The sheriff threatens to strike Syria

 

People against war: Supporters of the anti-war group Act Now to Stop War and End Racism (ANSWER) Coalition participate in a rally in Washington DC, in opposition to a possible US military strike in Syria. – EPA

For nearly all countries including the US, a military attack on Syria will only make things worse.

TEN years after US President George W. Bush attacked Iraq, his successor Barack Obama is set to do it with Syria.

A secular Muslim autocrat in West Asia, Iraqi President Saddam Hussein, was accused of possessing weapons of mass destruction (WMDs) so he “had” to be removed. Back then, Senator Obama had accused Bush of an unjustifiable and unnecessary war based on a flimsy pretext.

Now a secular Muslim autocrat in West Asia, Syrian President Bashar Assad, stands accused of using chemical WMDs. No evidence against Bashar had been presented before Washington’s decision to punish Syria.

Obama’s supporters may say it is a little different this time – just a little, though not much. Saddam’s case involved accusations of WMD possession, while Bashar’s involves accusations of actual use.

But what real difference is there once the bombs begin to drop? The arguments and circumstantial “evidence” so far are insufficient to support even a misdemeanour in a civil court, let alone a serious action such as war.

Just as the so-called evidence against Saddam’s Iraq was false, the same may be said of the case against Syria so far.

At a time when the US needed to convince the international community to support action against Syria, no evidence against Bashar had been offered. It nonetheless seemed sufficient to get Washington on the warpath again.

The White House says there is no doubt that Syria had used chemical weapons, but doubts persist. The Syrian government insists it did no such thing.

The issue concerns allegations of chemical weapons use in an area controlled by rebel forces just outside Damascus on August 21. The result – about 1400 civilian deaths.

Critics of military action ask why Syria had agreed to a UN arms inspection if it had just used banned chemical weapons, why it should target civilians including children who were not against it, and why it should do so knowing the likely international consequences. They also question the reliability of the evidence linking the incidents to the Syrian government, and the credibility of the source of the alleged evidence itself.

At the same time, motives also exist for falsifying evidence to blame Syria, so that US military action would weaken or dislodge Bashar. The beneficiaries are within and outside Syria.

The strongest “evidence” against Damascus comes from Israel, specifically Unit 8200 of the Israeli Defense Forces that supposedly intercepted the Syrian military’s electronic communications. According to Prof. John Schindler at the US Naval War College, Israel then fed this information to Washington and London for follow-up action against Syria.

Bashar’s Syria is the latest Muslim country in West Asia to be undermined by Israel, following Iraq, Libya and Egypt. In quietly promoting Western military action against these countries, Israel need not spend a single dollar or risk a single soldier’s life.

Western countries inclined to military action often find they have to depend on Israel. They lack the kind of intelligence information on the ground that Israel has, regardless of whether that information is trustworthy.

This also happens to benefit various militant groups hoping to seize power after Bashar – up to a point. Israel expects them to disagree among themselves and neutralise one another as Syria disintegrates, leaving the door open to Israeli interests.

In a US poll on Friday, 52% of respondents believe that once Bashar falls, Syria would be split. Over the medium and long terms, Israel would be the only beneficiary of another dismembered Muslim nation.

Within Syria, the considerable but still limited military strength of the various opposition groups has meant an armed stalemate while Bashar remains in office. The only factor likely to make a difference is Western military intervention, if that could be “arranged”.

On Thursday, an Associated Press news report said Washington remained uncertain where Syria stored its chemical weapons. US intelligence officials acknowledged that proof of Syria’s use of these weapons was still unclear, and that they were even less certain of Bashar’s guilt than they were of Saddam’s.

On the same day, a report released by the British government revealed that London did not understand why the Syrian government would want to use chemical weapons as alleged. Yet Britain was prepared to support the US position that Syria was guilty, nonetheless.

Meanwhile, the overwhelming majority of international opinion is set against military action. This includes the general populations in Britain and the US.

The US Congress is divided on the issue and insists that its prior approval is needed, while the British Parliament on Thursday voted to oppose military action. But US officials have said none of this would change their plans.

Russia says no evidence exists of chemical weapons use, much less to link the Syrian government to such use. China says the UN Security Council should not be pressured on deadlines to approve any action before UN inspections are complete.

