International
Monday Newspaper Review - Irish Business News and International Stories
By Finfacts Team
Sep 11, 2006, 08:42

The Irish Independent also reports that nearly  five years after the launch of the much vaunted National Health Strategy, many of its promises remain unfulfilled.

The Irish Times reports that a major cross-Border investigation between Irish and British authorities has uncovered widespread social welfare fraud by asylum seekers and other foreign nationals may have cost the State tens of millions of euro.

Sources close to the investigation, called Operation Gull, said they have been "staggered" by the level and nature of abuses being detected.

Co-ordinated swoops on ports and airports in the Republic and Northern Ireland have revealed significant numbers of foreign nationals taking advantage of the common travel area between the Republic and the UK in a bid to defraud the Irish Exchequer.

When interviewed while entering the State from the UK, many were found to have already registered for social welfare benefits of up to €3,000 per month in the Republic.

They had left the country but had continued to be paid benefits into bank accounts. They were able to access their welfare payments from abroad via ATM machines. The authorities were unaware the fraudsters had left the State and so the payments were never stopped.

Many of those involved had attempted to travel back to Ireland via the more relaxed immigration controls in the common travel area after long periods abroad. Some offenders were found to be registered for benefits in the UK and other EU states under assumed identities. One Nigerian couple registered for benefits here were found to be running a four-star hotel in Lagos, where they were spending long periods.

In another case a foreign national woman living in Co Meath was claiming rent allowance and child-related benefits totalling almost €3,000 per month combined despite her husband working as a fully-qualified doctor in a Belfast hospital.

In recent months gardaí have uncovered cases, primarily involving Chinese nationals, where a child registered for child benefits in the Republic has been sent back to the care of relatives in China only for the welfare payments to continue to be paid here.

Operation Gull has been stepped up in recent months with the secondment to the Garda National Immigration Bureau (GNIB) of extra officials from UK immigration authorities and the Department of Social and Family Affairs.

It is only the second time in the history of the State that welfare officials have been seconded to a Garda unit. The first case involved the Criminal Assets Bureau.

Confirmed savings so far have reached almost €7 million under Operation Gull. However, this is based on the presumption that the average social welfare payment is for 32 weeks, as it is for Irish nationals. Many foreign national fraudsters detected had been claiming allowances usually paid for much longer than this. It is estimated the real savings run into tens of millions. Almost 1,200 cases have been detected to date.

The Garda portion of the operation has been run in the Republic by GNIB under Chief Supt Derek Byrne and Det Sgt John Foudy.

Teams of gardaí, UK immigration officials and social welfare officials have staged around 50 operations since Operation Gull began last year. Some operations at ports and airports have involved team members staying in place for up to four days and painstakingly checking the paperwork of foreign nationals and interviewing them.

The Irish Times also reports that the European Commission will sanction the State's decision to retain a significant stake in Aer Lingus under a deal agreed with the Government.

Internal market commissioner Charlie McCreevy said yesterday a draft deal negotiated in four meetings with Government officials should be legal under EU law.

The draft agreement means that the Government will need to rely on the support of at least one other shareholder to block the sale of slots at Heathrow airport. Initially, the Government had proposed that its retention of a shareholding of at least 25.1 per cent would enable it to block the sale of any of the lucrative landing slots at Heathrow. But it is understood that officials at the EU's Internal Market division insisted this would be illegal.

"If it had been what was originally proposed by the Government it would have been opposed by us," Mr McCreevy told The Irish Times. "The original plan brought to our attention would not have been cleared. I made this quite clear to the Irish authorities."

Mr McCreevy has been fighting a high-profile battle against the retention of "golden shares" by EU governments in state companies that are privatised in public flotations.

He has argued consistently against governments retaining special shares that give them the right to a decisive vote at a shareholders' meeting to the detriment of other shareholders.

"In the Aer Lingus case, the relevant department were aware of our concerns on this and after a lot of negotiation we reached an accommodation," Mr McCreevy said, on the sidelines of an EU finance ministers meeting in Helsinki.

"If it is reflected in the legislation and the firm's memorandum of association it will be satisfactory to us."

