Author Archives: Lila

UN Funds Missing Billion Plus in Climate Change Donations

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The Telegraph reported a few days ago that UN Funds were missing over a billion dollars contributed to tackle climate change in developing countries:

“A total of 20 nations pledged up to 410 million dollars (£247m) a year in 2001, resulting in a pot that should be worth well over 1.6 billion dollars (£963m).
But only 260m dollars (£157m) has been paid into two United Nations funds earmarked for the purpose according to the latest figures, the BBC World Service investigation said.
The EU told the broadcaster that the money was collected in ”bilateral and multilateral deals”, but was unable to provide data to back up the claim.
The sums were pledged in the 2001 Bonn Declaration, which was signed by the 15 countries that then made up the European Union, plus Canada, Iceland, New Zealand, Norway and Switzerland.

As of the end of September this year, the two UN funds – called the Least Developed Countries and Climate Change Funds – contained 155.4m dollars and 104.1m dollars respectively, the BBC said.
Boni Biagini, who runs the funds, told the broadcaster: ”These numbers don’t match the 410m per year. Otherwise, we’d be handling billions of dollars by now.”

More Fall Out From Dubai On Indian Market

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Business Standard:

“Segments of the economy such as consumer durable and core industrial growth that are driving the current recovery in the Indian economy are purely a function of domestic stimulus initiatives and remain to that extent relatively insulated,” HDFC Bank said in a report today.

However, areas such as exports, remittance, banking and construction as well as real estate are likely to see further damage, the report added.

Exports are going to be the most affected by Dubai woes, as the UAE region is now India’s largest export destination toppling the United States.

Besides, bullion trading in Dubai is likely to be impacted, which may have ripple effect for India as around $29 billion of gold from the country is being traded in Dubai.”

Madoff -Related Accounting Firm Does Dubai´s Accounts..

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From the Independent:

“Dubai World will start a formal process next week that will see it invite leading banks, including HSBC, Royal Bank of Scotland (RBS), Lloyd’s Banking Group and Standard Chartered, to create a steering committee to represent the many lenders. KPMG has been lined up by the lead banks to represent them in negotiations, with a formal appointment expected once the compilation of the five-to-six bank steering committee is finalised.

My Comment:

Now, KPMG is the big four accounting firm that gave Madoff´s representations to Tremont Group Holdings (a US fund that Madoff purportedly hoodwinked) a thumbs up.  The Tomchin Family Charitable Trust, one of numbers of investors who were allegedly scammed by Madoff,  has launched a lawsuit against KPMG and Tremont for negligence in monitoring one of Tremont´s funds that invested with Madoff.

The lawsuit included a list of other Madoff clients that included Victoria de Rothschild of the banking family of the Rothschilds and a Tory party contributor:

“Also on the list of Mr Madoff’s British clients is Lady Victoria de Rothschild, who is related to Nathaniel Rothschild, the co- chairman of Atticus Capital, the hedge fund.

Lady Victoria is a well-known figure on the society circuit and became known more recently as a lender to the Tory party, having set up a special company that gave the party a £1,014,000 loan that is due to be repaid in 2010.”

(Times Online, February 5, 2009)

KPMG has also been hit with a $1b lawsuit for “reckless and negligent” auditing of failed subprime broker, New Century Financial, reportedly the first major case against an auditor arising from the financial crisis.

My Comment

So we have a Madoff-tainted accounting firm KPMG, with multiple legal problems, representing the banks that loaned to Dubai on one side, and  (as I noted before) French banking legend Rothschild on the other side, heading up the restructuring efforts for Dubai….

Wiki has a list of KPMG´s legal infractions that includes this:

“In February 2007 KPMG Germany was investigated for ignoring questionable payments in the Siemens bribery case.[29] (Siemens agreed to pay a record $1.34 billion in fines to settle the case in December, 2008.) In November 2008 the Siemens Supervisory Board recommended changing auditors from KPMG to Ernst & Young.[30]

In 2006, Fannie Mae sued KPMG for malpractice for approving years of erroneous financial statements.[31]

In March 2008 KPMG was accused of enabling “improper and imprudent practices” at New Century Financial, a failed mortgage company[32] and KPMG agreed to pay $80 million to settle suits from Xerox shareholders over manipulated earnings reports.”

Some confidence-builder… a bank that´s been closely connected to the Madoff scam and to the Fannie and Freddie case (and hence, to Goldman Sachs)…

And, how about this:

KPMG and Deloitte were brought in to investigate India´s ¨Madoff¨” – the fraud- riddled IT outsourcing giant Satyam (now Mahindra Satyam, its post-merger avatar – over the objections of the Institute of Chartered Accountants, India´s regulator, which said KPMG was not registered with it and would thus not be subject to its code of conduct or disciplinary proceedings.