UN Secretary-General Ban Ki-moon appealed for calm and for enough time for UN weapons inspectors in Syria to complete their job. Their mission ends this weekend.

Former chief UN arms inspector Hans Blix, in a similar situation a decade ago when the US had already decided to attack Iraq, now questions the right of any country to attack Syria even if it had actually used chemical weapons.

Despite the international ban on chemical weapons, no international law obligates any power to attack a country for the use of WMDs. The US itself is not restrained against its first use of nuclear WMDs.

The official US line is that “punishing” Syria is not intended to topple Bashar. In the heat of hostilities, however, nobody can guarantee there would be no regime change, especially when US forces meet with resistance and risk international embarrassment for not achieving anything substantial.

The US case for an attack also claims the “immorality” of Syria’s alleged chemical weapons use. But the moral argument is defeated when an attack could result in more civilian deaths and suffering than the supposed use of chemical weapons.

The International Committee of the Red Cross has warned that any action that escalates the Syrian conflict would only result in more civilian suffering. Unesco said the looting of Syria’s rich cultural heritage had already begun.

White House spokesman Jay Carney insisted that logically, there was no doubt about the Syrian government’s guilt. But logic remains the biggest impediment to the US argument.

Attacking another country can be legitimate only in a case of self-defence or when approved by the UN Security Council. The latter requires endorsement by all the UNSC’s Permanent Five members.

A US attack cannot cite self-defence because Syria did not attack the US. Neither will there be UNSC approval, since Russia and China are likely to vote against.

Nonetheless, the US proceeded to attack Iraq in 2003 even after China abstained. Obama may now outdo Bush by attacking Syria when both Russia and China object.

US bombs may also hit chemical weapons stockpiles, releasing poison gas and killing many more people. But then only Syrians would be affected.

Obama’s standing in the Muslim world has declined considerably since its height with his 2009 Cairo speech. Where actions speak louder than words, that decline is also happening in the developing world in general.

BUNN NAGARA is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia

China's peaceful rise is not forever

China’s dilemmas in domestic and foreign policy

CHINA is already the second biggest economy in the world, on the cusp of becoming the largest in the not too distant future. With the world’s largest population and formidable military capability, it is more powerful than the Soviet Union ever was against the United States.

Yet, China is reticent about its success at home and role in the world. It would rather be left alone to continue with its “peaceful rise” to attend to many domestic challenges and to develop relations abroad without undue disturbance. But no power and economy its size can hope just to carry on the way it has these past three decades.

Although millions have been brought out of a-dollar-a-day poverty, over 100 million of its people still live on less than that. China’s per capita income is still less than those of nine African countries, according to LSE economist Danny Quah.

Its Gini coefficient, the measure of income inequality, has for the past decade been consistently above 0.4, the UN determined danger point for social stability (A score of one spells absolute inequality, so the lower the number the better it is). Development with equitable distribution is not taking place efficiently, whether among individuals or regions, the western parts of the country being still far behind the east and coastal areas.

Corruption is extensive which the high profile Bo Xilai trial only highlights. The ills of economic growth with disproportionate gain for some are becoming a plague on China. To add to this, environmental degradation has become a serious problem. The pollution level in 74 Chinese cities, including the capital Beijing, is over three times above the danger point set by WHO. It has been estimated life expectancy at birth in China is shortened by between seven and 12 years because of environmental deterioration.

And, against all these challenges of economic success, economic growth is slowing, a conundrum Chinese authorities have to further manage. Western authorities and economists now seem to move from fear of China to fear for China. Paul Krugman sees a crash into the Great Wall of the Chinese model of development. Having over-extended credit, the economy’s debt-fuelled asset bubble is about to burst, exposing large non-performing loans. Yet others see what economist Arthur Lewis described as the inexhaustible supply of cheap labour drying up which he claimed was behind the economic miracle of China and other emerging economies. Of course there is the usual call for China to restructure its economy, to switch from an investment-driven growth to a consumption-driven one, from export-led to domestically-charged expansion – if China is to avoid being caught in the middle income trap.

Ageing population

To boot, the population is ageing as a result of the one-child policy; so China will not reap the demographic dividend, a virile young population driving further growth and not a dependent, unproductive old one. All the time it is intoned that China’s underlying socio-political stability will be undermined if economic reforms are not put in place, together with reform of the political system.