Government officials are understood to have accepted the compromise in the knowledge that the combined shareholding of the trade unions and the Government should be enough to block any move by management to sell the Heathrow slots.

The Government is concerned that if Aer Lingus sold its 21 pairs of slots at Heathrow - which are estimated to be worth €300 million - it might be more difficult for Irish passengers to fly to the airport for connecting flights. Heathrow is Europe's busiest airport by passenger numbers and the most important gateway to the US.

Mr McCreevy said that the draft deal with the Irish authorities did not amount to favouritism.

"I am very Irish as people know, but I treat everyone the same, whether it is Poland, France, Germany or Ireland," he said.

The prospectus for the sale of Aer Lingus is expected to be published tomorrow.

It will outline details of the specific conditions and shareholding votes that are required before Aer Lingus management can choose to sell slots at Heathrow airport.

The Irish Examiner reports that global warming, described by former United States President Bill Clinton and British Prime Minister Tony Blair as the greatest crisis facing humanity, presents opportunities for Irish agriculture to make a great contribution to national energy self-sufficiency.

Dr Eddie O’Connor, chief executive of Airtricity, the independent supplier of wind generated energy, made the claim at the Agricultural Science Association annual conference in Sligo at the weekend.

“Out of this looming catastrophe there is a need and opportunity to recast Irish farming and re-orient it so as to serve a whole new set of customers, at new levels of profitability in its own and the common interest,” he said.

Dr O’Connor said global warming killed 160,000 people last year. By the middle of this century it will have wiped out one million species. “The population of the planet could be halved by 2100 as large areas become susceptible to drought and others to flooding.

“The North Pole ice cap is retreating at 9% a decade and will be gone by the middle of this century along with all its habitats and unique ecosystems. The density of the water in the north Atlantic will change and no one knows what effect this will have on the Gulf Stream. If the ice cap on Greenland melts then sea levels will begin to rise and, if it fully melts, then sea levels will rise by several meters.”

Dr O’Connor said, at the same time as the explosive release of greenhouse gas happens, other factors are emerging to change life on the planet as people know it. The peak of oil is coming. The Chinese, believe it is happening now. Others, like some oil companies, believe it will happen in 2030.

“The person I believe is one Colin Campbell, living in Ballydehob, Co Cork, who has spent a lifetime in oil exploration and production as a geologist. He claims it will peak in 2012,” he said.

Dr O’Connor said Ireland, which imports 90% of its fuel, could make great strides to increase its wealth and competitiveness if it builds on the great strength of the country’s agricultural tradition. Instead of set-aside and growing food, people could grow energy crops.

Beet is a high (16%) yielder of sugar which can be turned into alcohol, which is directly substitutable for petrol as is done extensively in Brazil and in California.

Rape seed is a huge source of bio diesel and biomass. It grows well in Ireland and again it substitutes for propulsion fuel. But to make these two things happen, more State legislation and regulation is needed and more entrepreneurs need to take on and run with the businesses.

“The State can legislate that a certain escalating quantity of bio fuels be used in our vehicles each year. It can also adjust the tax on fuels to make bio fuels competitive, just as it did to introduce lead-free petrol,” he said.

Dr O’Connor said making bio fuels in Ireland would create jobs, reduce fuel imports, enhance rural wealth creation, increase the State’s tax take from more employment, benefit tourism from cheaper road fuels and result in gains for general manufacturing and service industry from fuel price stability.

The Financial Times reports that the dispute over the dumping of cheap goods from China on European Union markets continued to hamper economic relations between the two at a bilateral meeting in Helsinki at the weekend.

China's long-held demand to be awarded full EU market economy status went unheeded and José Manuel Barroso, president of the European Commission, spelt out four significant obstacles to the move.

Trade between China and the EU has grown rapidly to its current $255bn (€200bn, £137bn) a year but the relationship has been sullied by disagreements over China's dumping of cut price goods in Europe, such as shoes.

At the EU/China summit in Helsinki, which was attended by Wen Jiabao, China's premier, Mr Barroso said specific technical criteria had to be met by China before a decision could be made.

These involved the influence of the state, accounting rules, bankruptcy law and reform of the financial services sector.

