07/07/2014 World Business Report

his run of losses in major finals. Those are the latest headlines from

BBC world news. Now for the latest financial news with Sally.

Gold in a fix ` crisis talks on the future of the London benchmark for

gold prices. The money cycle ` the teams looking to cash in as the Tour

de France hits London. Hello, and a very warm welcome. You are with

World Business wap report. Also in the programme we will join our team

in Mumbai as the UK finance minister arrive there for trade talks. First

of all, for nearly a century, a handful of bankers behind closed

doors have set the world benchmark for gold prices around the world `

but perhaps not for much longer. A series of rate rigging scandals in

the Libor and foreign currency markets has sparked calls for

reform. The London gold fix is set by four banks currently, that's

Barclays, HSBC, society general, and bank of Nova Scotia. But in May

Barclays was fined by watchdogs for failing to stop one of its traders

trying to manipulate the price. It was concluded Barclays needed better

oversight of the staff setting this key benchmark but most now agree

much greater transparency is he needed in a system system to prevent

any future scandals. I'm joined by the partner of the consultancy firm

Fidelis. Explain to us how the current system works. It has been

around for a long time hasn't it? It has been going on for 1919. It was

five banks and now four, because Deutsche Bank, has resigned from the

panel. They meet every day and they decide what is the official price

for gold, at which transactions that gold miners and producers and buyers

should set ` should settle. And these transactions settle this

price, which is set behind closed doors, effectively on phone calls.

No`one else knows what's going on during these calls. So it is a very

opaque system. And where can the manipulation occur? Well, there are

several things going on in this market which are very peculiar. The

first one is that, as I said, there's only four banks that are

entitled to set this price. Four is a very small number in today's

world, with a very globalised financial system. The second thing `

so there is a potential for conclusion, that is one of the big

allegations which has been put forward in the US class actions have

been filed already. The second thing that is going on is that, as I said

before, there is a problem with owe owe `` opaquety of the market. As

you can imagine, there are gold investors worldwide going from

China, India, US, Europe ` they want transparency. They want to know

whether the price is correct. So very, very briefly, how will they

try and reform this? Well, the world gold council is meeting today to ask

for proposals to its members and other market participants on how to

reform it, long the lines of what I just said. So it's very possible

that they will reform the system in a very similar way to what has

happened with Libor, so there will be an independent administration of

the benchmark, there will probably be more transparency in terms of the

data on which the benchmark is set, and we will get more regulation. I

think the light touch regulation of the past is finished. All right,

Alberto Thomas, thanks for coming in. We will keep an eye on the

developments today as they progress. Now let's talk about another very

big event going on in London today ` the Tour de France is coming through

the capital. The cyclists will journey through Olympic Park and the

Mall to the end stage of the race. But the teams are under frommesh to

win funding for their support. They rely entirely on sponsorship to run

their teams, but many sponsors in recent years have pulled out so the

race is on ` to find new income. A drizzly morning in the Yorkshire

Dales and the nine riders of the Belkin team set off for a practice

session ` a series of gruelling hill climbs. While the cyclists tear up

the countryside, to the beamusement of some local residents, back at

their base camp in Leeds, 20 support staff are tending to the riders'

bikes ` and their welfare. You can see a professional cycling team in

the Tour de France like a travelling circus. You have mechanics, a

doctor, coaches, physiotherapists, a lot of people dealing with a team

like this. Sponsors spend up to $15 million a year for their cycling

teams. In return they get international exposure for their

brands. But sponsors can be fickle. Belkin, a consumer electronics firm

took over the sponsorship of this pro`cycling team last year, because

it wanted to boost its profile in European ` the stronghold of

cycling. But now it says it is seeking a global profile ` and

cycling, although it's extremely popular television viewers in

Europe, is hardly watched at all in markets like the United States. So

the team has to raise money from other sources, while it hunts for

new sponsorship. One idea has been to start a club for fans, like in

football. I would like to call it the seasoned card holder. So for our

team but also other sources of income like data rights, image

rights, portrait rights, the business club ` it's all providing

us with new sources of income. Because events like the Tour de

France are watched for free, cycling teams are currently completely

reliant on sponsorship. But teams like Belkin are beginning to change

the economics of international cycling with new, money`spinning

ideas to keep their sport on the road. Now let's talk about what UK

finance minister r George Osborne is up to today. He has arrived in India

ahead of trade talks with Prime Minister Narendra Modi. Now, so far

today he has toured a factory owned by tractor`maker Narendra. This

visit is a precursor to a visit by Prime Minister David Cameron later

in the year. Let's go to our correspondent in Mumbai for us. Just

tell us about the day so far ` how is George Osborne being received?

Well, the main objective of this visit, of course, is to establish a

relationship with this new government that has recently been

elected in India. Mr Osborne and, you know, also the foreign secretary

are among the first lot of senior members of Western governments to

visit India. Before this we've only had the French foreign minister

visiting India. Today they are here in the financial capital of India `

Mumbai. They are going to this factory, where it is going to be

announced that they are investing a lot of money in research for

electric cars. But another pharmaceutical major is also

expected to announce an investment in the UK. So those are the two big

announcements expected today. But after that, they are meeting

business leaders here in Mumbai and also the governor of the central

bank here. Very quickly ` how is he being received? Well, you know, we

have been scanning through the newspapers here today and there

isn't really much excitement about this visit. It is not really being

reported, you know, in a huge way. Tomorrow, of course, they are going

to be in the capital, deli, they will meet the foreign and finance

ministers before meeting Prime Minister Narendra Modi but as of now

in India it doesn't seem like there's great excitement about the

visit. OK, thanks very much indeed for joining us. Other stories: In

France, trade unions have threatened to boycott a two`day summit with

President Francois Hollande and business leaders. Francois Hollande

is relying on a huge deal to push through spending cuts in order to

meet union rules. 40 billion Euros of business tax cuts in exchange for

a promise for firms to create half a new million new jobs. Unemployment

is at a recording 2. 4 million so the unions are demanding guarantees.

The Chinese premierier has signed a deal to buy 100 helicopters from

Airbus. The contract was signed in the great hall of people, in the

presence of Angela Merkel. The germ man Chancellor is set to prioritise

economic ties during her state visit. China is Germany's biggest

trading partner outside of Europe. The head of Spanish wifi service

provider Gowex has resigned after admitting he falsified company

accounts. Gars I cannot Martin said the firm would file for bankruptcy.

An independent report by goth ham City research first flagged the

suspicion of inflated revenue last week. It posted a 28 million Euros

profit last year whilst competitors were making losses. That's all from

World Business Report, I will see you soon.

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

but first a climber in the Peak District has discovered iron Age