The Irish Independent reports that the Competition Authority is believed to be looking into a complaint alleging anti-competitive practices by certain insurance brokers seething at the launch of a new website that promises to slash companies' insurance bills.
The new online insurance broking offering, www.cheaperinsurance.ie, was launched last week by McLaughlin & Greaney Insurances, a Galway-based brokerage which confirmed yesterday it had written to the Authority.
They plan, in time, to broaden coverage into personal lines and possibly into the UK and other markets.
The promoters say the site is a creative response to the Competition Authority's call for "greater openness, transparency and competition" in the industry. Insurance brokers have long hidden commissions charged, and not just in Ireland; the Financial Services Authority in the UK is threatening to force disclosure there.
Website clients will be charged a fixed-fee and no commission, and the promoters promise savings of €2,350 on annual premiums costing €35,000.
They argue that the website approach significantly reduces the costs normally associated with insurance broking - savings that will be passed on to business clients.
The insurance companies themselves do not appear to be opposing an initiative the promoters claim is unique in insurance circles.
McLaughlin & Greaney have, however, told the Irish Independent that some insurers requested to have their logos removed from the website.
A thumbs down was the general political response last night to the recommendation from the Government-appointed National Competitiveness Council that a property tax should be introduced, according to the Irish Independent.
With a maximum of 18 months to go before the next General Election, parties gave the proposal a frosty 'thumbs down', though the Greens said they favoured a site value tax which would cover properties other than domestic residences.
Government sources indicated the proposal was a non-runner, pointing out that "significant" taxes were already being raised for the Exchequer through stamp duty on houses and capital gains tax on the disposal of property.
PD president Michael McDowell dismissed the proposal out of hand, roundly rejecting the idea of a property tax.
He said: "We have a tax system here that is hugely pro-incentive to work compared to other countries."
And Tanaiste Mary Harney pointed out: "We raise €1bn a year in stamp duty on property taxation."
Fine Gael's Environment spokesman, Fergus O'Dowd, described the proposal as "daft".
He said: "Heaven help us if this is what Government think-tanks have to offer the property-buying public. A property tax would would push up the price of houses, fuel inflation and generate higher wage demands." Members of the NCC themselves disagreed profoundly when it came to taxation proposals.
The NCC says that the 'competitive' direct tax rates should be maintained, including our low rates of corporation tax, that the tax base should be broadened and that tax incentives for property investment should be phased out.
The two nominees of the ICTU to the NCC disagreed profoundly with any suggestion that they favoured proposals advocating low taxation and low public spending.
Paul Sweeney, economic advisor to the ICTU, also strongly disagreed with the EU Services directive, which he said would have a severe impact on the livelihood and prospects of many Irish workers.
The Irish Times reports that social partnership looked under increasing threat last night after Taoiseach Bertie Ahern said there was "no more" the Government could do to prevent Irish Ferries from implementing its controversial outsourcing plan.
Mr Ahern said he did not think the dispute at the company was going to be resolved, given its refusal to accept a Labour Court recommendation on the issue. "I think that's a pity. I think they should do that [sign up to the recommendation] and I think it will create difficulties if they don't. But I think there's no more that we can do."
The Taoiseach was speaking shortly after Siptu confirmed that ships officers at Irish Ferries had balloted to take industrial action in the event of the company unilaterally implementing its plan.
Siptu is in dispute with the company over its decision to lay off up to 543 unionised seafarers and replace them with agency workers from eastern Europe on hourly pay of €3.60.
The row threatens to derail the 18-year-old social partnership process.
Talks on a successor to Sustaining Progress had been due to begin last week, but unions say they will not take part in the absence of Government guarantees on measures to prevent displacement of jobs and exploitation of migrant workers.
Union leaders say it will be extremely difficult to secure rank-and-file support for their participation in talks if the Irish Ferries dispute is not resolved.
They had hoped Mr Ahern would follow up his condemnations of the company with action to prevent it from implementing its plan.
Various options, such as the possibility of withholding redundancy payments from the company or preventing it from reflagging its vessels, have been suggested.
Mr Ahern indicated last night, however, that none of these had proved viable. He had been saying for three or four weeks that he was open to people making suggestions, and a number had done so, he told The Irish Times.
The Labour Party, for example, had proposed a Bill designed to restrict the circumstances in which an Irish-registered vessel could be reflagged to another country.
"We have looked at that, but none of that seems to hang together that it will resolve the issue.