"These are relevant to determining prices and costs in anti-dumping. Once these criteria are fulfilled, we won't wait a day," he told journalists after the summit.

Mr Wen praised the state of relations between the EU and China, but hinted at Beijing's growing frustration over the issue, saying that achieving full market economy status would "reflect mutual respect and equality" between the two.

Relations have also been strained by the issue of China's human rights. Mr Wen objected once again to the EU's policy of linking "economic and trade issues with the so-called human rights issues".

At the same meeting the two sides made limited progress over Darfur, where the crisis has worsened after the Sudanese government told 7,000 African Union peacekeeping troops to leave the country because of the AU's plans to hand over to a United Nations force at the end of this month.

China abstained in a UN Security Council vote authorising the transition to a UN force in Darfur, primarily because it buys oil from Sudan.

In a statement on Sunday the two sides said "leaders emphasised that transition from an AU to a UN-led operation would be conducive to peace in Darfur".

The EU also kept in place its arms embargo on China, imposed after the 1989 Tiananmen Square crackdown against pro-democracy demonstrators, but said it was "willing" to revisit the issue.

The meeting was held ahead of a two-day Asia Europe meeting (Asem). It was agreed on Sunday that the Asian side would propose India, Pakistan and Mongolia as new Asem members, while the EU side would nominate Bulgaria and Romania.

Meanwhile, Junichiro Koizumi has ended months of speculation by publicly backing Shinzo Abe to succeed him as Japan's prime minister.

Addressing reporters in Helsinki about the election of the Liberal Democratic party's next president, expected to be endorsed as prime minister by parliament on September 26, Mr Koizumi said: "I will cast my one vote for Mr Abe. He is a person who has not just looked on the Koizumi reform

The FT also reports that Jean-Claude Juncker, the political head of Europe's single currency, has called for an end to the public spat between finance ministers and the European Central Bank, and vowed to uphold the bank's independence.

After months of tension between Mr Juncker and Jean-Claude Trichet, ECB president, the Luxembourg prime minister used an interview with the Financial Times to say the sniping must stop.

“This Trichet-Juncker thing must be brought to an end,” the Luxembourg prime minister said in an interview marking his election to a second term as head of the 12-member eurogroup.

Although he claimed the media had exaggerated the dispute, he conceded that finance ministers had inflamed matters by publicly criticising the ECB's recent interest rate rises.

“I have asked ministers not to be too outspoken on monetary policy,” he said after a meeting of finance ministers in Helsinki. “I am a great defender of the independence of the central bank.”

His comments come at the end of a protracted public row between Mr Juncker and Mr Trichet – dubbed the “two Jean-Claudes” – over the extent to which the ECB should listen to the views of eurozone finance ministers in setting monetary policy.

It culminated on Friday with Mr Trichet and Mr Juncker debating publicly who deserved the title “Mr Euro” and with the ECB president pointing out that he was the one who signed single-currency banknotes.

The debate has split the eurozone. Mr Juncker, supported by France and the European parliament, believes the ECB should be more open to political dialogue in setting rates, while the Netherlands is among the most strongly opposed.

Germany, traditionally a staunch defender of the bank's independence, is today said by EU officials to be taking a more equivocal stance.

Mr Juncker said he would continue to press for regular informal talks with Mr Trichet to strengthen co-operation between the euro's political and monetary arms, but suggested he wanted to take the heat out of the debate.

“Both of us have said there is an excellent relationship and that co-operation will be intensified,” he said. “The idea the eurogroup has diabolic intentions to harm the independence of the ECB is totally wrong.”

Mr Juncker marked the start of his second two-year term by urging more discipline by finance ministers in their public statements, to give the euro a more coherent political voice.

“We are living in a democracy, and you can't stop ministers from talking, but I would like them to express themselves in line with the general atmosphere,” said Mr Juncker, who is his country's finance minister as well as the EU's longest-serving prime minister.

He reflected growing optimism among finance ministers that economic reforms were finally bearing fruit, and that the eurozone's strongest growth for six years was set to continue.

“In many countries labour market reforms have happened and the first fruits are there,” he said.

