US slaps broad new sanctions on Iran (AP)

By MATTHEW LEE, Associated Press Writer

WASHINGTON - The Bush administration imposed sweeping new sanctions against Iran Thursday — the harshest in nearly three decades — cutting off key Iranian military and banking institutions from the American financial system for Tehran's alleged support for terrorism and nuclear weapons ambitions.

In the broadest U.S. unilateral penalties on Iran since the takeover of the U.S. Embassy in 1979, the administration slapped sanctions on Iran's Revolutionary Guard Corps, a main unit of its defense ministry, three of its largest banks and eight people that it said are engaged in missile trade and back extremist groups throughout the Middle East.

Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson said the moves would further isolate the Islamic republic's government by further distancing it from the international economy and discouraging its trading partners from continuing to do business with it.

At the same time, they stressed that offers for negotiations with Iran over its nuclear program remain on the table and that the sacnctions are not a sign of imminent military action. The U.S. officials insist — over Iranian denials — that the nuclear program is a cover for atomic weapons development.

"Unfortunately, the Iranian government continues to spurn our offer of open negotiations, instead threatening peace and security," through its nuclear program, production and export of ballistic missiles and backing for Shia insurgents in Iraq, the Taliban in Afghanistan, Hezbollah in Lebanon and Hamas in Gaza, Rice said.

The United States has long labeled Iran a state supporter of terrorism and has been working for years to gain support for tougher sanctions from the international community aimed at keeping the country from developing nuclear weapons. It has won two U.N. Security Council sanctions resolutions but a third has been held up by Chinese and Russian opposition.

Rice, who also noted Iran's hardline anti-Israel stance, said the moves were part of "a comprehensive policy to confront the threatening behavior of the Iranians" but that Washington remains committed to "a diplomatic solution."

Other officials echoed that sentiment, maintaining the announcement is not a prelude to armed conflict with Iran despite concerns from some allies that the administration is building a case for war.

"In no way, shape of form does it anticipate the use of force," said Nicholas Burns, the State Department's No. 3 diplomat.

Instead, officials said they hope the measures will increase pressure on Iran to take a deal offered last year that would give the oil-rich country economic and other incentives in exchange for dropping nuclear activities that could produce a bomb.

In Tehran, the Guards' chief, General Mohammad Ali Jafari, shrugged off increased U.S. pressure on the force.

"Today, enemy has concentrated sharp point of its attacks on the Guards," Jafari told a military ceremony in Mashhad, east of Tehran, according to the state news agency IRNA. "They have applied all their efforts to reduce the efficiency of this revolutionary body. Now as always, the corps is ready to defend the ideals of the revolution more than ever before."

Israel, on the other hand, said it was pleased with the sanctions.

"Israel welcomes the U.S. government's decision," Foreign Ministry spokesman Mark Regev said in Jerusalem. "We see this as an important contribution to the international effort to intensify pressure on Iran to abandon its nuclear program."

Iran has ignored previous, smaller attempts to apply international and financial sanctions, and says the conditions Washington has set for talks are unacceptable. Iran is continuing work on its nuclear program, which it says is peaceful.

The sanctions target 25 Iranian entities, including individuals and companies owned or controlled by the Revolutionary Guard that play a major role in Iran's domestic economy and international trade. The are the first of their type taken by the United States specifically against the armed forces of another government.

In addition to freezing any assets they may have in U.S. jurisdictions, something officials acknowledged would be of minimal effect, the sanctions also bar Americans from doing business with them.

But of far greater impact, officials said, they will subject foreign firms to U.S. sanctions if they engage with the designated entities.

Paulson called on "responsible banks and companies around the world" to end relationships with the three banks and companies and affiliates of the IRGC and noted that because of the IRGC's reach into business and other spheres, "it is increasingly likely that if you are doing business with Iran you are doing business with the IRGC."

State-owned banks Bank Melli, Bank Mellat and Bank Saderat were named supporters of global terrorist groups for their activities in Afghanistan, Iraq and the Middle East. Along with Bank Sepah, which was already under U.S. and U.N. sanctions, the institutions account for more than 50 percent of Iran's banking sector, Treasury officials said.

"As awareness of Iran's deceptive behavior has grown, many banks around the world have decided as a matter of prudence and integrity that Iran's business is simply not worth the risk," Paulson said. "It is plain and simple: Reputable institutions do not want to be the bankers for this dangerous regime."