"The company is determined to go the way they're going and of course they have their staff who are prepared and waiting for their redundancies. And then they have this plan to bring in people below the wage, which is really the issue that I so fundamentally object to."
Mr Ahern was speaking in Dublin city centre prior to launching the Industrial Relations Research Trust.
Siptu ships officers balloted by 68 to 27 in favour of industrial action in the event of the company implementing the plan.
Irish Ferries says it will give two weeks' notice of implementation.
The Irish Times also reports stress and pressure that was allegedly due to bullying and caused an investment manager to resign his position at Goodbody Stockbrokers, also made him depressed, an employment appeals tribunal heard.
Addressing the tribunal in Dublin yesterday, Dr Gerard Waters said John Looby (36), an investment manager who is claiming unfair dismissal from the firm, was dejected and down after stopping work. "To me it was obvious that it was totally work related," said Dr Waters, who has known Mr Looby for more than 20 years. "He told me how he felt he had been undermined. He was flat and the effect was enough to make a diagnosis of depression."
Mr Looby, who along with two others was hired by Goodbody to run its elite high-risk hedge fund management project in August 2003, is claiming the behaviour of one of his colleagues, Michael O'Sullivan, forced him to quit his €124,000-a-year job.
Goodbody, which is owned by AIB and is Ireland's oldest broker, is contesting the case. It claims Mr Looby resigned of his own free will and refused other positions offered to him at the firm. The company is also alleging he timed his departure to avail of a €50,000 bonus, an award Mr Looby claims he had been entitled to since July. He resigned in October.
Under cross examination by Goodbody counsel Séamus Clarke, Mr Looby said bullying was what he associated with antics in the school yard and that what he experienced was more like abuse. He described five individual incidents over the course of four months where he believes he was intimidated by Mr O'Sullivan's "white anger".
Prompted by a so-called "dignity at work" conference at Goodbody, Mr Looby went to his boss Roy Barret to complain about the way he claims he was being treated. He told the tribunal he felt "disappointed" that Mr Barret did not resolve the issue and after a week's holiday in Wexford decided to leave. He has not worked since.
In response to questions by Mr Clarke, Mr Looby said he had no qualms about not going through the usual complaints procedure as his was a unique situation where three very good friends came into the firm together to work on a specific project. He told the tribunal he was not even aware of the group's complaints policy, as by this time he was operating "just as a shell" and simply wanted it to be over.
Also giving evidence at yesterday's hearing, Brian Gray, the third partner in the project, said he had known Mr Looby since 1988 when they both worked at NCB. He said they became good friends quickly and continued to spend considerable amounts of time together even after he moved to work at Montgomery Oppenheim.
In response to questioning by Mr Clarke, Mr Gray said the atmosphere between the three men was very good at the start of the project, though it deteriorated over time as Mr Looby did not put in as much work as the other two. Asked about the five incidents where Mr Looby alleges he suffered abuse, Mr Gray's accounts to the tribunal differed from those told by Mr Looby. He said they both knew that Mr O'Sullivan was a man who told it how it was, but that he had no recollection of him slamming doors or raising his voice as alleged by Mr Looby.
The hearing was adjourned to continue in January.
The Irish Examiner reports that Irish businesses will be hit by rising currencies and bad debts, according to a survey of exporters.
A survey for the Institute of International Trade of Ireland found that because many Irish firms are dealing in non-euro transactions they are at risk of losing out to fluctuating currencies. The institute’s president, Jim Somers, said less than half of Irish firms are carrying out transactions in euro.
“Most disturbing is the fact that 10% of those surveyed do absolutely nothing to manage foreign exchange risks,” he said.
The survey also found many firms are being hit by late payments, with 90% of companies experiencing difficult in getting paid. Some 40% of respondents experienced non-payment, with 14% claiming the resultant loss of revenue reduced export turnover by between 5 and 10%.
“Given the alarming statistics about credit risks from non-payment there is a surprising and disturbing lack of risk management in many firms,” Mr Somers added.
Most firms rated the services poor and said the quality had declined from the previous year.
Fewer than 20% rated the support level as good. One of the main reasons for the negative perception is the lack of information on export matters from Government agencies - only 44% reported receiving any information during the year.
The Financial Times reports that the European Commission will open legal action against the Italian central bank next month over its handling of recent bank mergers involving foreign bids, Internal Market Commissioner Charlie McCreevy said on Thursday.
“I have not signed the letter yet but I expect to do so before Christmas for the start of proceedings” against the Italian central bank, McCreevy told Reuters on the sidelines of a mortgage industry conference.
