BEIJING (Reuters) - A Chinese city has taken its fight on corruption to the bedroom, ordering officials to own up to extramarital affairs in the hope of keeping public money out of the hands of mistresses, Xinhua news agency reported.
China has tried assorted checks and balances to curb corruption which has returned alongside market reforms after being virtually wiped out when the Communist Party swept to power in 1949.
"Nanjing, capital of east China's Jiangsu Province, issued a regulation in May requiring officials to report their extramarital affairs, with a belief that the stipulation could curb corruption," Xinhua said in an overnight report.
Some 95 percent of convicted corrupt officials in China had mistresses, it said without elaborating.
"In south China's economic-booming cities of Shenzhen, Guangzhou and Zhuhai, all the officials involved in the 102 corruption cases investigated in 1999 had mistresses," it said.
Legal scholars have criticised the Nanjing regulation, which also gives the government permission to interfere in outside relationships that affect "officials' family stability", for infringing on privacy and for being nearly impossible to enforce, the agency said.
"No one is willing to voluntarily speak out about their extramarital affairs," law researcher Mo Jihong was quoted as saying.
China's leaders have warned chronic corruption could topple the Communist Party, which has controlled the world's most populous nation for more than 50 years.
Almost 870,000 officials were indicted for corruption in 2004.
"Although arguments exist, one fact is undeniable," Xinhua said of the Nanjing regulation. "The Chinese government and academic society are being more innovative than ever before in the field of creating new ways to prevent and control corruption."
Friday, May 20, 2005
Wednesday, May 18, 2005
HK limits dollar to deter speculators
By Alexandra Harney in Hong Kong and Steve Johnson in London
Published: May 18 2005 18:09 | Last updated: May 18 2005 18:09
Hong Kong on Wednesday surprised financial markets by introducing a ceiling on its currency in an effort to discourage speculative investment into the territory.
The Hong Kong dollar, which has been pegged at HK$7.8 to the US dollar since 1983, will not be allowed to strengthen beyond HK$7.75 with immediate effect. It will also not be able to weaken below HK$7.85, a shift which will be achieved over the next five weeks.
Speculative flows into Hong Kong have risen sharply since late 2003 amid growing expectation that China, whose currency is pegged to the US dollar at Rmb8.28, would revalue. Investors who see the Hong Kong dollar as a proxy for the Chinese currency were expecting it to rise if the renminbi appreciated.
Joseph Yam, HKMA chief executive, said the move was aimed at sending a clear message to investors about how much Hong Kong's currency would be allowed to strengthen.
"You don't need to make use of the Hong Kong dollar as a speculative tool for betting" on appreciation of the renminbi, he said yesterday.
Until now, the Hong Kong Monetary Authority has intervened if the currency has fallen below HK$7.8 to the US dollar - known as a fixed convertibility "floor" - but has not set a "ceiling" above which it cannot rise.
Some analysts welcomed the move. "Hong Kong is simply tidying up its currency regime to deal with a scenario - strong speculation about an appreciation - that had not previously been a problem," Julian Jessop, chief international economist at Capital Economics in London, said.
But Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi, argued Hong Kong's decision could herald increased speculation as the market tests the limits of the new trading band.
"The credibility of the old fixing had been undermined, the market will now test the credibility of the new band," he said.
Jonathan Anderson, chief economist for Asia at UBS, also questioned whether speculators would be discouraged.
"We were expecting a move that was going to stem the problems. It's not clear that this really does that," he said.
Mr Yam denied the decision was related to China's plans for currency reform.
"I have no inside information on what the People's Bank of China [China's central bank] may or may not do," he said.
Mr Halpenny argued that the move suggested that Hong Kong does not believe China will revalue the renminbi soon, and thus felt compelled to take action itself.
Enoch Fung of Goldman Sachs said the move would lead to a faster than expected rise in Hong Kong interest rates.
The Hong Kong dollar initially fell on Wednesday to 7.809 to the dollar, before rallying to 7.795. The Japanese yen rose to Y107.11 against the dollar and Y135.39 against the euro in early New York trading amid speculation that Hong Kong's move may be a sign that China is set to follow suit.
Published: May 18 2005 18:09 | Last updated: May 18 2005 18:09
Hong Kong on Wednesday surprised financial markets by introducing a ceiling on its currency in an effort to discourage speculative investment into the territory.
