who was involved in the
sales of Chelsea to Roman
Abramovich and Manchester City
to Thaksin Shinawatra, would
become chairman if his bid was
successful, according to Sky News.
It is not known who would fund
the bid fronted by Harris, who
part-owns troubled stockbroker
Seymour Pierce and has previously
acted for Chainrai.
PST spokesman Colin Farmery
told City A.M. that rumours had
circulated of a rival bid but that
theirs remained best for the club.
As far as the PST is concerned,
our bid is fully funded and ready
to go, he said. We need to be
sure that we make a clean break
from the past.
Harris is a former chairman of
the Football League and an ardent
Manchester United fan.
Wilshere stars and
Lampard warned
not to move to US
THURSDAY 7 FEBRUARY 2013
26
SPORT
cityam.com/sport
BY FRANK DALLERES
BY FRANK DALLERES
ENGLAND...................................2
BRAZIL........................................1
BY FRANK DALLERES
INTERNATIONAL
@cityam_sport
England locate rhythm
MANAGER Roy Hodgson heaped
praise on Jack Wilshere after the mid-
fielder marked his first international
start for 20 months with a man-of-
the-match performance in last
nights friendly victory over Brazil.
Wayne Rooneys 33rd England goal
and what threatens to be Frank
Lampards last, either side of Freds
equaliser, earned the hosts a first tri-
umph over the celebrated South
Americans since 1990.
Goalkeeper Joe Hart also played a
crucial part with an excellent penalty
save from Ronaldinho, but on a night
of milestones and celebrations it was
the return of Wilshere that offered
greatest hope.
He was made man of the match
and I concur with that, I thought he
had an excellent game, said
Hodgson. As did Theo Walcott, I
thought those two were the serious
contenders. Jack brings us energy,
mobility and enthusiasm in midfield,
and links that with an awful lot of
skill. I thought the three midfielders
in both halves did very well.
It really was a good result. The play-
ers worked really hard for it. We had a
mad spell at the start of the second
half, which put them back in the
game, but we were good value for our
victory over 90 minutes. I think we
can be satisfied with not only the win
but also the manner of the win.
Lampard secured the victory with a
deft first-time shot that curled in off
the post, and Hodgson urged the 34-
year-old to stay in the Premier League,
or Europe at the very least, when his
Chelsea contract expires in the sum-
mer. The evergreen midfielder has
been tipped to follow in David
Beckhams footsteps by joining LA
Galaxy, but Hodgson warned such a
move would make Lampards
progress hard to monitor.
Im rather hoping well still see
him if not in England then Europe,
which will make my task easier, he
added. If he goes further afield and
follows David, it complicates matters
but it doesnt mean your career is
over with England. But the further
afield you go, the more problematic
it gets for the media and the England
manager to follow you.
Englands fourth win over Brazil
ensures Hodgsons men approach
next months 2014 World Cup quali-
fiers against San Marino and
Montenegro emboldened, and came
on a night of milestones, including
left-back Ashley Coles 100th cap.
That honour was also shared by
Brazil forward Ronaldinho, at whose
hands England famously exited the
2002 World Cup, but he conjured lit-
tle of his old magic nor found any
favours from Hart. The Manchester
City stopper saved the former
Barcelona forwards tame penalty eas-
ily enough, but then showed superb
agility to halt his follow-up, before the
alert Tom Cleverley cleared.
Hodgson did not hide his anger that
a spot-kick had been given for a cross
striking Wilshere They cant chop
their arms off, he said but it dissi-
pated moments later when England
took the lead. Wilshere, playing in a
midfield triangle with captain Steven
Gerrard and Manchester Uniteds
Cleverley, released Walcott, and,
when Julio Cesar saved at the Arsenal
Harris is part-owner of Seymour Pierce
THE PROPOSALS
n A majority of 14 of 20 clubs must
vote in favour for either of the
following rules to be passed. It is
thought more likely that both or
neither will succeed, rather than one
n Wage cap: Teams are restricted to
increasing their wage bill year-on-
year by a certain amount. Figures of
5-10 per cent have been mooted, but
neither is thought to have full backing
n Break-even: Clubs required to limit
losses to a pre-agreed amount, as long
as they are covered by owners, with a
view to eventually breaking even
27
Billy did well, Manu brings something different.