Dutch bank ABN AMRO complained to the European Union executive alleging that the Bank of Italy had illegally favoured a rival Italian bidder for Banco Antonveneta.
Antonio Fazio, the governor of Italy’s central bank which oversees bank mergers in the country, has dismissed accusations of favouring local bidders over ABN AMRO, and has ignored calls to resign.
McCreevy’s action would accuse the Italian authorities of contravening the free movement of capital and the freedom for businesses to set up shop in another member state.
The FT also reports that Morgan Stanley is paying $34.3m to three former senior executives who quit following a controversial management reshuffle this year.
Stephan Newhouse, who was president of the Wall Street bank, will get $17.4m in cash plus other benefits, Vikram Pandit, ex-head of institutional securities, will get $9m, and John Havens, former head of equities, will receive $7.9m.
The agreements bring to more than $200m the amount Morgan Stanley has paid to top executives who quit and those who replaced them during months of management turmoil.
In September, Morgan Stanley said it had paid $178m in exceptional compensation. This covered mainly severance packages for Philip Purcell, former chairman and chief executive, and Stephen Crawford, former president, and the contract for Mr Purcell's replacement, John Mack.
The size of the pay-offs was widely criticised and Mr Mack agreed to change the terms of his contract after protests from shareholders.
The packages announced on Wednesday, which have taken eight months to negotiate, are significantly less generous. Both Mr Purcell and Mr Crawford received roughly twice their previous year's total compensation.
In contrast, Mr Newhouse's $17.4m payment is roughly equal to his 2004 compensation while Mr Pandit and Mr Havens are getting payments equal to about half their 2004 pay.
The management upheaval was triggered by a controversial reshuffle in March, in which Mr Purcell made Mr Crawford and Zoe Cruz co-presidents, promoting them above Mr Pandit and Mr Havens and displacing Mr Newhouse.
All three promptly quit and were shortly joined by several other senior executives including Joe Perella, former vice-chairman, and Terry Meguid, head of investment banking.
Mr Purcell himself was ousted in June following a shareholder campaign.
Mr Crawford resigned a month later pocketing the $32m awarded to him under a contract negotiated on Mr Purcell's departure. Ms Cruz declined to accept such a guaranteed pay deal and remains at the bank.
Mr Pandit and Mr Havens recently set up a hedge fund and private equity group focused on India.
The New York Times reports that five months into his term as chief executive of Morgan Stanley, John J. Mack is stepping up efforts to add new businesses and possibly bolster his management team in the process.
Yesterday, Morgan Stanley severed ties with three former executives who were forced to leave the firm by Philip J. Purcell during his management shake-up earlier this year. Stephan F. Newhouse, a former president; Vikram S. Pandit, the head of the institutional securities division; and John P. Havens, who ran the equities division, signed agreements paying them a total of $34 million as part of their separation deal.
While making such a break with executives who some had hoped might return, Mr. Mack has picked up the pace in his search to acquire a hedge fund. He recently offered to buy FrontPoint Partners, a well-regarded hedge fund manager with more than $5 billion in assets, according to people who were briefed on the discussions.
Run by Philip N. Duff, a former chief financial officer of Morgan Stanley who is close to Mr. Mack, the acquisition would solve two major problems for Mr. Mack. Not only would it bring to the firm a fast-growing hedge fund business, incorporating FrontPoint would give Mr. Mack a senior executive with the outside and internal credibility to serve on his management team.
A deal was not consummated, these people say, largely because of an inability to agree on price.
At an investor conference this month, Mr. Mack spoke about his wish to buy a hedge fund. One way for Morgan Stanley to bridge the divide between its struggling retail division and its more prosperous institutional side is to offer retail clients sophisticated investments that appeal to higher-income investors.
Still, the uncertainty surrounding the status of Zoe Cruz, the acting president, has made it more of a challenge for Mr. Mack to attract the type of talent he says he needs for the firm to turn itself around. Morgan Stanley declined to comment, and Mr. Duff could not be reached.
Ms. Cruz, whose career at the firm was advanced by Mr. Mack, was appointed co-president by Mr. Purcell to fend off an internal revolt. While liked in some quarters, her hard- charging support of Mr. Purcell during the management struggle made her unpopular among those pushing for his ouster. Mr. Mack has publicly expressed his support for Ms. Cruz, but he has also declined to take the acting away from her title.
At the same time, he has reached out to a number of senior executives at other firms, gauging their interest in joining Morgan Stanley at a senior level.