The Hong Kong dollar, which has been pegged at HK$7.8 to the US dollar since 1983, will not be allowed to strengthen beyond HK$7.75 with immediate effect. It will also not be able to weaken below HK$7.85, a shift which will be achieved over the next five weeks.
Speculative flows into Hong Kong have risen sharply since late 2003 amid growing expectation that China, whose currency is pegged to the US dollar at Rmb8.28, would revalue. Investors who see the Hong Kong dollar as a proxy for the Chinese currency were expecting it to rise if the renminbi appreciated.
Joseph Yam, HKMA chief executive, said the move was aimed at sending a clear message to investors about how much Hong Kong's currency would be allowed to strengthen.
"You don't need to make use of the Hong Kong dollar as a speculative tool for betting" on appreciation of the renminbi, he said yesterday.
Until now, the Hong Kong Monetary Authority has intervened if the currency has fallen below HK$7.8 to the US dollar - known as a fixed convertibility "floor" - but has not set a "ceiling" above which it cannot rise.
Some analysts welcomed the move. "Hong Kong is simply tidying up its currency regime to deal with a scenario - strong speculation about an appreciation - that had not previously been a problem," Julian Jessop, chief international economist at Capital Economics in London, said.
But Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi, argued Hong Kong's decision could herald increased speculation as the market tests the limits of the new trading band.
"The credibility of the old fixing had been undermined, the market will now test the credibility of the new band," he said.
Jonathan Anderson, chief economist for Asia at UBS, also questioned whether speculators would be discouraged.
"We were expecting a move that was going to stem the problems. It's not clear that this really does that," he said.
Mr Yam denied the decision was related to China's plans for currency reform.
"I have no inside information on what the People's Bank of China [China's central bank] may or may not do," he said.
Mr Halpenny argued that the move suggested that Hong Kong does not believe China will revalue the renminbi soon, and thus felt compelled to take action itself.
Enoch Fung of Goldman Sachs said the move would lead to a faster than expected rise in Hong Kong interest rates.
The Hong Kong dollar initially fell on Wednesday to 7.809 to the dollar, before rallying to 7.795. The Japanese yen rose to Y107.11 against the dollar and Y135.39 against the euro in early New York trading amid speculation that Hong Kong's move may be a sign that China is set to follow suit.
Thursday, May 12, 2005
Cisco Pushes a New Twist on Options
By GARY RIVLIN and FLOYD NORRIS
SAN FRANCISCO, May 11 - Adding a new twist to the continuing fight over the expensing of employee stock options, Cisco Systems is seeking regulatory approval for a novel financial instrument that could allow the company to assign a lower value to the stock options than under current valuation models.
A lower value for the options, which under new accounting rules will have to be recorded as expenses on Cisco's books starting this July, would reduce the impact expensing will have on Cisco's profits and could lead other companies to adopt something similar. The company said that if it employed a traditional valuation standard like the Black-Scholes model for expensing its stock options, its reported profits would fall by roughly 20 percent.
Options give employees the right to buy stock for as long as 10 years at a price set when the option is issued, and thus can become very valuable if the stock rises over that period.
Cisco's proposal is to create a market by selling new securities based on the employee options. By doing so, the company potentially could be changing the terms of the debate on expensing stock options. But details of the securities Cisco decides to sell, and the way it markets them, could prove crucial in determining how the approach works in practice.
The issue is important for Cisco because it grants options to all employees and because it will be one of the first companies to come under the new accounting rule that requires options to be expensed. That rule, adopted by the Financial Accounting Standards Board after a bitter debate, goes into effect on June 15 for fiscal years beginning after that date. Cisco's fiscal year begins July 31.
In its last fiscal year, Cisco granted 188 million options to employees. It disclosed that had it been forced to take the value of options as an expense, its net income would have fallen by 28 percent, to $3.2 billion.
The securities would be sold only to institutional investors. Cisco would sell new securities when it issued options to employees, and would then use them to value those options on its books.
Cisco confirmed the move after it was reported by Bloomberg News.
Cisco, the largest maker of equipment for directing traffic on the Internet, has been a leader among technology companies seeking relief from the rule from Congress and the Securities and Exchange Commission.
Some details of Cisco's proposal were disclosed Wednesday by two people who had been briefed on them and who asked not to be identified because details could still be changed.
They said the securities would be offered to a limited number of institutional investors, adding that the company believed that by limiting the prospective buyers, it might get a higher price because those investors would have an interest in putting in the time needed to analyze a new and complicated security. But it could also be argued that by limiting the number of investors, the company would be depressing the price.