Im just thankful Im not making the decisions
cityam.com
THURSDAY 7 FEBRUARY 2013
Hamilton shaken by
nightmare first test
Door not closed on Armstrong criminal charge
Rooney tapped in the
opening goal his 33rd
for England after
Wilshere had released
Walcott
in Brazil win
forwards feet, the lurking Rooney
pounced.
Santos wunderkind Neymar blazed
over before half-time, but the visitors,
and next World Cup hosts, levelled
when substitute Fred beat Hart with a
powerful left-footed effort after Gary
Cahill had been dispossessed.
Fred hit the crossbar seconds later,
but Lampard clinched a deserved win
on the hour when Brazil half-cleared
and he clinically guided an 18-yard
shot in off the woodwork.
Hodgson finds
magic formula
in midfield trio
L
LAST night offered an exciting
glimpse of exactly how I think
Roy Hodgson wants England to
play, a nervy 20 minutes aside.
The midfield was very good
indeed, with some terrific link-up
play and great movement between
Steven Gerrard, Jack Wilshere and
Tom Cleverley.
Gerrard looks very comfortable in
front of the back four, while
Wilshere was exceptional it was a
pleasure to see him back to his best.
That fluidity, and Englands
confidence in playing short passes
in the final third, helped Wayne
Rooney to be more dangerous.
Theo Walcott, meanwhile, looked
a different, much more mature
player. His excellent club form has
clearly given him belief and he no
longer shrinks in an England shirt.
Im not sure about Danny
Welbeck on the left, although he
does offer a goal threat coming
inside when Rooney drops deep.
Brazil, it must be said, were pretty
disappointing, but lets give credit to
England for working very hard and
using the ball well.
Midfield aside, the main
experiment was in defence, where
the Gary Cahill-Chris Smalling
partnership looked a touch untidy
and naive, with Brazil dragging
them out of position. They wont be
Hodgsons No1 choice but will have
benefited from 90 minutes against
quality opposition.
Trevor Steven is a former England
footballer who played at two World Cups
and two European Championships. He
now works as a media commentator.
FOOTBALL
COMMENT
TREVOR STEVEN
IN BRIEF
I was right to quit Sky, says Cav
n CYCLING: Britains Mark Cavendish
says his instant success at new team
Omega Pharma-QuickStep has justified
his decision to quit Team Sky. Cavendish
took the overall lead in the Tour of Qatar
yesterday with his second successive
stage win his third in a month with his
new outfit. I am really, really happy
here right now, the Isle of Man rider
said. Three wins already shows me that
I made the right move.
Strachan off to winning start
n FOOTBALL: New Scotland manager
Gordon Strachan enjoyed a winning start
to his reign last night after Charlie
Mulgrews first-half strike earned a 1-0
friendly victory over Estonia.
Tottenhams Gareth Bale carried his club
form onto the international stage with a
goal and an assist as Wales beat Austria
2-1. Republic of Ireland beat Poland 2-0
with goals from Ciaran Clark and Wes
Hoolahan, while Northern Ireland were
held 0-0 by Malta.
Allardyce fined for cup comments
n FOOTBALL: West Ham boss Sam
Allardyce has been fined 8,000 by the
Football Association for his criticism of
officials in last months FA Cup third-
round defeat at Manchester United.
Allardyce was angered at being refused
a penalty and said: You see it time and
time again at Old Trafford.
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BRITAINS Lewis Hamilton
admitted suffering a pretty
heavy impact after he crashed
just 15 laps into his first testing
session with his new Formula One
team Mercedes yesterday in Spain.