Philanthropic Versus Misanthropic Libertarianism

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Mad props to Humble Libertarian for coming up with this:

“Libertarian thought often starts with “me” and says to others “you shouldn’t violate my rights,” which is certainly true, but somewhat off-putting because it’s egocentric. Aside from being off-putting, it’s the moral low-ground. It’s moral and true, but it pushes the moral imperatives of libertarian thought off on someone else. The moral high-ground is to accept and practice the moral imperative for yourself. Libertarians would always do better to say, “I shouldn’t violate your rights- I won’t violate your rights.” In practice this makes a world of difference. On the issue of welfare and property redistribution, for example, the first approach would sound like this: “Who are you to take my hard-earned money and give it away to the poor? Even if I should give it to them, you have no right to confiscate my property from me.” The second approach is a sharp contrast to the first in both tone and content: “Who am I to take your hard-earned money and give it away to the poor when I’m likely not even giving enough myself? Even if you should give it to them, I have no right to force you to, especially when I’m not giving enough myself. How hypocritical of me would that be?” See how much more humble that is and sounds?

The first example is a challange. Its tone is antagonistic and its premise is egocentric. The second example is an invitation and a catalyst for conversation. Its tone is humble and its premise is philanthropic- motivated by love and concern for other human beings and their rights. The distinction here can ultimately boil down to these alternatives, egocentric libertarianism on the one hand, and philanthropic libertarianism on the other.“

Dubai Government Thumbs Its Nose at Creditors

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After tentatively implying that there would be a back-stop to Dubai World´s debt problems, the Dubai Government on Monday disowned any legal obligation to Dubai World and told creditors that they needed to take responsibility for their loans.

“Creditors need to take part of the responsibility for their decision to lend to the companies,” said Abdulrahman al-Saleh, director general of Dubai’s department of finance. “They think Dubai World is part of the goverment, which is not correct.”

(Reuters)

My Comment:

What´s going on here? The back and forth isn´t recent, but has been going on the whole year, with Dubai implying at one time that its debt load was taken care of, and at another, that it still had more problems; and in this instance, first seeming to back up Dubai World and then, backing-off from its backup….

The timing and vacillation seem to suggest that the government is testing the market and the reaction of investors before making its move. Not good.

And it leaves open the possibility, already raised by UBS in a recent Bloomberg piece, that the problems exceed the $80 billions of government liabilities and might extend to off-book structures that are not presently known.

Update:

After weekend assurances from Dubai that its much richer fellow-emirate Abu Dhabi, seat of the UAE federal government, would help, and that liquidity would be assured for local and international banks that needed it (through a “special additional liquidity facility”), Asian markets recovered this morning from their sell-off last week. But this morning, the local stock exchanges have been hit hard and this new announcement could provoke a second sell-off in world markets, especially in the UK FTSE, since British banks, especially Royal Bank of Scotland, have loan exposure to Dubai World.

Then, there´s also the exposure that UK banks have to other investments where Dubai World holds a stake.

And there´s the indirect exposure US banks have to Dubai through ties with UK banks.

Pollution, Not Global Warming, Is Biggest Environmental Threat

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Mark Sircus. from Globalresearch, via Lew Rockwell:

“Meanwhile despite the international financial crisis pollution is still increasing as we continue to blanket the planet with mercury from coal fired electrical plants around the world. Mercury and thousands of other chemicals continue to be released in staggering tonnages and this is the real threat that we and our children face. Again they had most people worrying about the wrong thing – our old friend CO2.

Should we count the huge tonnage of Coke and Pepsi into our calculations of poisons released on earth directly into peoples’ guts?

Things are quite a bit different today than in 1918 when the last pandemic (first large experimental vaccine program) happened. Today people and our children are walking chemical time bombs. Diseases are accidents only waiting to happen and the triggers that will set us off get more fine-haired every year. The global catastrophe with chronic diseases like cancer, diabetes, heart and neurological diseases has more to do with chemical poisoning running head on into nutritional deficiencies; and the fact that too many have lost their souls and don’t know truth from untruth anymore than anything else.”

India Fears Effects of Dubai Meltdown

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After earlier assurances that the Dubai meltdown wouldn´t impact the Indian market much, top officials now admit in published reports that the Indian labor market could be affected.

