news blog from Rebeca

Nestle, Rio Tinto lead on managing water risk

* Online Aqua Gauge assesses businesses’ water managementBy Deborah Zabarenko, Environment CorrespondentWASHINGTON, Oct 18 (Reuters) - Food giant Nestle Ltd and miner Rio Tinto are among the companies best placed to cope with water risks from floods, droughts and pollution, according to a new investment tool released on Tuesday.Geared to institutional investors, the Aqua Gauge released by the Ceres coalition of investors and environmental groups measures how well companies are prepared for water scarcity and water stress, which are forecast to worsen in coming decades.Consultants McKinsey & Company estimate a possible 40 percent global shortfall between forecast water demand and available supplies by 2030, Ceres President Mindy Lubber said in a telephone news briefing.”Few companies are fully disclosing their water risks to investors, nor are they taking measures to manage those risks,” Lubber said. “Investors need this tool.”A report accompanying the release of the gauge showed some companies leading the way, including Nestle, which has a customized water risk mapping tool, and Rio Tinto, which is working to put a financial value on water in mining operations.”Climate change and population growth will only add to water scarcity pressures,” Lubber said.The impact of water scarcity and water stress — what happens when demand for water exceeds supply or when poor quality restricts use — has already hit water-intensive companies and supply chains in Russia, China and across the southern United States, Ceres said in a statement.APPAREL, GAS AND FOODThe coalition said this has in turn affected:— Apparel-maker Gap Inc , which dropped its annual profit forecast by 22 percent after record drought devastated the Texas cotton crop, a major source for the company;— Gas producer Toreador Resources, whose stock price dropped 20 percent after the French government banned shale-gas fracturing, also called fracking, primarily over concerns about what the process does to water quality;— Kraft Foods Inc , Sara Lee Corp and Nestle, which all announced planned increases in prices to offset higher commodity costs caused by droughts, flooding and other factors.The gauge was created with input from 50 investors, companies and public interest groups with a collective stake of more than $1 trillion under management and lets users score a company’s water management against competitors.Jon Lukomnik, executive director of the IRRC Institute, which funds research on corporate responsibility, noted in a telephone news briefing that, on a recent trip to China, he saw presentations from two mainstream investment banks — HSBC and CLSA — that included water risk.”Why were these mainstream investment banks spending time, resources, personnel and money explaining water risk in China to us?” Lukomnik said. “It turns out that nearly 40 percent of China’s food production comes from water-stressed areas; 53 percent of China’s industrial output is in water-scarce regions. Water input costs for manufacturing are expected to rise by a factor of three to five times in just a few years.”Greg Koch, global head of water stewardship at The Coca-Cola Co , said at the briefing he would look to the gauge as a road map, noting that, because the company’s beverages are bottled locally for each community they serve, “the health of our business is completely dependent on the health of that community and that watershed.”Visible online at www.ceres.org/aquagauge, the investment tool lists key areas of corporate water management.

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Olympus scandal highlights board inadequacies in Japan

* Olympus case takes shine off recent steps to improve governanceBy Nathan LayneTOKYO, Oct 18 (Reuters) - The scandal at Olympus Corp triggered by accusations of improper payments has put a spotlight on what critics say is a key weakness of Japanese-style management: the lack of strong independent oversight on most boards.Japanese boards are typically stacked with insiders, and Olympus, a camera and medical equipment maker whose chief executive was abruptly dismissed last week, is no exception.Twelve of Olympus’ 15 board members are company executives, and one of its three outside directors failed to pass a test of independence set by top proxy voting firms.This structure, while common among Japanese companies, appears to have left the Olympus board vulnerable to groupthink when dissension and rigorous debate were needed most.”You have so many insiders, very few independent members and none of them is really in a position to challenge the decision-making of long-standing members of the board,” said Robert McCormick, chief policy officer at proxy advisory firm Glass Lewis & Co. “I think the CEO kind of came into that.”Olympus did not immediately respond to a request for comment for this article.Former Olympus CEO Michael Woodford has told media he believes he was sacked for questioning about $680 million in payments to financial advisers in the purchase of Britain’s medical equipment firm Gyrus in 2008, or one-third of the transaction price, and $600 million in goodwill impairment after other small acquisitions in Japan.Olympus says that Woodford was dismissed because of a clash of management styles and that it has carried out proper accounting and disclosure for the acquisitions.SHARES PLUNGEBut the relentless slide in the share price — it has lost 43 percent in the past three sessions — suggests investors are not satisfied with the company’s explanation and generally lack confidence in management.Chairman Tsuyoshi Kikukawa, who replaced Woodford as CEO, told the Nikkei newspaper on Tuesday that the Gyrus-related payment was closer to 30 billion yen ($391 million) and said losses at the domestic companies it acquired represented lapses in judgment on his part.But to some critics Kikukawa’s comments may only reinforce the notion that there have been few checks on his authority and may not silence criticism of the payments, which at 30 billion yen were still unusually high for an acquisition of that size.The lack of independent directors supervising management is one of the key factors behind Japan’s No. 36 ranking out of 39 countries on corporate governance in the latest survey by research firm GMI .Other propagators of poor governance include cross-shareholdings with business partners and a tendency for executives to hang on wielding influence in advisory posts even after they’ve retired from the board.The Olympus case may give the impression that governance is moving backwards, despite a series of steps aimed at improving the situation in recent years, including the Tokyo Stock Exchange’s requirement from this year that all companies have at least one independent director or auditor.”This is a negative step for corporate governance in Japan,” said Jamie Allen, secretary general of the Asian Corporate Governance Association based in Hong Kong.”There had been some hope that Japanese companies would take on not just outside directors but outside managers and that corporate cultures in Japan would be more open and international.”

