European Business News (EBN), 96-12-13

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated December 13 1730 CET

CONTENTS

[01] German prosecutors outline details of conspiracy to get GM data

[02] UK clears CalEnergy's £782m bid for Northern Electric

[03] Waigel trumpets E.U. stability pact

[04] US criticises EU proposal for global trade talks

[05] Spain cuts key repo rate

[06] BankAmerica to cut jobs in Europe as part of restructuring

[07] E.U. commission to probe Thomson

[01] German prosecutors outline details of conspiracy to get GM data

But the prosecutors said they had been unable to find sufficient evidence of complicity on VW's part in acquiring the GM documents. 'The thought that anyone at VW could have been involved doesn't lead us very far, even though it has been in our minds,' said senior prosecutor Gerhard Andres.

They also noted that it had been impossible for them to quantify any damages to GM out of the case, making it legally difficult to file charges of fraud.

The prosecutors confirmed that Jose Ignacio Lopez de Arriortua and three other former GM and Opel employees have been charged with fraudulent misappropriation and disclosure of trade secrets.

'The accused planned to acquire business documents from the research planning production and purchasing departments with a view toward their planned joint move to VW,' the prosecutors said.

The prosecutor's office disclosed a broad range of data and plans that Lopez and the others allegedly took with them to VW and use in the course of their employment with the German carmaker. They said they have reasonable grounds to assume the commission of a crime and therefore can proceed with the prosecution of the case.

'They planned to acquire these documents, the use of which could be of interest to them,' the prosecutor's office said, adding that 'they kept the documents after their departure from General Motors and Opel in order to evaluate them in conjunction with their work for VW and thereafter to destroy them at least in part.'

The accused took lists of cost data for a number of GM car models, including big-sellers Corsa, Omega, Astra, and Vectra, the prosecutors office said.

They also took 'documents with the (cost) savings that were achieved (by GM) in 1992 and the purchasing strategy for new projects planned for 1993 and documents regarding new models and projects particularly in mini-car areas.'

The prosecutors also said that Lopez and the others took plans for GM planned modular production facility, code-named 'Plant X' and used them to prepare a study for a modern VW car plant in the Basque region of Spain which they called 'Plant B.'

Immediately following their move to VW, they had offices prepared in Wolfsburg, where VW is based, in which they made 'the necessary preparations to prepare presentations for VW with aid of the documents they brought with them from General Motors.'

[02] UK clears CalEnergy's £782m bid for Northern Electric

The British government cleared the US energy firm's offer when Ian Lang, president of the Board of Trade and Industry, announced he won't refer the bid to the Monopolies and Mergers Commission.

CalEnergy, a Nebraska-based power generator, launched a hostile bid for Northern, one of the U.K.'s regional electricity companies, on October 28.

In announcing his decision, Lang said CE Electric PLC, the CalEnergy majority-owned company through which the bid is being launched, had adequately addressed regulatory concerns, including maintaining Northern's financial status.

CE Electric and Northern both released statements moments following Lang's announcement, welcoming the news.

Northern shares, meanwhile, shot up on the news. The stock had been lower on the day with the rest of the London market but by 1123 GMT was up 40 pence, or nearly 7%, to 642.5 pence. The shares had been as low as 598 pence.

It's likely the shares will continue to push toward CalEnergy's offer price of 650 pence. That price was set on December 6, and CalEnergy said terms won't be improved again before the offer period closes December 20.

[03] Waigel trumpets E.U. stability pact

The pact aims at ensuring budget rigour among the countries that will adopt the single currency after January 1 1999. But the pact's key accord has been to agree figures for exemption from sanctioned fines should a euro- zone country fail to meet budgetary criteria.

This includes setting a high 2% of economic shrinkage, a sign that countries were facing extraordinary difficulties and should be exempt from fines for overspending.

A contraction of less than 2% would mean the sanctions would be levied, although the country in question would be able to plead its case in the event of a contraction between 0.75% and 2%. It would have to point to special circumstances in that event. A contraction of less than 0.75% would unambiguously warrant sanctions.

Although the stability pact is perhaps not as hard line as Germany had intimated it would like, it is nevertheless at the tougher end of sanction proposals, an analyst said.

Waigel said that the agreement is an important signal to the financial markets, and an 'important step on the road to economic and monetary union.' Although the pact negotiations had been 'hard', it was a 'successful' struggle, added Waigel.