A braking failure left Hamilton
unable to prevent the car hurtling
headlong across the gravel and
into a tyre wall, and brought to a
premature and abrupt end the
outfits track time for the day.
The 2008 world champion
shrugged off the incident in Jerez,
insisting it was better to have
identified the problem before the
season begins in Australia next
month, but conceded to being
slightly shaken.
[The impact] was pretty heavy
but it wasnt as bad as I've
experienced in the past, the 28-
year-old said.
We damaged the car a little bit
and as all the new stuff is still
being built we didnt have too
many spare parts to be able to
change it, so they are working on
it tonight.
Im just glad that firstly Im
safe and that its happened now,
not when were in the season or
something. This is what testing is
about. Its about getting through
those development phases, errors
or whatever they may be and
working on them and thats what
the guys are doing.
Yesterdays crash represented a
nightmare start to Hamiltons
new career with Mercedes, having
made the controversial decision
to leave McLaren, his home since
the age of 13, last year.
It also continued a dreadful
week for the team, after an
electrical problem left Nico
Rosbergs car in flames and
restricted the German to just 11
laps on Tuesday, the first day of
pre-season testing.
Rosberg is set to resume testing
today, with Hamilton, who
despite his limited track time
posted the sixth fastest lap
yesterday, not due back behind
the wheel until tomorrow.
Frenchman Romain Grosjean of
Lotus was quickest, ahead of
Force Indias Scottish driver Paul
di Resta and Australian Daniel
Riccardo of Toro Rosso.
His countryman, Red Bulls
Mark Webber, was fourth,
German Nico Hulkenburg fifth on
his Sauber debut, Hamilton sixth
and his replacement at McLaren,
Mexican youngster Sergio Perez,
finished seventh fastest.
DISGRACED former cyclist Lance
Armstrong may yet face criminal
charges in his native America,
despite an attorneys suggestion to
the contrary, following his
doping admissions.
Armstrong is under
investigation by the Food
and Drug Administration
(FDA), who could probe
allegations he obstructed
justice and intimidated
witnesses, according to
US media.
Attorney Andre
Birotte dropped a
two-year
investigation into
Armstrong last year and insisted on
Tuesday that it would not be
revived, despite the 41-year-old last
month confessing to cheating in all
of his seven Tour de France wins.
But ABC News, citing an
unnamed source, reported that
federal agents were still looking into
claims of obstruction, witness
tampering and intimidation
against the Texan.
FDA spokesperson Sarah
Clark-Lynn appeared to
confirm an investigation
was indeed active in
remarks published
yesterday by USA Today.
When the US Attorneys Office
declines to prosecute an individual
or entity, typically law enforcement
agencies do not pursue further
investigative activities, she was
quoted as saying. That said, this is
an ongoing matter for the agency
and I cannot comment further.
Armstrong, who was stripped of
his titles and banned from
competitive sport last year, is
already facing a number of lawsuits.
Insurance company SCA
Promotions is demanding the
return of $12m (7.5m) relating to
bonuses he was paid for multiple
Tour de France victories, while the
Sunday Times newspaper is suing
Armstrong for up to 1m over a
libel settlement to him in 2004.
BY FRANK DALLERES
BY FRANK DALLERES
The Englishman escaped unhurt after the brakes failed on his new Mercedes
Armstrong confessed to
doping last month
ENGLAND cricketer Michael Lumb
insists they will not underestimate
New Zealand after suffering defeat
in their final warm-up match for the
Twenty20 series.
Jos Buttler and Eoin Morgan both
hit half-centuries as England reached
170-5, but captain Stuart Broads 3-24
could not prevent a New Zealand XI
claiming a three-wicket win off the
final ball. I think it will be tight,
Lumb said of the three-match series,
which starts on Saturday. A lot of
people have written them off, but
you cant take them lightly.
Broads men in
Twenty20 blow
BY FRANK DALLERES
England hooker Dylan Hartley on the Twelvetrees-Tuilagi dilemma
Results
ALL WORK DOESNT
MEAN NO PLAY.
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