24/10/2012 World Business Report

Those are the latest headlines. Now for the latest financial news

Hello and welcome. You are with World Business Report. The

headlines: An American dream turned nightmare. Rajat Gupta, the former

Goldman Sachs director, was today sentenced for insider trading.

And the slowdown catches up with Volkswagen.

And, after a turbulent day it on the markets, Asian shares are

Good to have you with us. Since arriving in the US, Rajat Gupta has

lived the American Dream, reaching the pinnacle of the corporate world.

He was the chief executive of the consultancy group and was on the

board of Goldman Sachs and Procter & Gamble, but in June he was found

guilty of insider trading. Today he returns to court to be sentenced

and faces eight to ten years in prison.

The American dream has turned into a nightmare for Rajat Gupta, a

well-known figure in the corporate world. He is to be sentenced for

insider trading charges. In June he was found guilty of sharing company

secrets he obtained as a director of Goldman Sachs with his friend,

the former hedge fund manager Raj Rajaratnam. With that information,

Raj Rajaratnam made a profit on the stock market. There is a rumour

that Goldman Sachs might look to buy a commercial bank. This was a

big discussion at the board meeting on whether we might buy a

commercial bank. This was one of the phone conversations played to

the jury which prosecutors used to illustrate their relationship. Raj

Rajaratnam is serving an 11-year prison sentence. This is one of the

first cases I remember where such a high-profile person was indicted

and convicted almost completely on circumstantial evidence - there

wasn't a single witness who took the stand who could testify about

the conversations where Rajat Gupta was apparently leaking confidential

information. More familiar with boardrooms than courtrooms, project

doctor was the chief executive of McKinsey and on the board of

Goldman Sachs and Procter & Gamble. Now some of his high-profile

friends have written to the judge asking for leniency. There were

some very prominent people like Bill Gates, Kofi Annan, and their

letters were, let me give you a sense of this guy be on his

business career, and talked about his humanitarianism. Then there was

another group of letters from family and friends that talked

about what a terrific person he was. Rajat Gupta it is the most

influential figure caught up in the government's crackdown on insider

trading over the last four years. When he appears before the judge in

this lower Manhattan court has, he will learn whether his high-stakes

relationship with Raj Rajaratnam has cost him his freedom.

In France, another rogue trader will get his day in court. It is

Jerome Kerviel's final appeal against his 2010 conviction on

charges of forgery, breach of trust and unauthorised computer use. He

was at the centre of the world's biggest trading scandal when he

lost 4.9 billion euros while working for society general in 2008.

Today's decision will determine whether he goes to jail or walks

free. It seems Europe's economic slowdown

has finally caught up with the huge and highly profitable German

carmaker Volkswagen. In a few hours it is expected to announce its

first quarterly fall for three years, down by as much as a fifth

in the last 12 months. The slump in demand for cars in Europe means it

has had to cut sales targets and production.

The grand plan for VW is that, in 2018, it will overtake Toyota as

the world's number one carmaker, turning out 10 million cars a year.

For the past three years it has driven up production, offsetting

the falling demand for cars in Europe with strong sales in China

and the States, but now it expects to sell 140,000 cars fewer this

year than it had originally forecast. It has cut production for

some models. That is worrying but not yet the crisis. It's no secret

what is going on in the world economy, especially Europe. We can

see the strain reflecting on car sales and shower rooms throughout

the region. The bottom line is that VW is in better shape than pretty

much all of its peers. The European car sales have fallen by 7% this

year. VW is on level pegging. It has sold just over 2 million cars

to date, the same rate as the year before. The chief executive of its

struggling rival, Fiat, has accused VW of bolstering sales for a policy

of deep discounts, fuelling a price war among European car

manufacturers. VW denies this but many others have gained the same

impression. They have gone on record as saying some European

carmakers will fail in the next three years, which will be good

news for VW in many ways because they can take up the slack, so you

can see the W being incredibly aggressive, to the anger of its

rivals. Unlike its cash-strapped peers, VW has a $20 billion cash

pile to help it Rideout the European downturn while continuing

to invest heavily in brands like Porsche. Few expected to Europe to

be much of a troubled at all in its drive to be the world's top

carmaker. The markets have been volatile in

Asia following sharp falls in the United States, and more bad news

for the Spanish economy spooked investors. Let's go to our Asia

Business Report in Singapore. The day started with heavy losses

across the board but things seem to have recovered in certain markets.

That's right. As you say, we saw a similar trend early this morning

when Asian markets from Tokyo to Sydney to Hong Kong opened as what

we sought overnight in the United States, but as you say, things are

starting to calm down, especially after we sought China's

manufacturing data coming in a lot stronger than expected. It showed

that business activity is still slowing down but things are

starting to improve, and that's great news for many of Asia's

economies because China is the largest trading partner for many,

including Japan and Australia, so currently most markets are flat,

and in fact Japan and Hong Kong seem to have reversed.

The another big story for Australia. They had data out which increased

speculation the Australian Central Bank might cut interest rates soon.

A that's after inflation data came and a lot higher than expected, the

cost of living rising almost 1.5% in the third quarter, and that's

prompted some analysts to speculate that the Central Bank may cut the

cost of borrowing from the current 3.25 % to 3% next month. They were

expecting to cut some time before Christmas, but they are now saying

the move might happen sooner than later, and that's been pushing up

the value of two Australian dollar - that has shot up against the US

dollar. Shares in Facebook rose 9% in after-hours trading yesterday.

It reported better-than-expected revenues for the third quarter, and

the company said it made a profit of $1.6 billion in the year to

September, slightly higher than the year before. What boosted

confidence was the news that Facebook is making more money from

advertising with an increase of 36%. It's said it has rolled up several

advertising products in the last quarter. Shares have sunk by about

50% since its stock market listing in May.

One of its trade mark not so secret events - Apple unveiled a smaller,

lighter version of the iPad as part of an overhaul of its range. It

goes on sale next month, aimed at warding off mounting competition in

the fast-growing tablet market from competing products from the likes

of Google, Amazon and Microsoft. We saw a fairly heavy fall in the