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UPDATE 1-KKR, MBK bid for Samsung Group asset - sources

* Samsung providing 5 yr guarantees on revenue-sourceBy Stephen Aldred and Ju-min ParkHONG KONG/SEOUL, Oct 18 (Reuters) - Global private equity fund Kohlberg Kravis Roberts & Co LP and Asian buyout fund MBK Partners are among bidders for a majority stake in Samsung Group’s procurement arm iMarketKorea Inc , two sources told Reuters on Tuesday.Samsung Group said in August that it planned to sell a combined 58.7 percent stake in the non-core business, held by nine of its affiliates, in a rare divestment by the South Korean conglomerate. The bids went in on Friday.Goldman Sachs Group Inc has been hired to advise on the sale of the stake, which is valued at 372 billion won ($326 million) based on Tuesday’s closing share price of 17,650 won.An official for South Korean shopping mall operator Interpark Corp also confirmed it is heading a consortium which placed a bid.The Interpark group contains private equity fund H&Q, the sources said.An external spokeswoman for KKR could not offer an immediate comment, while MBK could not immediately be reached for comment. Goldman Sachs declined to comment.The sources declined to be identified as the discussions were private.The size of the stake could be smaller, as Samsung earlier said it might maintain an interest in Imarketkorea if buyers request it. That interest could be up to 10 percent, one of the sources said.Samsung set up Imarketkorea in 2000 to provide goods and maintenance services for business clients.The conglomerate is providing five-year guarantees to prospective buyers, to ensure two trillion won of revenue annually through Imarketkorea, one of the sources said.

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Singapore’s Komodo shuts global macro hedge fund

Komodo Capital managed about $40 million before it started returning money to investors. In 2008, it managed $120 million.The hedge fund manager, who earlier worked at Millennium Capital Management and Bank of America , said he hoped to start managing money again for clients from mid-2012.”I will continue to manage my own money which I have been doing since I started the fund, and I will be managing money on a number of platforms and also for several clients,” Cameron said.

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Deutsche Bank analysts see 40 pct Greek haircut

Politicians, including German finance minister Wolfgang Schaeuble have asked private creditors to Greece to accept steeper writedowns on their holdings than the 21-percent losses agreed last July.”A higher haircut for Greece can be engineered via three sources - a reduction in coupon, extension of maturity of the new bonds and a reduction in the principal amount,” Deutsche Bank said in its fixed income weekly note published on Monday.”For example, a reduction in coupon by 1 percent and a maturity extension by 10 years would result in an accounting haircut of 40 percent,” the bank said.This would still avoid a scenario of an outright default, and by using the existing agreement as a template, keep the governing law of the new bonds international rather than Greek, Deutsche said.Private sector initative “version two” would provide an opportuntity to clean bank balance sheets and stop short of a messy default at a time when eurozone banks are struggling to recapitalise, Deutsche Bank said.”A Greek PSI version two, along with a credible plan to recap banks would, we believe, provide a first step to isolate the financial sector from any potential contagion risks, as well as provide Ireland and Portugal time to distinguish themselves from Greece,” the note further said.Greece’s overall debt is forecast to climb to 357 billion euros ($491 billion) this year, or 162 percent of annual economic output — a level economists say is unsustainable.To reduce this mountain, euro zone leaders have been trying to convince banks to accept voluntary writedowns of up to 50 percent on their sovereign holdings. At the same time, they are trying to agree on a blueprint for recapitalising financial institutions at risk from the deepening crisis.