The Revolutionary Guard Corps and its Ministry of Defense and Armed Forces Logistics were designated proliferators of ballistic missile technology. The Corps, also known as the IRCG, is the largest component of Iran's military. The defense ministry entity is the parent organization for Iran's aerospace and ballistic missile operations.

The Quds Force, a part of the Guard Corps that Washington accuses of providing weapons, including powerful bombs blamed for the deaths of U.S. soldiers in Iraq, was named a supporter of designated terrorist organizations.

The Revolutionary Guards organization, formed to safeguard Iran's 1979 Islamic revolution, has pushed well beyond its military roots, and now owns car factories and construction firms and operates newspaper groups and oil fields.

Current and former members now hold a growing role across the country's government and economy, sometimes openly and other times in shadows.

The guards have gained a particularly big role in the country's oil and gas industry in recent years, as the national oil company has signed several contracts with a guards-operated construction company. Some have been announced publicly, including a $2 billion deal in 2006 to develop part of the important Pars gas field.

Now numbering about 125,000 members, they report directly to the supreme leader and officially handle internal security. The small Quds Force wing is thought to operate overseas, having helped to create the militant Hezbollah group in 1982 in Lebanon and to arm Bosnian Muslims during the Balkan wars.

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AP Diplomatic Correspondent Anne Gearan and Associated Press Writer Jeannine Aversa contributed to this story.

BP to pay $373 million in federal probe

By LARA JAKES JORDAN, Associated Press Writer

WASHINGTON - Oil and gas giant BP PLC agreed Thursday to pay $373 million in fines and restitution to end investigations into whether it manipulated energy markets and violated environmental laws, the Justice Department said.

Additionally, four former BP employees were indicted by a federal grand jury in Chicago on 20 counts of mail and wire fraud charges connected to the price-fixing scheme.

BP, Europe's second-largest energy company, will pay an estimated $50 million as part of an agreement to plead guilty for violating the Clean Air Act as a result of a 2005 explosion at its Texas City refinery that killed 15 employees and injured more than 170 others.

Additionally, it will pay $20 million in criminal fines and restitution to the state of Alaska and the National Fish and Wildlife Foundation for pipeline leaks of crude oil that polluted tundra and a frozen lake in Alaska.

The rest of the fines aim to punish BP for conspiring to manipulate propane prices.

Federal investigators have been looking at whether BP traders tried to pump up profits by cornering the propane market, driving spot prices in February 2004 as high as 94 cents a gallon in places like New York, Pennsylvania and Illinois.

Investigators alleged that traders at BP Products North America Inc. bought massive quantities of propane to be delivered over a pipeline that starts in Texas and then withheld supplies, forcing other buyers in the wholesale market to pay an unnaturally high premium.

The over-the-counter market includes trades conducted on the phone or electronically in products not listed on exchanges. In the end, BP did not profit because the financial benefits of the scheme were outweighed by the unexpectedly huge costs associated with carrying it out.

BP also is grappling with fallout of earlier problems, such as the Alaskan oil spill and the refinery blast that have resulted in ongoing higher maintenance costs.

BP told The Associated Press the company has cooperated with authorities and will continue to do so. It declined further comment.

Dissension Arises Over Chrysler Contract

By MICHELINE MAYNARD and NICK BUNKLEY for the New York Times
Published: October 16, 2007

DETROIT, Oct. 15 — There are signs of dissent within the United Automobile Workers union over a tentative agreement with Chrysler. Union leaders at Chrysler plants approved the contract Monday, clearing the way for a vote by the company’s 45,000 workers in the United States.

But the contract did not receive unanimous approval, unlike the deal between the U.A.W. and General Motors. And it turns out that the contract, reached last Wednesday after a six-hour strike, caused a split among the union’s bargaining committee as well.

Bill Parker, the president of U.A.W. Local 1700 in suburban Detroit, who was chairman of the bargaining committee, tried unsuccessfully to persuade other union leaders to reject the pact and send bargainers back to negotiations.

Specifically, Mr. Parker and other leaders were concerned that the contract did not provide enough assurances of future work at Chrysler, which was acquired in August by the private equity firm Cerberus Capital Management.

Highlights of the contract, distributed at the meeting Monday at Cobo Center, showed that the future of Chrysler’s minivan plant outside St. Louis appears to be in doubt.

The plant survived Chrysler’s most recent plant closing announcements in February, but the union said the future of the plant was “tied to volume,” meaning minivan sales. The union will “continue to advocate for new product.” Chrysler also builds minivans in Windsor, Ontario.