That could be important because the company has two conflicting interests. As with any security it sells, it would benefit from getting the highest price. But Cisco would also benefit from a lower price if that allowed it to report higher profits.
Buyers of the new instruments, to be called employee stock option reference securities, or Esors, would not be able to transfer them, and would have options that would vest over five years. Both provisions mirror those in employee stock options.
Donald Nicolaisen, the S.E.C.'s chief accountant, said that he could not comment on Cisco's proposals. But in general, he said, "it certainly would be desirable to have a market value that could help validate the valuation models."
Last year Cisco, along with Qualcomm and Genentech, proposed an alternative valuation method intended to slash the value of options that the companies argued was simpler and more accurate.
The accounting standards body rejected their proposal. That proposal called for discounting the valuation for numerous reasons and drew criticism because it would have resulted in drastically lower valuations and therefore lower expenses, compared to the models endorsed by the accounting standards board.
"They've had plenty of time over the past couple of years, while this was all still being debated, to propose something like this," said Jack T. Ciesielski, editor of The Analyst's Accounting Observer. "And in fact they did propose something similar with their proposal last fall. That didn't work, so they're now trying a different route."
Cisco hired the investment bank Morgan Stanley to put together its proposed security, which could be used to set the price of the options of any company wanting to participate.
"We all wish there was a public market for stock options because then we'd have real evidence of what these things are worth," said John England, who runs the executive compensation practice inside the consulting firm Towers Perrin. "The idea is great but whether it can be pulled off is another issue."
There would also be provisions, which were not given in detail, barring the owners of the derivatives from hedging their positions. That mirrors a provision in employee stock options, but it could also serve to limit the number of potential investors if it constrained other trading strategies - selling the company's stock short or buying put options, for example - that would normally be available to institutions.
Perhaps the most controversial part of the proposal is that a buyer would not know how many options he would eventually have.
That is because the Esors would mirror the actual experience of employee options, which are canceled when employees leave Cisco, whether voluntarily or not. Last year, Cisco's annual report states, 52 million options were canceled.
A potential problem with that provision is that it could lead to understating the value of the derivatives. Employees who forfeit options when they leave voluntarily presumably do so because their new jobs offer sufficient compensation to offset the value of the forfeited options. But there is no similar compensation planned for Esors holders.
"I think one of the reasons the F.A.S.B. never picked a particular option-pricing model is because they were hoping that there would be advancements in ways to value these options," said Pat McConnell, an accounting analyst at Bear Stearns. "I think this is another step in that process."
Mr. Ciesielski, however, sees this as more of a step backward than forward. "If the S.E.C. were to give the green light to something like Cisco is proposing, it'd be nibbling away at the F.A.S.B. standard without public comment," he said.
The Cisco proposal is in some ways reminiscent of a plan Coca-Cola announced in 2002, when it said it would voluntarily take stock options as an expense. It then proposed to seek market valuation estimates from investment banks, with the possibility that banks would be forced to buy or sell based on their estimates. But that idea was later dropped because it was not in accord with the existing accounting rule, which gave companies the choice of whether or not to treat options as an expense.
The new accounting rule, however, specifies that market values, if available, can be used in valuing options.
Gary Rivlin reported from San Francisco for this article and Floyd Norris from Paris.
SAN FRANCISCO, May 11 - Adding a new twist to the continuing fight over the expensing of employee stock options, Cisco Systems is seeking regulatory approval for a novel financial instrument that could allow the company to assign a lower value to the stock options than under current valuation models.
A lower value for the options, which under new accounting rules will have to be recorded as expenses on Cisco's books starting this July, would reduce the impact expensing will have on Cisco's profits and could lead other companies to adopt something similar. The company said that if it employed a traditional valuation standard like the Black-Scholes model for expensing its stock options, its reported profits would fall by roughly 20 percent.
Options give employees the right to buy stock for as long as 10 years at a price set when the option is issued, and thus can become very valuable if the stock rises over that period.
Cisco's proposal is to create a market by selling new securities based on the employee options. By doing so, the company potentially could be changing the terms of the debate on expensing stock options. But details of the securities Cisco decides to sell, and the way it markets them, could prove crucial in determining how the approach works in practice.
The issue is important for Cisco because it grants options to all employees and because it will be one of the first companies to come under the new accounting rule that requires options to be expensed. That rule, adopted by the Financial Accounting Standards Board after a bitter debate, goes into effect on June 15 for fiscal years beginning after that date. Cisco's fiscal year begins July 31.