“Annual remittances to India from UAE is about 2 billion US dollars, out of the $52 billion sent by Indian expats from across the world.Two-thirds of the six million people living in Dubai are Indians, more than 60 per cent of them Malayalis, much to the worry of Kerala’s Finance Minister T M Thomas Isaac.“One main fear,” he notes, “is that the credit to realty sector in Dubai would be frozen for some time. It could seriously affect the construction sector, thereby our workers.” There is also concern about the fate of Kochi’s Smart City project as the Dubai-based real estate giant TECOM is already alleged to be in a bad shape.Most of the Indians employed in the UAE, according to recruitment agencies, are in the real estate sector, financial services and retail.“The Middle East meltdown,” says E Balaji of Chennai-based headhunting firm Ma Foi Management Consultants, “will lead to at least 25 per cent contraction in the job market. It can have a ripple effect.”

My Comment:

I´m assuming that the job market refered to is the job market for Indians in the Middle East….

Meanwhile, the rupee has come under pressure as the Indian stock market sold off on the events in Dubai.

Rothschild Helps Dubai Put Assets On Auction Block

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From The Daily Telegraph:

“Paul Reynolds, head of Rothschild’s advisory operations in the Middle East, was this week asked to work for the Dubai government’s chief restructuring officer alongside Aidan Birkett of Deloitte, who was appointed on Wednesday.

The team is tasked with assessing the group’s assets, which is likely to result in a large scale sell-off of assets as varied as the QE2 cruise liner; Turnberry, the golf course that hosted this year’s Open Championship; and a raft of properties.”

My Comment:

This was the first I´d read about Rothschild´s involvement in Dubai, but it turns out Rothschild has been advising Dubai about the potential bankruptcy of Dubai World and its subsidiary Nakheel for a while.  The advice is in connection with the bond issue to funnel money to Nakheel through something called the FSF (Financial Support Fund), which will apply certain tests (equivalent to the US “stress” tests) to pick and choose which of Dubai World´s operations will qualify.

“Those seeking FSF cash will have to demonstrate they have a long-term plan for financial and commercial viability, not least because the cash will have to be repaid, probably within a three- to five-year time frame. …..

It is worth noting, too, that the Dubai financial sector appears to fall outside the Rothschild guideline of FSF eligibility. Although they are obviously a key part of ongoing economic development, the emirate’s banks are generally regarded as being in a comparatively healthy condition, well-capitalised and with acceptable levels of non-performing loans. But whether the Rothschild strategy would allow a big financial institution with a high real-estate exposure to qualify for FSF funding is open to debate.”

More at Global Reearch.

What´s interesting is that Dubai World´s real estate assets wouldn´t qualify, which means that a lot of expensive real estate, some of it in New York and London, is likely to be on sale for cheap, although Dubai itself is stating that it will not allow itself to be forced to sell its prize assets at what it considers unfair prices.

Now with Dubai´s own property prices already down 50-60% from their 2008 peaks (with another 20% to go), what´s a firesale in London or New York property going to do to prices already showing signs of entering the famous second dip?

The Culture of “Da Boyz”

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In a piece on Pamela Martens, the former Wall Street whistle blower,  who last year unearthed the black box of Markit, as well as the Primex dark pool, Stephen Metcalf discloses the culture of  “da boyz.”

Whistle-blower´s Grim Tale, Stephen Metcalf, The Observer, December 1, 2002

“The secret to Wall Street’s systemic chauvinism is simple: The Street is insulated against litigation and bad publicity. All employees at the major investment banks must sign a mandatory arbitration clause, effectively giving away their right to sue their employer. Claims are adjudicated in what amounts to an industry-controlled private justice system, by arbitration panels staffed overwhelmingly by white males in their 50’s and 60’s. In mandatory arbitration, no depositions are made public, and awards have ironclad gag provisions. So Wall Street can continue to smile, and smile, and be a villain. One anecdote in particular conveys the full horror of the situation. When two female Smith Barney employees complained of strikingly similar episodes involving a male co-worker, in which the man forced himself on them physically, the firm waited four years before conducting a hearing. “A week before the hearing,” Ms. Antilla writes, Smith Barney “forced the two women to undergo examinations by a psychiatrist of the brokerage firm’s choosing.” One of the women was subjected to a Gulag-quality interrogation. The grilling included “questions about her sex life, the opening of her gynecological records, and queries about her menstrual periods, her marital counseling, and her divorce. The psychiatrist even had copies of her therapy records.” The woman finally broke down when the psychiatrist asked her to recite in reverse order the names of the U.S. Presidents.”