Mr. Mack has also had numerous discussions with Laurence D. Fink, the chief executive of BlackRock, a fast-growing asset-management business. Morgan Stanley recently raised $600 million of the $800 million for a new closed-end fund to be managed by BlackRock. The two men are friends and talk frequently, and Mr. Mack has said publicly that he would like Mr. Fink to join the firm in a senior capacity.
But Mr. Fink, who was approached by the Morgan Stanley board as one of the first possible replacements for Mr. Purcell, is said to be happy running his firm. With its stock soaring and assets flowing into the company, Mr. Fink would seem to have little incentive to make such a move.
Mr. Fink declined to comment.
Of the three executives who received pay packages, Mr. Newhouse seemed the most likely to return. A respected international banker, Mr. Mack and Mr. Newhouse, who received a $17.4 million package, have had conversations about his returning to work with clients. But, having already been president, such a role would represent a demotion for Mr. Newhouse.
Mr. Pandit and Mr. Havens, who received $9 million and $7.9 million, respectively, are hard at work establishing their own firm that would be part hedge fund and part private equity venture. They have been in talks with investors and are expected to open their doors more formally early next year. Currently called Old Lane Management, the two men, together with other departed executives from the firm, Guru Ramakrishnan and Brian Leach, are working out of an office in the Seagram Building on Park Avenue in Manhattan.
Mr. Pandit, Mr. Havens and Mr. Newhouse declined to comment.
The NYT also reports that two United States oil companies, taking an unusual tack, filed arbitration proceedings this week against the government of Yemen for expropriating an oil-producing block with output worth more than $1 billion a year.
A venture owned by the Hunt Oil Company and Exxon Mobil sought arbitration before the International Chamber of Commerce in Paris, a rare instance of oil companies taking action in an international forum against a sovereign nation.
Last week, the Yemeni government said that a government-owned company would replace the American companies' venture, the Yemen Exploration and Production Company, or Y.E.P.C., as the operator of the area, known as Block 18.
"Unfortunately, Y.E.P.C. is now forced to respond to the Yemen government's failure to honor the sanctity of our legal contract by filing this arbitration," Ray L. Hunt, chief executive of Hunt Oil, said in a statement.
Sarah Tays, a spokeswoman for Exxon Mobil, said in a phone conversation from Austin, Tex., that "Exxon Mobil supports the position of Hunt Oil as the operator of Block 18."
At Yemen's embassy in Washington, Mohammed al-Basha, a spokesman, was not available for comment Wednesday. But on the Yemen News Agency, Prime Minister Abd al-Qadir Ba Jamal said last week that the government company would run the block for the next 20 years.
The partnership and Yemen entered into a 20-year production-sharing agreement in 1982, Hunt Oil said. Two years later, the venture discovered the country's first oil reserves of commercial significance.
A five-year extension to the original agreement was signed in 2004, but the Yemeni Parliament rejected that agreement in April, according to Dow Jones news wires. Hunt Oil, however, contends that the agreement went into effect Nov. 15, the day that its venture was replaced.
"Since 2004, Y.E.P.C. has invested millions of dollars at the direction of the Yemeni government," said Michael Goldberg, a partner in the Houston law firm of Baker Botts, which is representing the venture. "Up until Nov. 15, we fully expected that they would honor the contract. The government of Yemen had no right to take over this operation, and although we did not want to file an arbitration, they gave us no choice."
The Yemeni decision to replace the Hunt venture with a government-owned company may be linked to the recent surge in oil prices. With production averaging over 75,000 barrels a day, revenues from Block 18 would total $1.6 billion a year, at $58.71 a barrel, Wednesday's closing price on the New York Mercantile Exchange.
"The present oil price climate can put tremendous political pressure on more populist governments with regard to foreign investors," said James Loftis, a partner at the firm of Vinson & Elkins in Houston. "We've seen that recently in Bolivia and Venezuela, among others, and it may be the reason in Yemen."
Mr. Loftis is also the United States delegate to the International Chamber of Commerce's Commission on Arbitration.
A decision on an award by the International Chamber of Commerce's tribunal is expected late next year or in 2007. The rise in the number of arbitration cases by private companies against sovereign nations is a recent phenomenon, he said.
"For most of the modern period, it was rare for a private investor to seek arbitration directly with the state, usually because they had no right to do so," Mr. Loftis said.
Even so, although there are hundreds of cases in international arbitration, only a small portion of those are against sovereign nations, and a minuscule part involve oil, a commodity in the ground that a company cannot easily walk away from.