[04] US criticises EU proposal for global trade talks

'Major trade liberalisation can occur within the WTO without having to wait for another global round,' Barshefsky told a press conference. She said if the WTO members had to wait for a new round every time they wanted to increase market access, nothing would ever get done.

Barshefsky said the information technology agreement that was approved during the Singapore talks is an example of market opening initiatives that can occur without another global round.

EU Trade Commissioner Sir Leon Brittan strongly supports a new round of trade talks in the year 2000 as a way of ensuring the WTO's momentum will be maintained.

Barshefsky outlined the schedule of the information technology accord at press conference. Participating countries, which currently number 28, will cut their first round of tariffs on July 1, 1997; every year following that will bring another round of tariff cuts until they're all gone by the year 2000.

'I hope that at a minimum we and the EU would accelerate our tariff cuts, that we wouldn't wait until the year 2000,' Barshefsky added. The agreement was touted as the WTO's biggest breakthrough since the wide-ranging free trade pact known as the Uruguay Round three years ago.

In addition to the information technology agreement, the trade ministers made substantial progress toward clinching a deal on opening up telephone services to foreign investment and competition around the world.

And they agreed a package of new studies into the viability of negotiating global pacts to simplify investment rules, prevent anti-competitive business practices and stamp out corruption in lucrative government contracts.

[05] Spain cuts key repo rate

The benchmark interest rate, set at regular seven-to-13-day repurchase agreement auctions, was cut 50 basis points to 6.25% from 6.75%. The central bank hasn't cut its key interest rate since October 3, when it was lowered 50 basis points from 7.25%. The key interest rate is Spain's main monetary policy instrument.

'The rate cut was dependent on the CPI,' says Jorge Sicilia, an analyst at research bureau Analistas Financieros Internacionales in Madrid.

'CPI came in at 3.2% which was unexpected...I think that puts the Bank of Spain into the mood to maybe cut more rates next year,' Sicilia adds.

Market expectations originally called for Spain's November CPI to show a 3.3% to 3.4% year-on-year rise, but with the better-than-expected figure of 3.2%, analysts are saying a 1996 year-end central bank rate cut of 50 basis points was more than justified.

Also, Spain's October CPI was up 0.1% in the month from September, bringing the year-on-year rate down to 3.5% from 3.6% in September.

[06] BankAmerica to cut jobs in Europe as part of restructuring

In the restructuring, the San Francisco-based banking and financial- services behemoth will close 120 branch offices in California, lay off about 3,700 of its 93,000 workers world-wide and reorganise units in Japan and Europe. A company spokeswoman in London said the job cuts will come mostly from operations in Europe, the Middle East and Africa.

Among other things, the actions signal a subtle shift from old-fashioned branch banking in California as BankAmerica plans to open more than 200 retail outlets, in places such as supermarkets. Internationally, it will shift its wholesale-banking activities toward emerging markets and step up its capital-markets activities.

BankAmerica is disappointed it isn't attaining its goals of percentage returns 'in the mid-to-high teens' in several areas, including its European and Japanese operations, said Tom Theurkauf, analyst at Keefe Bruyette & Woods Inc.

The company expects to complete nearly all of the restructuring moves next year, and to recoup the related costs -- some $280 million before taxes -- by the end of 1998 through cost savings. Those costs will be reflected in the 1996 fourth quarter and directly will reduce its financial results by $165 million.

In the 1995 fourth quarter, BankAmerica earned $704 million, or $1.74 a share.

Analysts said the moves also will help free up capital for share repurchases.

[07] E.U. commission to probe Thomson

The inquiry will probe French plans to recapitalize the state-owned consumer electronics company. The commission had previously been examining an 11-billion-franc ($2bn) recapitalization plan for Thomson, of which the lion's share was to go to TMM.

According to E.U. officials, the capital injection would have been approved at the commission's December 18 meeting. But last week's decision by the French privatization commission to veto the sale of Thomson SA to French defense and media conglomerate Lagardere SA dealt a blow to that plan, officials said.

'We were on the verge of something that if (the French) had taken it, we could have gone to the commission and authorized it,' one official said. 'Now we have doubts. We prefer to open an official procedure.'

The French government said earlier this week that it will sell Thomson SA in two stages, selling defence group Thomson-CSF early next year and the consumer-electronics arm at a later date yet to be decided. The government plans to inject about 10 billion francs into Thomson SA, most of which is due to go towards partially wiping TMM's debt.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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