Elsewhere, the highlights showed that the union had agreed that four Chrysler plants could be converted to a new lower wage and benefit standard.

Tom Littlejohn, president of Local 1268 in Belvidere, Ill., was among the union officials who opposed the contract. “I’m not going to recommend ratification,” he said.

But Bob Vorell, a committeeman at Local 573 in Cleveland, said the agreement “pretty much mirrors the deal at G.M. I don’t think it will have much problem being ratified.”

The union’s president, Ron Gettelfinger, said he was not concerned by the dissent. “We give people an opportunity to express themselves,” he said. “We’re a very democratic union.”

Mr. Gettelfinger said that the union did “the very best that we could in this set of negotiations” and that he was “prepared to go out into the field” to urge workers to vote for the contract. He said the union hoped to complete much of the voting by this weekend.

The developments on the Chrysler contract came as G.M. released details showing that the health care trust created in G.M.’s contract stands to become the company’s biggest shareholder.

The trust would hold about 16 percent of G.M. stock, because of a convertible note that the company is investing in order to establish the trust. That level would make it G.M.’s biggest institutional shareholder, surpassing the State Street Corporation, which has about 13 percent of G.M. stock.

G.M. and the U.A.W. reached agreement on their contract on Sept. 26, after a two-day strike. Workers approved the contract last week.

It established the trust, called a voluntary employee benefit association and known by its acronym VEBA, that would assume G.M.’s liability for health care benefits for G.M. workers, retirees and their families. A similar trust would be established at Chrysler under its new contract.

Today, G.M. said the liability for its U.A.W. members was about $46.7 billion.

G.M. agreed to spend $29.9 billion to finance the trust. The investment includes cash as well as a five-year, $4.37 billion convertible note, which will be placed in the trust on Jan. 1.

The note is equal to 109 million newly issued G.M. shares at $40 a share. G.M. can convert the note after three years, or if G.M.’s share price reaches $48. G.M. stock fell $1.53, to $41.11.

The trust would be run by an independent board that is expected to include union and company advisers, although G.M. said it might not take part if that affects the accounting for its liability.

The chief financial officer of G.M., Frederick A. Henderson, said the VEBA “will be a very large shareholder of General Motors.” He said he would expect trustees to “vote the stock in the same proportion as all shareholders.”

MGM Mirage plans massive Atlantic City complex

By William Spain, MarketWatch

CHICAGO (MarketWatch) -- MGM Mirage is taking its building spree on the road, announcing Wednesday that it plans to construct a gambling, hotel and retail complex for $4.5 billion to $5 billion on land it owns in Atlantic City.

Before the start of trading,MGM Mirage said its board approved the project, to be called the MGM Grand Atlantic City. It will located on 72 acres of land it already owns adjacent to the Borgata, the company's 50/50 joint venture with Boyd Gaming.

Plans call for three hotel towers with more than 3,000 rooms, which would make it the largest such facility in the New Jersey resort town. It would also have the largest casino floor in the state, with 5,000 slot machines, 200 table games and a poker room, along with a 1,500-seat theater, restaurants and nightclubs, a spa, a convention center and 500,000 square feet of retail space.
"Our company has carefully considered the possibilities for our landholdings in Atlantic City," said Terry Lanni, chief executive, in the announcement. "We believe the success at Borgata demonstrates the eagerness for further evolution of the nation's second-largest gaming market."
The company added that the resort will be the city's tallest building and "dominate the architectural skyline."
Assuming it gets the go-ahead from state coastal regulators, MGM Mirage intends to break ground on the project next year with an opening slated for 2012. About 60 acres of the site will be used with 12 acres reserved for "future development, which may include a residential component."
Word of the project comes as New Jersey gaming regulators continue to probe the company's Macau joint venture with businesswoman Pansy Ho. She is the daughter of Macau casino tycoon Stanley Ho, who has long been dogged by allegations his gambling halls have been involved with organized crime. If the New Jersey regulators find her an unsuitable partner, MGM Mirage could be forced to either back out of the Macau project -- which is set to open in December -- or dump its holdings in Atlantic City.
Both Nevada and Mississippi have approved the company's relationship with Ho and Lanni has publicly expressed confidence that New Jersey will eventually follow suit.
The project is apt to be nicknamed "City Center East" after the $6 billion complex that MGM Mirage is currently building on the Las Vegas Strip, a development it bills as the largest privately funded construction project in history.