But he warned against complacency, insisting that single currency countries must use the good times to balance their budgets and reduce public debt. He said there should be no slackening in the pace of reform.

The New York Times reports that a Hewlett-Packard board meeting ended inconclusively yesterday, with no word on whether Patricia C. Dunn, the chairwoman of the technology company, would be asked to resign over her role in an investigation that dug up the phone records of company directors and journalists.

Hewlett-Packard said in a statement last night that its board would continue its conference-call meeting this afternoon and that the company would have nothing further to say in the interim.

A person with knowledge of some portions of yesterday’s board meeting said that there was a strong chance that Ms. Dunn — who recused herself from some of yesterday’s discussions — would have to step down. A company spokesman would not comment last night on that assertion.

For her part, Ms. Dunn has said that she has no intention of resigning but as “a servant of the board,” would do so if asked.

It was Ms. Dunn who ordered an investigation into the source of leaks from the Hewlett-Packard board to the news media, in 2005 through this year, over the events leading up to the removal of Carleton S. Fiorina as Hewlett-Packard’s chairwoman and chief executive. The investigators used a questionable, if not illegal, technique called pretexting, in which they posed as other people in order to get those people’s phone records. The California Attorney General is examining the events with an eye toward possible criminal charges.

Thomas J. Perkins, a venture capitalist who resigned from the Hewlett-Packard board in May because of his objections to the investigation, issued a statement on Saturday calling for Ms. Dunn to quit in order to serve the company’s best interests. “I think the past months and days have shown that those interests are best served if Ms. Dunn would resign from the board,” the statement said.

Several board members contacted at home Sunday declined to discuss the meeting. Hewlett-Packard released no other information.

A number of unanswered questions remain, most notably the identity of the private investigators that Hewlett-Packard used. The company has said that a confidentiality agreement prevents it from releasing the names, though the state prosecutors said the company had been “very cooperative.”

The turbulence on the board could provide Mark V. Hurd, who succeeded Ms. Fiorina as chief executive in April 2005, a chance to shape the membership and emerge as chairman. Mr. Hurd has told associates that in filling any vacancies, he wanted to have board members who were interested in the process of governing collaboratively.

The company has said that George A. Keyworth II, the director identified as the source of most of the leaks, will not be nominated for re-election this spring. But Mr. Hurd may be able to make changes before that, whether or not Ms. Dunn departs.

Robert P. Wayman, who has been Hewlett-Packard’s chief financial officer since 1984, has told associates that he intends to retire this year, though he could decide to remain on the board. Four of the 10 board members are retired executives.

Mr. Perkins, the director who resigned, has consistently held Ms. Dunn responsible for ordering the controversial investigation.

Ms. Dunn on Friday provided her version of events, saying that Mr. Perkins had been eager to catch the leaker until he discovered that it was Mr. Keyworth, his friend and the longest-serving board member. It was then, Ms. Dunn said, that Mr. Perkins did not want Mr. Keyworth’s identity as the leaker revealed.

The board sought Mr. Keyworth’s resignation, but he refused. Instead, Mr. Perkins resigned. Ms. Dunn said that Mr. Perkins did not raise issues about the investigation or the use of pretexting until later, more than a month after he resigned.

The NYT says what a difference a few weeks can make. As OPEC ministers prepare to meet here Monday, the question on their minds is not how high oil prices will rise, but how far they may drop.

Crude oil prices have fallen more than $10 a barrel in the last month, driving down the retail price of gasoline and providing some relief for consumers. While energy prices remain high, they have not risen to the heights that many analysts had feared, in part because of a light hurricane season this summer, the cease-fire between Israel and Hezbollah, and the fact that the United Nations has not imposed sanctions on Iran.

While there is no sense of urgency about oil price increases, some members of OPEC are beginning to express anxiety about further price declines. Nigeria’s representative, Edmund Daukoru, who currently holds the rotating presidency of the group, said Sunday, “I am very concerned about the drop in prices. We do not know how much further they can go and we need to review that in depth.”

Others are more optimistic. Ali al-Naimi, Saudi Arabia’s oil minister, said on Saturday, “Demand is very well satisfied — you read the numbers, you see the inventories rising. I think the market is very comfortable and very well supplied. We are very happy with the situation.”

