14/05/2014 World Business Report


14/05/2014

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World News. Now for the latest financial news

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and World Business Report. Accused of bribery, Chinese police

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accuse a British executive at the drug maker GlaxoSmithKline of

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ordering staff to bribe doctors. Back to work, South Africa's longest

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and most costly strike could finally end today as platinum workers look

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set to return to the mines. Welcome to World Business Report. In

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a minute we'll be heading live to Johannesburg to hear the latest on

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the miners strike. Accusations of bribery. Chinese

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police have accused a British executive at the drug maker

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GlaxoSmithKline of ordering his staff to bribe doctors in China. At

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a police briefing in Beijing, Chinese officials claim GSK's former

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head of Chinese operations, Mark Reilly, and two other executives,

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had ordered staff to commit bribery that bought in 'illegal revenue

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worth billions' of yuan. In July GSK was accused of allegedly funnelling

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up to three billion yuan, that's $500 million, through travel

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agencies to facilitate bribes to doctors and officials. GSK has tried

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to distance itself from the accusations in China, saying

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previously that it has zero tolerance for bribery. They claim to

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have zero tolerance for bribery and yet the second bribery charge being

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brought against an art of China. That is right. I just attended a

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briefing with investigators from China's economic crimes unit. They

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laid out their investigation, the findings of a ten month

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investigation very clearly, blaming GlaxoSmithKline from it impossible

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sales targets set by its London headquarters, through to its former

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China general manager, who ordered sales representatives to bribe

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hospitals, doctors and medical associations. Investigators have

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been pointing to a widespread systematic bribery used through the

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company. How is GlaxoSmithKline reacting to this latest accusation?

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They have not issued a response yet. It all along, they have been

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defending itself, saying that any problems with bribery were down to

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rogue employees. They took matters into their own hands to achieve

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sales targets. They have been distancing itself from these

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allegations through this 10`month investigation. It will be

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interesting to see how they respond to these quite, high`handed, very

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intense allegations that have come out from the Chinese police bureau

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today. Today South Africa's longest and

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most costly strike could finally come to an end. Platinum miners in

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South Africa have been striking since January demanding that their

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basic salary be more than doubled. The four`month strike has halted 40%

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of normal global platinum production. The producers say the

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strike has to date cost them $1.6 billion in lost revenues and

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employees have lost nearly $800 million of earnings. However, now

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the three main producers have made an offer directly to employees,

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side`stepping the AMCU union, which they say will see workers return to

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the mines on Wednesday. Lonmin, Implats and Anglo American say that

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many of the miners that live in the Eastern Cape have returned to the

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area, adding that most miners want to return to work. The South African

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police has deployed additional officers to the platinum belt as

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well anticipating a flood of workers today. So will we see a majority of

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the 70,000 strikers return to work today? That's a question for Lerato

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Mbele, she's live in Johannesburg for us now.

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If those workers return to work today, where does that leave the

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unions in South Africa? The big question is whether they will return

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to work. The mining companies have indicated that loopholes they have

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conducted, text messages they have received, and as you say, workers

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coming in their numbers back to the platinum mining area, the indication

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is that there is a willingness and they will buy workers to return to

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work, but last night it was characterised by writing and protest

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a lot of the supposedly reluctant workers who are locking their

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colleagues from coming back to work. That situation of violence and

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intimidation generally sets the tone for what is going on in the platinum

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belt, and whether or not workers can physically go back to work today is

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something that remains to be seen. It is quite tense, the situation in

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the area at the moment. As I was asking before, where does

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it leave the very powerful unions, such as AMCU, the producers have now

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approached the workers directly, trying to get them back to work.

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AMCU has dug its heels in, insisting that they want 1200 US dollars as a

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basic wage before they even discuss benefits and allowances. What the

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mining companies have done, negotiate directly with the workers

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and offered them a revised offer of 10% plus benefits. If workers to

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return to work, it obviously does incapacitate, in many ways, AMCU. It

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weakens them significantly, because it means they have not negotiated

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adequately for the workers, and they have not negotiated in a way that

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empowers Labour over management. Everything depends on whether or not

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we see mine workers returning to the shaft today, and then we will know

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whether AMCU has lost the moral ground, as well as the fighting

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power, to negotiate further. It's no secret the electronics

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business is a tough one and perhaps no company has been feeling the pain

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more than the Japanese giant Sony. Just how much red ink is being spilt

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at Sony will become clear in a couple of hours time when the

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company announces its latest earnings, but analysts are expecting

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a full year loss of more than $1 billion. Sony's chief executive

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Kazuo Hirai has reportedly offered to forego his bonus for the second

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straight year. Ashleigh Nghiem explains why Sony, once an

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indisputable market leader, is now struggling.

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Sony was once the king of consumer and electronics, but it has fast

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been overtaken by competitors such as Apple and Samsung. It is expected

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to book annual losses of close to $1.3 billion, despite ongoing

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restructuring of the firm, plans to cut 5000 jobs, and the $1 billion

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sell`off of its headquarters in Manhattan. The big drag on its

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bottom line has come from its TV and personal computer divisions.

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Prompting Moody 's to cut their credit rating to junk status this

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year. Part of the losses have been put down to one of costs linked to

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its decision to exit the PC business, and sell off its brand of

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computers. It has threatened to ditch its television division as

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well, a fiercely competitive set with slim margins. But so far the

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firm is resisting the move, and has split the unit into a wholly owned

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subsidiary. It could prove to be a executives, who could be forced to

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forego their bonuses for yet another year. Some may now be asking, why

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Sony is so different to other gadget makers, such as Panasonic and sharp,

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both of them have turned their fortunes around, and are back in the

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black after huge losses last year. A quick look at some of the news.

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The US authorities are seeking more than $3.5 billion from BNP Paribas

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to resolve state and federal investigations. The French bank is

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under investigation is for its dealings with sanctioned countries,

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including sedan and Iran. It could be the largest penalty for a

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sanctions violation ever and it is still being negotiated.

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Danone is in talks with Nestle and other potential buyers over the

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disposal of those of its medical nutrition division. Its eyes and

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expansion of its baby food business. It stands to raise up to 5

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billion euros from a sale. Britain's top share index hit its

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highest closing level since December 1999. The new higher was helped by a

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surge led by housebuilding stocks which have risen sharply this year

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on the back of a booming property market in the UK.

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Valeant Pharmaceuticals says that it will improve its $47 billion offer

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to buy US drugmaker Allergan. The maker of the Botox antiwrinkle

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treatment. They rejected the offer, but Valeant Pharmaceuticals says

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that it will announce a new offer on the 28th of May. It will hold a web

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cast for Allergan shareholders, therefore bypassing the board.

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That is all for this hour. We would get to the newspapers in a

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short while. First, a 59`year`old man has been arrested on suspicion

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of

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