20/05/2014 World Business Report


20/05/2014

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countries. Those are the latest headlines from

:00:00.:00:00.

BBC World News. Now, for the latest financial news with Sally.

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Guilty as charged ` Credit Suisse is fined $2. 6 billion for helping US

:00:19.:00:27.

clients evade tax. And: The shocking statistic ` forced labour generates

:00:28.:00:30.

profits of over $150 Hello, and welcome. You're with

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World Business Report. I'm Sally Bundock. Also in the programme: The

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man who came in from the cold ` President Putin's plan to sell gas

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to China. But first: It's the first big bank

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to admit to tax evasion for two decades ` the Swiss lender Credit

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Suisse has pleaded guilty to helping some US clients avoid paying taxes

:01:00.:01:06.

to the US government. It's agreed to pay $2. 6 billion in a fine. The

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punishment is intended to send a strong message to other banks and

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quiet public criticism. Prosecutors there have been soft on financial

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institutions. The outcome was a victory for the

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Justice Department ` Credit Suisse is the biggest bank to plead guilty

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to criminal charges in the US in more than 20 years. US

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Attorney`General Erik Holder the bank helped American clients dodge

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US taxes. In the course of these activities,

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Credit Suisse desieved the IRS, the Federal Reserve, the Securities and

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Exchange Commission, as well as the United States Department of Justice.

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The bank went to elaborate lengths to shield itself, its employees, and

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the tax cheats that it served from accountability for their criminal

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actions. As part of the settlement, the Swiss

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financial giant won't lose its banking licence in the US, but its

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net profit will be reduced by $1. 8 billion in the second quarter.

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Credit Suisse chief xisk Brady Dugan said in a statement, "We deeply

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regret the past misconduct that led to this settlement. Having this

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matter fully resolved is an important step forward for us. We

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have seen no material impact on our business in the past several weeks."

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Mr Dugan already apologised in February to the US Congress. Then,

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law`makers rebuked the Department of Justice for failing to identify tax

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dodgers. The department now feels it's made big strides in addressing

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that. They're providing us with a great deal of additional information

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that will allow us to determine where those accounts went, how many

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accounts they had, some of the size of the accounts. There's going to be

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a substantial amount of information that we're going to get that will

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enable us to find out who the account holders are and take the

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appropriate action. But there's no question there's a

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bigger target here ` and that's the banks. There has been the perception

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that the US government has failed to crack down on the bad behaviour of

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banks over the last decade ` not least because of their role in the

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financial crisis. With this guilty plea from a major international

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bank, it's clear it's a perception they're trying to alter.

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That plush hotel, that cheap pair of jeans, that beautifully cooked meal

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` in some cases, it could be thanks to use of forced labour. New figures

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from the international labour organisation suggests illegal

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profits from the trade are as high as $150 billion a year ` two thirds

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of that figure comes from the sex industry, with the rest primarily

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from domestic work, agriculture and construction. In fact, construction,

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mining and manufacturing nets $34 billion in illegal profits for

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firms, according to the ILO. Agriculture remains one of the

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biggest offenders, although the overall profits are smaller `

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estimated to be at $9 billion. Despite attempts to crack down on

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modern`day slavery, it still exists in the home ` private households

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save $8 billion a year by not paying or underpaying their staff.

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The chief of the ILO's unit on fundamental principles and rights at

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work joins us now from Geneva. Good to have you on the programme. That

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is a shocking statistic ` $150 billion. The director`general of the

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ILO is saying, "We have to eradicate this evil. We have to make greater

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efforts to stamp this out." Easier said than done. How is that tackled?

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Indeed. Slave labour has absolutely no place in our society. We should

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be doing our utmost best to eradicate this as a matter of

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priority. Now comes the question of how to do this. This is one of the

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reasons that prompted the ILO to come up with this new statistic and

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to doing more surveys. We need to understand better the root causes `

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what is prompting victims to be trapped into forced labour? This

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report is one step in the right direction, which will enable us to

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guide governments and policymakers into more efficient policies and

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measures to combat forced labour, by prevention and by protection of

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victims. Also, a lot of this ` I mean, a lot of this is criminal

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activity, isn't it? More than half of these are women and girls, a lot

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of them forced into sex trade. How is that tackled? Because that is

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happening across Europe, UK, and Asia. Where do you begin? Prevention

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will be the most cost`effective way in trying to eradicate this

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phenomenon. A lot of effort needs to be going to pre`departure prevention

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by raising awareness of the most vulnerable, those are more likely to

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fall into the trap of forced labour. But we need, also, to be stepping up

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our efforts to protect victims, by giving them access to effective

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protective measures, by being more efficient also in enforcing the law

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in prosecuting those that are currently using forced labour and

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forced sex workers. It's really a combination of very efficient

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prevention measures and very effective protection measures of

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victims, and also getting those that are using forced labour to pay and

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compensate the victims. All right. Thank you for your time, from the

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International Labour Organisation. Of course, there is so much more to

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discuss. Unfortunately, we haven't got time at the moment. There's more

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on that story on our website. Let's talk about these two gentlemen

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` the heads of state of both Russia and China came face to face today at

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a summit in Shanghai. It's widely sprct expected that, over the next

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two days, they'll sign a huge deal on gas supplies. Under the deal,

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Russia would export to China 38 billion cubic metres of gas per year

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` equivalent of a third that it exports to Europe. Russia is keen

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for a second big gas market besides Europe. Would it spell a new era in

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Russian`Chinese relations? Increasingly, Chinese cities are

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becoming enveloped in smog, produced by the huge amounts of coal the

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country burns to drive its economy. It wants to import cleaner fuels,

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like gas. Russia is offering to supply approximately a tenth of the

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gas China needs for the next 30 years. To do this, Russia's Gazprom

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will deliver gas from felsds in the far east of the country via a new

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pipeline thousands of miles long. This plan goes back ten years, but

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has been held up by arguments over the price China would pay. Recently,

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however, Russia has seemed much keener to push the deal through. The

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crisis in Ukraine and the resulting tensions between Europe and Russia,

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including over gas supply, have, I think, increased from the Russian

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point of view, the political importance of demonstrating that it

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has a major long`term second market for its gas. The gas which China

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would get comes from the far eastern part of Russia and would not have

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been marketed in Europe, and so there's no question of countries

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there being deprived in future of the gas supplies they currently get.

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But some wonder whether Russia ` after striking a big commercial deal

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with China ` would aim to develop closer political ties. China is

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still on pretty good terms with the United States, pretty good terms

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with the EU, pretty good terms with a lot of African countries. Russia,

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after this Crimea and Ukraine crisis, has been caught isolated ``

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quite isolated. From the Russians' point of view, it is important to

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have some sort of support and ally from China. However, China, for its

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part, will have to wait a long time for the benefits of Russian gas.

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It'll take years for the new fields to be developed and for the pipeline

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to be laid, and the first gas would only arrive in China by 2018 at the

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earliest. A quick look at the Asian markets

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now: earliest.

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A quick look at the Asian markets In Japan, shares rose from a one`month

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low. Thailand's caught a lot of the attention. You can see a mixed

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picture there. In Thailand, the markets fell ` the bot weakened

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because of the situation emerging there.

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That's World Business Report. I'll see you soon.

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Thanks to Sally for that. We will get to the papers in a moment.

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First: Thousands of schoolchildren from England are beginning to

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commemorate the centenary of the First World War by taking special

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tours of battlefields in Belgium and France. The tours are part of a

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government`funded programme to

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