Members of the Organization of the Petroleum Exporting Countries account for 40 percent of the world’s oil exports, and they have been pumping at maximum capacity over the last year in an effort to drive down prices.

It is unlikely that the OPEC ministers will alter at Monday’s meeting their current policy of keeping markets well supplied with oil. But some of them are beginning to think about whether to cut output next year, an effort that would be aimed at keeping prices from declining further.

One consideration is that a sharp infusion of new energy supplies is expected to hit the market from producers outside of OPEC. The biggest increases are likely to come from African producers like Angola, from Russia and from Caspian nations, and from unconventional sources of fuel like ethanol, biodiesel or liquefied gases.

“OPEC will have to cut supplies at some point, it’s a no-brainer, but not until new supplies come on the market,” said Deborah White, an energy economist with Société Générale in Paris. “There were forecasts for substantial non-OPEC supplies for 2005, but everything is running late and behind schedule.”

She added, “The only thing OPEC is capable of doing is setting a floor for prices, but not a ceiling.”

Like most oil producers, OPEC’s 11 members have struggled to catch up with rising demand in the last two years. For some, production has dropped because of armed conflicts, like those in Iraq and Nigeria; for others, lower production has stemmed from restrictive policies at home, as in Iran and Venezuela.

Still, oil prices have dropped. Crude oil futures on the New York Mercantile Exchange fell on Friday to their lowest level in five months. The light, sweet crude contract for October delivery closed at $66.25 a barrel.

Oil markets seem to have evaded predictions that the price would rise to $100 a barrel, but they remain at the mercy of sudden production interruptions. The hurricane season is only at the halfway point, the United Nations may still agree to impose sanctions on Iran, and Nigeria’s output remains crimped by violence in the Niger Delta region.

Oil traders have recently been encouraged by signs that the physical market — actual barrels that are traded — is oversupplied, helping bolster fuel stockpiles in the United States to higher-than-average levels and helping to push prices down. Commercial stockpiles of crude oil and products are 6 percent higher today than they were last summer.

Greg Priddy, an analyst in Eurasia Group’s Global Energy practice, said: “We’ve had two sets of factors moving in opposite directions: fundamentals are pulling the market down a little. But the political issues like Iran and Nigeria are still around.”

At a meeting in June 2005, OPEC set an official quota of 28 million barrels a day for all its members except Iraq, which has not had a production target for years. Since then, the group has met five times without changing its output goal.

OPEC members are currently pumping about 27.8 million barrels of crude oil a day, 200,000 barrels less than the quota. With Iraq, the group’s output is closer to 30 million barrels a day.

As a group, OPEC failed to anticipate the rapid growth in consumption from China and the United States, an oversight that contributed to a sharp increase in energy prices. Production disruptions in Alaska and the Gulf of Mexico, and geopolitical tensions in the Middle East, have increased fears of supply shortfalls in the global energy markets.

But just a few weeks ago, oil analysts and forecasters were issuing bleaker predictions still. The Atlantic hurricane season was expected to be as bad as last year’s; Iran, a top oil producer, was defying the United Nations over a nuclear research program; and BP was forced to shut down a major field in Alaska because of a pipeline leak.

Then there was a monthlong war in the Middle East, which sent oil prices spinning to their highest levels in three decades, almost $80. Gasoline prices soared in the middle of the driving summer season.

But just as suddenly, the bubble seems to have deflated.

So far, there has been only one major hurricane, compared with six at the same time last year, including Hurricane Katrina, which flooded New Orleans and shattered the offshore oil infrastructure in the Gulf of Mexico. The war between Israel and the Hezbollah in Lebanon stopped last month without escalating into a regional conflict. And the prospect of sanctions against Iran seemed further off Sunday, as Iranian and European negotiators appeared to make some headway in their discussions, which are also taking place here.

Of course, oil prices have tripled in the last five years. But when adjusted for inflation, prices have yet to reach records from the 1970’s, which would translate into more than $90 a barrel in today’s prices.

Regular gasoline averaged $2.68 a gallon last week, an 11 percent drop from last month, according to the Energy Department.