Sprint Wins Patent Case Against Vonage

Reston Firm Awarded $69.5 Million in Second Blow to Internet Phone Company

By Kim Hart
Washington Post Staff Writer
Wednesday, September 26, 2007

A federal jury yesterday ordered Vonage Holdings to pay Sprint Nextel $69.5 million in damages for violating six of its patents, prompting analysts to question whether the troubled Internet phone company could survive.

Vonage, which lost another major patent case earlier this year, said it would appeal the decision that sent its shares plummeting 33 percent.

Vonage must also pay Sprint a 5 percent royalty on future revenue, the jury decided after the three-week trial in U.S. District Court in Kansas. Sprint, which is based in Reston, said it planned to ask the court to permanently ban Vonage from using its patented technology, and District Judge John Lungstrum can triple the damage award if he agrees with the jury's decision that Vonage deliberately infringed the patents.

In a statement, Sprint said it was pleased with the verdict and viewed it as a "validation of the strength and depth of its patent portfolio."

Vonage's chief legal official, Sharon O'Leary, said the company's 2.4 million subscribers would not be affected. "Vonage has already demonstrated that it can keep its focus on customers and on its core business while managing ongoing litigation," she said.

Sprint's victory is the latest blow to Holmdel, N.J.-based Vonage, which lost a separate patent case to Verizon Communications in March. Analysts said they did not expect yesterday's verdict to affect Vonage's appeal in the Verizon case.

That verdict called for Vonage to pay Verizon $58 million in damages and 5.5 percent of its future revenue. Vonage's appeal is pending in the D.C. Circuit Court of Appeals.

An apparent delay in that court's decision has given Vonage additional time to devise a technology that does not infringe on Verizon's patents, according to several analysts. But the two cash-guzzling losses deepen the company's troubles as it struggles to maintain the confidence of customers and investors.

"Each case in isolation isn't the death knell for Vonage, but the accumulation of the two losses is pretty grim," said Rebecca Arbogast, regulatory analyst with Stifel Nicolaus. "It's a real one-two punch."

Richard Doherty, research director with Envisioneering Group, a market-research firm, said the two firms could reach a revenue-sharing agreement. "Sprint doesn't want those royalties as much as it wants access to those customers," Doherty said, adding that the decision gives Sprint more leverage in either reaching a settlement with Vonage, or acquiring the company, as was rumored earlier this year.

Vonage shares fell to $1.30, and trading was halted after news of the verdict. Sprint shares rose 13 cents to $18.43.

Millions hit by London Tube strike (Times Online)

Sophie Tedmanson

London commuters faced chaos this morning as a Tube strike by maintenance workers over pensions and jobs left millions forced to find alternative ways to get to work. But there was a glimmer of hope for passengers after the Rail, Maritime and Transport (RMT) union, whose members began a 72-hour strike yesterday evening, announced that talks to resolve the dispute would be held later today. Only two of the 12 Tube lines – which service the main parts of central London – were operating in full, causing travel chaos for most of the three million people who use the underground network. During the morning peak hour, massive queues formed outside bus stops, including at Victoria Station where the mood among commuters turned from frustration to anger at having to wait for packed buses. Police handed out street maps and encouraged people to begin walking or face lengthy delays for a bus.

“I’ve no idea why they’re striking or what this is all about - all I know is that they’re making life a misery for millions of people,” said Caroline Dyer, 33, an accounting assistant from Kent.

Transport for London (TfL), which has put on extra staff to cope with the demand and help people find alternative routes to work, said the disruption was “severe and unacceptable”.

“We share Londoners’ view that this disruption is intolerable, as it serves no purpose,” a TfL spokesman said.

About 2,300 workers from the Rail, Maritime and Transport Workers’ union (RMT) began 72 hours of industrial action at 6pm on Monday over fears of job losses and pension cuts by the collapsed tube maintenance firm Metronet. Metronet, a privately-owned group that maintains most of the London Underground train network, went into administration in July after running out of funds. The union said it will meet Metronet, Transport for London and the company’s administrator later today to try to resolve the dispute. The RMT general secretary, Bob Crow, said: “As a result of discussions last night with London Transport Commissioner Peter Hendy, talks will now take place.

“This is a positive development and we hope that Metronet and its administrator will now take our members’ legitimate concerns seriously.”

