FT : Corruption in the EU costs business €120bn a year, study finds

Corruption in the EU costs business €120bn a year, study finds

Corruption has increased since the sovereign debt crisis hit the eurozone and costs the EU economy about €120bn a year in lost tax revenues and foreign investment, according to a European Commission study.
The impact of rising corruption is having a devastating impact on business activity, the study found. A third of companies participating in a public tenders for government contracts have been prevented from doing so due to corruption, according to a Commission survey of European businesses.

The Commission’s report, which found that EU member states have continuously failed to address conflicts of interest between politicians and business, could taint the bloc’s image as a relatively clean place to do business.
Sixty-nine per cent of the 7,842 business surveyed by the EU said paying bribes and exploiting political connections were the easiest ways to obtain certain public services.
Countries under scrutiny in the wake of the eurozone crisis continue to have corruption problems, the study found, despite reform efforts mandated by Brussels.
Nearly all companies interviewed in Greece, Italy and Spain, for example, complained that corruption was widespread in their country.
Cecilia Malmstrom, the European commissioner for home affairs, said corruption was undermining democratic accountability in all 28 members of the EU.
“Corruption erodes trust in public institutions and in democracy, it undermines our internal market, it hampers foreign investment, it costs taxpayers millions, and in many cases it helps organised crime groups do their dirty work,” she said on Monday.
According to the survey, three quarters of EU citizens believed corruption was widespread, while more than half said that it had increased over the past three years. Companies were also asked whether they had been expected to pay a bribe.
“Trust in Europe’s leaders is falling because relations between business and the public sector take place in the dark, leaving citizens with questions about whose interests are being taken care of,” said Miklos Marschall, deputy managing director of Transparency International.
“To bridge the gap between politics and people, there must be greater transparency in public life and more public officials held to account for their actions,” he added.
Denmark, Finland, Luxembourg and Sweden confirmed their reputation for being clean, with very low experience of bribery and where perceptions of widespread corruption were below the EU average of 74 per cent.
In the UK, experience of bribery was very low, at below 1 per cent, but 64 per cent of respondents thought corruption was widespread in Britain.
Perceptions and actual experience of corruption were highest in Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece.

FT : UK ‘non-dom’ tax take rises 6%

UK ‘non-dom’ tax take rises 6%

Nearly 6,000 of the wealthiest foreigners living in Britain paid £178m for the right to exclude their overseas income from UK tax in the year to 2012, the largest amount raised from the tax charge since it was introduced in 2008. The increased take from the levy, which was 6 per cent bigger than a year earlier, provides further evidence of the UK’s appeal to the global elite, illustrated by a recent surge of foreign money into the London housing market. The preferential tax treatment of "non-dom" individuals – people who are not UK domiciled, usually because they were not born in Britain – remains controversial but is a big part of the UK’s attraction to foreign investors. The Treasury has recently pared back some of the advantages, notably by raising the annual charge from £30,000 to £50,000 in the 2012-13 tax year, for those living in Britain for at least 12 years. But advisers said the UK’s appeal had not been significantly dented. The increased tax charge will only apply to about 3,500 non-doms, according to Treasury estimates. Jenny Tozer, chair of the investment committee at Vestra Wealth, a wealth management group, said UK taxes on foreign residents were still fairly light relative to other jurisdictions. She said: "During the financial crisis France, Italy and Spain ramped up taxes on foreigners who own property, which has only increased the appeal of the UK." Property taxes in the UK are very low by international standards. The maximum rates payable even on luxury mansions in central London are generally below £3,000 per year. Ms Tozer said most of her clients saw the non-dom levy as a "rent" for the privilege of being in the UK but, "given the other advantages of residence, a price generally worth paying". The Treasury has recently announced plans to tighten the rules for "dual contracts", used by executives to exempt from the UK tax the income they earn overseas. It has introduced capital gains tax on property for foreign investors who are not resident in Britain, a group that does not include non-doms although they have been affected by the introduction of an annual charge for properties held in offshore companies. The number of individuals whose foreign incomes were sufficiently high to justify paying the £30,000 charge in 2011-12 represented just one in 20 of those describing themselves as non-dom in their tax returns. The reason most non-doms opted not to pay the charge was because the tax savings from excluding their foreign income from UK taxation would be less than the cost of the charge. The number of people that told the tax authority they were eligible for non-dom status increased by 7,000 to 123,000 in the year to 2011-12, the highest number since 2008-09. A far larger number of foreigners living in Britain are potentially eligible for non-dom status but have opted not to notify the tax authorities. In the first two years after the levy was introduced, the number of people who said they were eligible for non-dom tax status dropped by 16 per cent. Advisers said the fall reflected lay-offs by investment banks which employ many non-doms and a decision by many non-doms to opt out of the status, as they were insufficiently wealthy to justify paying the charge.