In its last fiscal year, Cisco granted 188 million options to employees. It disclosed that had it been forced to take the value of options as an expense, its net income would have fallen by 28 percent, to $3.2 billion.
The securities would be sold only to institutional investors. Cisco would sell new securities when it issued options to employees, and would then use them to value those options on its books.
Cisco confirmed the move after it was reported by Bloomberg News.
Cisco, the largest maker of equipment for directing traffic on the Internet, has been a leader among technology companies seeking relief from the rule from Congress and the Securities and Exchange Commission.
Some details of Cisco's proposal were disclosed Wednesday by two people who had been briefed on them and who asked not to be identified because details could still be changed.
They said the securities would be offered to a limited number of institutional investors, adding that the company believed that by limiting the prospective buyers, it might get a higher price because those investors would have an interest in putting in the time needed to analyze a new and complicated security. But it could also be argued that by limiting the number of investors, the company would be depressing the price.
That could be important because the company has two conflicting interests. As with any security it sells, it would benefit from getting the highest price. But Cisco would also benefit from a lower price if that allowed it to report higher profits.
Buyers of the new instruments, to be called employee stock option reference securities, or Esors, would not be able to transfer them, and would have options that would vest over five years. Both provisions mirror those in employee stock options.
Donald Nicolaisen, the S.E.C.'s chief accountant, said that he could not comment on Cisco's proposals. But in general, he said, "it certainly would be desirable to have a market value that could help validate the valuation models."
Last year Cisco, along with Qualcomm and Genentech, proposed an alternative valuation method intended to slash the value of options that the companies argued was simpler and more accurate.
The accounting standards body rejected their proposal. That proposal called for discounting the valuation for numerous reasons and drew criticism because it would have resulted in drastically lower valuations and therefore lower expenses, compared to the models endorsed by the accounting standards board.
"They've had plenty of time over the past couple of years, while this was all still being debated, to propose something like this," said Jack T. Ciesielski, editor of The Analyst's Accounting Observer. "And in fact they did propose something similar with their proposal last fall. That didn't work, so they're now trying a different route."
Cisco hired the investment bank Morgan Stanley to put together its proposed security, which could be used to set the price of the options of any company wanting to participate.
"We all wish there was a public market for stock options because then we'd have real evidence of what these things are worth," said John England, who runs the executive compensation practice inside the consulting firm Towers Perrin. "The idea is great but whether it can be pulled off is another issue."
There would also be provisions, which were not given in detail, barring the owners of the derivatives from hedging their positions. That mirrors a provision in employee stock options, but it could also serve to limit the number of potential investors if it constrained other trading strategies - selling the company's stock short or buying put options, for example - that would normally be available to institutions.
Perhaps the most controversial part of the proposal is that a buyer would not know how many options he would eventually have.
That is because the Esors would mirror the actual experience of employee options, which are canceled when employees leave Cisco, whether voluntarily or not. Last year, Cisco's annual report states, 52 million options were canceled.
A potential problem with that provision is that it could lead to understating the value of the derivatives. Employees who forfeit options when they leave voluntarily presumably do so because their new jobs offer sufficient compensation to offset the value of the forfeited options. But there is no similar compensation planned for Esors holders.
"I think one of the reasons the F.A.S.B. never picked a particular option-pricing model is because they were hoping that there would be advancements in ways to value these options," said Pat McConnell, an accounting analyst at Bear Stearns. "I think this is another step in that process."
Mr. Ciesielski, however, sees this as more of a step backward than forward. "If the S.E.C. were to give the green light to something like Cisco is proposing, it'd be nibbling away at the F.A.S.B. standard without public comment," he said.
The Cisco proposal is in some ways reminiscent of a plan Coca-Cola announced in 2002, when it said it would voluntarily take stock options as an expense. It then proposed to seek market valuation estimates from investment banks, with the possibility that banks would be forced to buy or sell based on their estimates. But that idea was later dropped because it was not in accord with the existing accounting rule, which gave companies the choice of whether or not to treat options as an expense.
The new accounting rule, however, specifies that market values, if available, can be used in valuing options.
Gary Rivlin reported from San Francisco for this article and Floyd Norris from Paris.
Monday, May 09, 2005
Cream Crackered
http://www.worldwidewords.org/qa/qa-cre2.htm
"I'm cream-crackered."