Trains ground to a halt on the following lines: Bakerloo, Central, Circle, District, East London, Hammersmith & City, Metropolitan, Victoria and Waterloo & City. The central part of the Piccadilly line was also suspended. There is a good service on the Northern and Jubilee lines, which are maintained by a different company. Passengers have been encouraged to use the Docklands Light Railway, which links Canary Wharf and east London with the City, National Rail services or buses. Advertising executive Chris Boys, who was waiting for a bus at Victoria station this morning, has only been working in London for a year but he already realised travel chaos was part of life in the capital.

“This is just what you go through, isn’t it?” he said. “It’s a pain in the a***, but I’m told it happens every year and you get used to it.”

“Even if I walk I’m going to be late, but I think my boss will be understanding. Everyone’s bosses should give them a bit of leeway this week.”

French lessons for UK's energy market

Nils Pratley (The Guardian)

French presidents come and go, but old-style state capitalism remains a fixture in Paris. Nicolas Sarkozy's personal intervention seems to have been the critical factor in forcing through the merger of Suez and state-controlled Gaz de France.

Suez chairman Gerard Mestrallet was protesting as late as last week that his company couldn't live without its water and waste division. Sarkozy disagreed, and Sarkozy prevailed.

In slightly shrunken form, Suez is just the right size for a merger with GDF, meaning it is just the right size for the French state's shareholding in the new €70bn (£47bn) entity to emerge at 35-40%.

Nominally, GDF is being privatised and a liberalising agenda is being pursued. In reality, the French state is gaining effective control of GDF-Suez, which will be the world's third-largest listed power company. It's a triumph for French nationalism and a defeat for the European commission, which would prefer energy markets in Europe to be freer and less dominated by corporate titans.

Sarkozy and the commission are on a collision course, but the French president will not be trembling. He is swimming with the tide in implying that free markets in energy don't work. This is an age when Russia, and specifically Gazprom, loom. Security of supply, not ensuring a good deal for consumers, is the worry in most European capitals and bigger is deemed to be safer. Sarkozy is doing what others would love to copy in creating a second national champion to operate alongside EDF, the electricity group.

The odd man out, of course, is Britain, which has long been in the commission's camp on liberalisation. Our regulators can produce a zillion statistics on how free competition has benefited UK consumers, but it's also a fact that our would-be corporate champions are lower-league players on the European stage. National Grid is obliged to shop in the US; Centrica has managed to acquire only unconnected bits and pieces on the continent.

In fact, the Suez-GDF deal illustrates very well how different leagues operate. As a condition of the deal, GDF has to sell its 25.5% stake in SPE, Belgium's second largest integrated energy business, because Suez owns the number one player. Centrica, which has 25.5% of SPE already, has the right to buy out GDF, so control should follow easily. But the value of SPE? About £515m, at the last count in 2005 - mere crumbs.

Political shenanigans in the French energy market may seem like a distant world when viewed from Britain. For most of the past decade, when North Sea oil and gas revenues were strong, that's been a fair stance. Now that imported energy is a greater part of the UK mix, we will see the other side of liberal markets. The balance sheets of companies in France, Germany and Spain will be needed to fund the next generation of energy investment in Britain.

Korean credentials

A fortnight ago, HSBC was said to be planning to pay $5bn-$5.5bn (£2.5bn) for 51% of Korea Exchange Bank (KEB). When the terms actually emerged yesterday, the price had risen to $6.3bn. What has happened in the interim?

Maybe only HSBC's greater desire to seal the deal. The bank has been eyeing South Korea, Asia's third largest economy, for eight years, and has been thwarted twice, most painfully when Standard Chartered snatched Korea First Bank two years ago. It doesn't want counter-bidders for KEB to emerge now.

HSBC could claim the price for control of KEB - about 1.8 times book value - is in line with other banking takeovers in Korea, but in this case the seller would seem to be desperate for any clean exit.

Lone Star, a US private equity outfit, has already seen two potential sales collapse because of an ongoing investigation into the legality of its original takeover of KEB in 2003. The key question is whether HSBC has a better chance than the others of persuading the Korean government to drop its demand that legal disputes must be settled before any takeover can happen.

HSBC's strategy seems to be to put its reputation as a top-notch international institution on the line and dare the Koreans to say no. "We believe we have the credentials to put ourselves in a very favourable light," said finance director Douglas Flint.

To concentrate minds, HSBC has set a deadline: if the deal is not done by the end of next April, it's off.

It's ballsy stuff, but HSBC shareholders will not be complaining. Almost any deal in Asia, even an expensive-looking one with a legal wrangle, will be welcomed after the bank's adventure into the US sub-prime market with Household in 2002. Market-savvy Korean politicians look a better bet than American junk borrowers.