FT : SAC London team jumps to Moore Capital

SAC London team jumps to Moore Capital

A nine-strong team has joined Louis Bacon’s Moore Capital from the closed-down London office of SAC Capital, the hedge fund that pleaded guilty last year after a high-profile US insider trading investigation.
The joint move by SAC’s London-based team, confirmed by a Moore Capital spokesman, is the largest single transfer of staff from the fund manager to a rival since it agreed to pay $1.8bn in civil and criminal penalties as part of a settlement with US regulators in November.

In November SAC Capital, founded by the hedge fund billionaire and art collector Steven Cohen, also agreed to return outside clients’ money, effectively ending its existence as one of the world’s largest and best performing hedge funds and turning it into a family office managing its founder’s wealth.
Mr Cohen, who last year bought Picasso’s “Le Reve” for $155m at auction, has not been criminally charged as part of the insider trading probe, but has been accused by the US market regulator of not properly monitoring behaviour at his hedge fund. He has denied the claim.
A spokesman for Moore confirmed that two analysts and seven portfolio managers, were joining from SAC. They are Israa Al Bayaa, Nicholas Aldridge, Arjun Menon, Alexios Papaconstantinou, Bramen Singanayagam, Martin Stapleton, Louis Villa, Atallah Esptephan and Rahil Kuchiera.

FT : Malone in talks with CVC over F1 stake

Malone in talks with CVC over F1 stake

US cable billionaire John Malone has approached the principal shareholder in Formula One about buying a stake in the motor racing series, in a move that could radically alter the relationship between media companies and the owners of live sports rights.
The chairman of Liberty Global and Liberty Media has held preliminary talks with CVC Capital Partners, which owns about 35 per cent of F1, said people familiar with the matter. Any deal is expected to value the motorsport at more than $9bn including debt.

Mr Malone’s Liberty Global has spent almost $30bn on European cable assets in the past two years while Liberty Media group is the driving force behind a $61bn battle to control Time Warner Cable and consolidate US cable. Any move into sports rights ownership would give his expanding empire an advantage over rivals such as Rupert Murdoch’s News Corp, BT and others who spend billions of dollars to secure the rights to broadcast live sport.
It would also intensify the rivalry between Mr Malone and Mr Murdoch, who made an unsuccessful pitch to buy F1 three years ago. At that time, Bernie Ecclestone, F1’s 83-year-old chief executive, said the idea of a media mogul owning F1 was not a good idea. But CVC would welcome an exit as a way out of the legal imbroglio surrounding Mr Ecclestone, who is caught in bribery allegations.
The private equity group has made a hefty profit on its eight-year investment, sold chunks of its stake and taken dividends. But it has had to put plans to list the sport in Singapore on hold because of Mr Ecclestone’s legal wrangles in the UK and Germany. It has also been unable to implement a succession plan because Mr Ecclestone has shown no willingness to retire and has kept a firm grip on the business he helped shape.
Mr Ecclestone said: “If someone came along [with an offer], I think they’d do it.”
It’s not the first time F1, which boasts a global TV audience of about 450m viewers, has attracted interest from a media company. News Corp teamed with Exor, the investment firm controlled by the Agnelli family, to work on a bid for the company in 2011. News of Mr Malone’s interest in F1 was first reported by the NY Post on Monday
Any acquisition led by Mr Malone could be carried out through Liberty Media, Liberty Global or Discovery Communications, with the US businessman sitting on the board of all three companies.
Discovery Communications is spending $345m on increasing its stake in sports network Eurosport, which it plans to use to acquire second-tier sports rights. Liberty Global and Discovery Communications declined to comment.
“It depends what they want to do with it,” Mr Ecclestone said. “If they want to control the sport through TV, it’s probably not good. But what sounded stupid a few years ago may not be stupid today. The world is changing so fast.”
CVC bought F1 in 2005-06 from its lenders, investing nearly $1bn and using $2.5bn of debt. Since then, CVC has returned more than 5 times its initial investment through the sales of shares to institutional investors in 2012 and dividends.
Mr Ecclestone stepped down from the company’s board last month after being told he would stand trial in Munich on bribery charges.
His troubles stem from a former German banker confessing to receiving $44m from him and Bambino, an Ecclestone family trust, in the aftermath of F1’s sale to CVC. Mr Ecclestone has denied wrongdoing, saying he was “shaken down” by the former banker.