UPDATE 1-US candidate Romney reaps $14 mln in latest report

By Patricia Zengerle and Kim DixonWASHINGTON, Oct 14 (Reuters) - Mitt Romney raised more than $14 million for his presidential campaign in the third quarter, signaling the Republican front-runner’s fund-raising remains healthy despite big swings in opinion polls.Texas governor Rick Perry, who hauled in $17 million in the same period, is likely his only rival to top that figure. It was Perry’s first reporting period after a late entry into the race.The Republican race to take on Obama has had wild swings, though Romney has stayed near the top throughout. Perry’s entry caused a splash before a series of missteps, while pizza executive Herman Cain is leading some polls now.Still, Romney has taken the mantle of front-runner in many ways in recent weeks, solidifying support from a broad array of the Republican establishment and big time donors.Romney’s campaign on Friday also said the campaign had $14 million in cash on hand, with 83 percent of the donations in increments of $250 or less.Expectations had been that Romney and most other candidates in the 2012 election would pull in less cash than in the three months ended in June, when Romney took in $18 million.The third fund-raising quarter is typically weak, largely due to the summer vacation season.President Barack Obama’s campaign reported raising $70 million in the third quarter, including funds raised for the Democratic National Committee.The election is expected to be the priciest ever, with Obama expected to raise more than his record-breaking $750 million from 2008.After Supreme Court and other legal decisions loosening campaign finance rules, proliferation of outside spending groups with no contribution limits will add hundreds of millions of dollars in new cash.”Past a certain threshold, money is not going to be as decisive this time,” said Norm Ornstein, a scholar at the American Enterprise Institute.Cain does not have a large fundraising operation and raised only $2 million in the second quarter, but he could see a bump after a surprise win in a Florida straw poll and his advancement in national polls.

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Whiting Petroleum awaits N Dakota ok for pipeline

By Janet McGurtyOct 13, (Reuters) - Independent oil producer Whiting Petroleum Corp is awaiting state permission for construction of crude pipeline to replace trucks as a means of access to major crude markets for the growing amount of shale oil from its North Dakota Bakken fields, a state regulator said on Thursday.An administrative law judge will likely make his recommendations about the permit to the North Dakota Public Service commission by the end of the week, the regulator said.Construction of a more cost-effective seven-mile pipeline to connect field gathering systems would speed delivery to the pumping station the company is building in Belfield, North Dakota.Whiting Petroleum, based in Denver, Colorado, said in a presentation on its website it had proved reserves 37.2 million barrels per day of oil equivalent in the Rocky Mountain region in 2010.In late September, Whiting completed 11 wells in North Dakota which tested at an average flow rate of 2.3 million barrels of oil equivalent, the website said.The U.S. government estimates the Bakken Shale fields could hould as much as 3.65 million barrels of oil equivalent and could vault North Dakota alongside Texas as a top oil-producting state.The pipeline would allow greater access for growing production to three major crude markets for Bakken: Guernsey, Wyoming, Clearbrook, Minnesota and Tesoro’s High Plains Pipeline Company.The next scheduled meeting for the North Dakota Public Service Commission is Oct. 26 but the commission may convene earlier.”Whiting has said they want to start right away,” said the regulator who asked not to be named.The project has not met with any public protest, and there were no comments against against the project at Monday’s meeting.A spokesman for Whiting was not immediately available for comment.

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Kazakhstan curbs religious freedom to halt militancy

Nazarbayev, 71, has ruled Kazakhstan for more than 20 years as a secularist autocrat. Until this year, the 70 percent Muslim country largely avoided the Islamist violence seen in other central Asian ex-Soviet states like Uzbekistan and Tajikistan.But a suicide bombing in May and the arrest in August of a group accused of a terrorist plot raised fears of a surge in militancy, prompting Nazarbayev to call for the new law to help curb extremism.”The new law … more clearly defines the rights and duties of religious organizations and outlines the role of the state in strengthening the religious tolerance of our society,” Nazarbayev said Thursday during a visit to Shymkent, near the border with Uzbekistan where radical Islam is on the rise.”Peace and harmony in our multiethnic home are Kazakhstan’s most valuable patrimony,” he said. The comments were reported on his official website.The law, swiftly approved by the compliant legislature, has caused heated debate. Article 7 bans prayer rooms in all state institutions. Kazakhstan’s Supreme Mufti, Absattar Derbisali, said this could anger pious Muslims and spur extremism.The law also requires all missionaries in the country to register with the authorities every year.Rights groups in the West, including the Organization for Security and Cooperation in Europe, have raised concern that it may restrict religious freedom.Among recent measures to fight Islamist militancy, Kazakhstan temporarily blocked access to a number of foreign Internet sites in August after a court ruled they were propagating terrorism and inciting religious hatred.

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