A cream cracker is a savoury dry biscuit, often eaten with cheese. Sometime in the past thirty years or so the phrase has become rhyming slang in Britain for knackered. That’s a slightly older slang term—there are examples going back into the 1950s—which means exhausted or worn out. It can also mean some piece of equipment which is damaged or broken. Both senses are common.
Where it comes from is not entirely certain. A knacker from the sixteenth century on was a harness maker or saddler. The word just might have come from knack, a trinket (which we still have, but only as one half of the reduplicated knick-knack), because the knacker originally only made the small bits of harness. Another sense from the beginning of the nineteenth century was for a person who bought old or worn-out horses and slaughtered them for their meat, hides and hoofs. He worked from a knacker’s yard. A possible link with the modern slang sense is obvious enough: if you’re knackered you’re fit only for the knacker’s yard.
But there’s another slang sense of knackers, for the testicles, which grew up a little later, possibly also from knack, but possibly from yet another sense of knacker, that of castanets (which could be an altered form of knockers, but might come from an obsolete sense of knack, to knock or to make a sharp, abrupt noise). To knacker, therefore, is to castrate.
Modern dictionaries are cautious about whether knackered has its origin in the horse-slaughterer sense or the castration one. However, British men often use it in such a way that they take it to mean the latter, even if that isn’t actually where it came from.
"I'm cream-crackered."
A cream cracker is a savoury dry biscuit, often eaten with cheese. Sometime in the past thirty years or so the phrase has become rhyming slang in Britain for knackered. That’s a slightly older slang term—there are examples going back into the 1950s—which means exhausted or worn out. It can also mean some piece of equipment which is damaged or broken. Both senses are common.
Where it comes from is not entirely certain. A knacker from the sixteenth century on was a harness maker or saddler. The word just might have come from knack, a trinket (which we still have, but only as one half of the reduplicated knick-knack), because the knacker originally only made the small bits of harness. Another sense from the beginning of the nineteenth century was for a person who bought old or worn-out horses and slaughtered them for their meat, hides and hoofs. He worked from a knacker’s yard. A possible link with the modern slang sense is obvious enough: if you’re knackered you’re fit only for the knacker’s yard.
But there’s another slang sense of knackers, for the testicles, which grew up a little later, possibly also from knack, but possibly from yet another sense of knacker, that of castanets (which could be an altered form of knockers, but might come from an obsolete sense of knack, to knock or to make a sharp, abrupt noise). To knacker, therefore, is to castrate.
Modern dictionaries are cautious about whether knackered has its origin in the horse-slaughterer sense or the castration one. However, British men often use it in such a way that they take it to mean the latter, even if that isn’t actually where it came from.
Sunday, May 01, 2005
All Britons millionaires
All Britons millionaires -- over a life-time
Tue Apr 26, 2005 04:31 PM ET
LONDON (Reuters) - The average Briton spends around 1.5 million pounds during adulthood, according to a survey on Tuesday.
The basics of shelter, food and clothing account for one-third of the total, according to the survey by insurer Prudential, with tax accounting for about one-fifth and leisure slightly less.
"The old saying goes that there are only two certainties in life -- death and taxes. We'd add 'expense' to that small and somewhat grim list," said director Angus Maciver.
The survey found men give 30 percent more to charity than do women.
But the average man will also spend 98,000 pounds on nights out -- 40 percent more than women -- two and a half times more on electronic gadgets, twice as much on hobbies and sports and 66 percent more on cars.
Overall the average male cost of living at 1.7 million pounds is 21 percent higher than women's 1.4 million.
As expected, London is the most expensive part of the country in which to live, with the average person spending just over two million pounds from the age of 18 to the grave.
Tue Apr 26, 2005 04:31 PM ET
LONDON (Reuters) - The average Briton spends around 1.5 million pounds during adulthood, according to a survey on Tuesday.
The basics of shelter, food and clothing account for one-third of the total, according to the survey by insurer Prudential, with tax accounting for about one-fifth and leisure slightly less.
"The old saying goes that there are only two certainties in life -- death and taxes. We'd add 'expense' to that small and somewhat grim list," said director Angus Maciver.
The survey found men give 30 percent more to charity than do women.
But the average man will also spend 98,000 pounds on nights out -- 40 percent more than women -- two and a half times more on electronic gadgets, twice as much on hobbies and sports and 66 percent more on cars.
Overall the average male cost of living at 1.7 million pounds is 21 percent higher than women's 1.4 million.
As expected, London is the most expensive part of the country in which to live, with the average person spending just over two million pounds from the age of 18 to the grave.
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