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: LYG -2.9%.

M&A news: JOSB -5.7%( in talks to purchase Eddie Bauer, according to reports; also Jos. A. Bank sends letter to Men's Wearhouse).

Select financial related names showing weakness: BCS -1.7%, ING -1.6%, PUK -1.4%, MTU -1.3%, DB -1.2%, UBS -1.2%, CS -0.8%.

Other news: GALE -7% (still checking), UNTD -4.6% (announces discontinuation of dividends), INO -3.9% (files for $125 mln mixed securities shelf offering), KIOR -3.4% (KiOR comments on EPA's proposed 2014 renewable volume obligations; KIOR says RFS support is necessary to continue the advancement and commercialization of renewable fuels), CPRX -3.1% (files to sell $100 mln of common stock), FEYE -2.3% (files for $700 mln common stock offering ), SNE -2% (still checking), VOD -1.9% (still checking), IMAX -1.8% (was mentioned cautiously in NYTimes story ), ARMH -1.7% (still checking), NUAN -1.5% (light volume; Oracle Health Sciences (ORCL) Works With Nuance to Voice Enable Clinical Trials), T -1% ( launches new prices plan for families on its best-in-class network), .

Analyst comments: MDVN -2.3% (downgraded to Hold from Buy at Needham), CCJ -3.4% (downgraded to Sell from Hold at Canaccord), BBVA -2.3% (downgraded to Hold from Buy at Societe Generale ), ZNGA -2.3% (downgraded to Underperform from Neutral at BofA/Merrill), SFY -2% (downgraded to Underweight from Equal Weight at Barclays)

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: SPCB +6.6%, RYAAY +5.2%, HLF +2.5%, GOLD +1.3%.

M&A news: ARTC +8% and SNN +0.8%(Smith & Nephew strengthens global sports medicine business through agreement to acquire ArthroCare for $1.7 billion), TWC +2.3% (Charter (CHTR) contemplating increasing bid for Time Warner Cable over $140 per share, according to reports)

A few social media names are seeing early strength: YELP +1.4%, TWTR +1.2%, FB +1.2%, LNKD +0.9%

Other news: GIG +10.4% (announced that its Custom Structured ASIC applications are establishing GigOptix as one the foremost providers of ASICs for cryptocurrency bit mining market), IPCI +8.1% (receives $3.1 mln from Par Pharmaceuticals; first profit-share payment on 15 and 30 mg generic Focalin XR sales), BEAT +5.6% (announces 'significant' patent Litigation Victory and the Acquisition of Mednet Healthcare Technologies), PDLI +4.4% (announces agreement with Genentech and Roche to settle litigation and arbitration; Genentech will pay a fixed royalty rate of 2.125% on worldwide sales of Avastin, Herceptin, Lucentis Xolair, Kadcyla and Perjeta ), NBG +4.3% (still checking for anything specific), CTIC +4.1% (announced that Karen Ignagni has been appointed a Director, effective immediately), TASR +2.9% ( set to join the S&P SmallCap 600), QIHU +2.9% (still checking), ALV +2.6% (still checking), TRP +2% (Final environmental review demonstrates Keystone XL 'should be approved'), NEM +1.8% (still checking), WTW +1.4% (positive Barron's mention), APU +1% (positive MadMoney mention), YRCW +0.5% (YRC Worldwide Successfully Closes $300 Million Debt Reduction), F +0.4% (following positive Barron's mention), GIVN +0.2% (receives FDA clearance for PillCam COLON in patients following incomplete colonoscopy ) .

Analyst comments: PANW +1.8% (upgraded to Outperform from Market Perform at Wells Fargo), PHM +1.6% (upgraded to Positive from Neutral at Susquehanna), COG +1.1% ( upgraded to Overweight from Equal Weight at Barclays), WFM +0.8% (upgraded to Overweight from Neutral at Piper Jaffray), AAL +0.7% ( initiated with a Overweight at Morgan Stanley), GS +0.4% (Goldman Sachs upgraded to Buy from Neutral at Guggenheim)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: SPCB +6.6%, RYAAY +5.2%, TASR +2.9%, QIHU +2.9%, ALV +2.6%, TWC +2.3%, TRP +2%, NEM +1.8%, SNN +1.3%, GOLD +1.3%, YRCW +0.5%, F +0.4%

Gapping down: GALE -7%, UNTD -4.6%, INO -3.9%, CPRX -3.1%, LYG -2.9%, SNE -2%, VOD -1.9%, BCS -1.7%, ARMH -1.7%, DB -1.2%, T -1%, AAPL -0.4%