The advice is not disinterested, even if China’s domestic challenges are truly huge. China must find a way out for itself and not be in denial because some the criticisms and cures offered by the West are not honest or consistent. If China is ageing, then the mantra of having to have at least 8% annual economic growth to absorb the work force coming onto the market does not hold true. Then, at least on this count, China’s slowing economy is not a catastrophe.

Those that will be hurt are other emerging and even Western economies as China has become an engine of global growth. Indeed many Western economies themselves are ageing. Then again, if China is to divert resources away from investment to consumption, how about those in the far west still on less than one-dollar-a-day who need to be linked to become part of a larger consumer base? What about bridging the wealth and income gap by providing the investment essentials to them of a better quality of life?

Thus, there is more than meets the eye on the advice proffered. But, there is also truth in some of them which should not be denied. China must make the balancing choices, an essential part of the management of any political economy. The new leadership is struggling to come up with a new national ethic. This is nowadays a difficult process in the globally democratised age of the IT revolution. Every netizen seems to have an opinion. It is not going to be as straightforward as Deng Xiaoping’s Four Modernisations or the Central Party School’s Peaceful Development, then to Rise and now back to Development, I think.

No.2 and growing

Even as China grapples with these momentous issues, the impact of its size on the world is not something that can be, shall we say, postponed. China is No.2 and growing. It could become Sparta to America’s Athens, rising Germany to stable old Europe, a challenging Japan denied status in the Pacific world, or a hostile Soviet Union seeking to overturn the established world order.

While most, not everything depends on the United States. China has a global role to play. How it is played will define how China is perceived as well as the outlines of the new global and regional order.

China cannot any longer avoid the role it must play by seeking to be left alone in its peaceful rise. Or by being insular and petulant in its foreign policy. Self-righteousness will be a defeatist strategy. It certainly cannot be a policy. Already, its nationalistic impulses have had negative ramifications, as can be seen from its territorial sea disputes in East and South-East Asia. China cannot be seen as attempting to assuage domestic pressures and challenges with international assertion and adventure.

China is not always in the wrong of course, but the way it conducts its foreign policy makes it appear not to be in the right. In South-East Asia, the benefits of its policy of economic cooperation since the 1997-98 financial crisis are not sufficiently underlined as the positive plank of foreign policy. Rather China retreats in hurt pride and spurned affection – and then comes out in anger. Beijing does not quite know how to turn swords into ploughshares. There is too much angst and emotion. This could be observed in the Scarborough Shoals stand-off with the Philippines last year, when the Philippines was not exactly innocent, but China came out as the bullying party. It could be seen even in the failure of Asean foreign ministers to issue a joint communiqué in July last year, widely observed as a consequence of Chinese mischief in tandem with their Cambodian ally.

But, what would have happened to Asean-China relations if an anti-Chinese communiqué had been issued? This is a point that has not been sufficiently advertised, with every commentator tearing his hair out about this first ever Asean failure because of Chinese machination.

Communication issue

It is often said China lacks soft power communication skills. Actually, soft power should be left out as an analytical tool here. China simply has to understand it has to communicate effectively, not intone. It has to develop the skills of subtle diplomacy as well as the ability to make foreign policy with a strategy to achieve its end. With that clarity and ability, China can avoid being wrong-footed, as in the South China Sea disputes, and being undermined after having invested so much economic goodwill.

The American pivot or rebalance to Asia-Pacific drew China into the purely political-security aspect of the US reassertion. China began to act as of it had some kind of Monroe Doctrine right over South-East Asia, just as the Americans claimed in Latin America. This was great power stuff, whereas China has always contended it does not have any such pretensions. President Xi Jinping had discussed with Barack Obama last June in Sunnylands about a “new type of great power relations.” Since then there has been much speculation on what that is all about. It is just G2? What about other relationships in any new world order?

The genius, perhaps unintended, of the US pivot and subsequent American initiatives is in their economic content while highlighting political and security matters in Asia-Pacific relations. In the sweep, previous Chinese economic advantages could be contained. After announcement of the pivot, former US Secretary of State Hillary Clinton led or participated in a number of business meetings in the region involving senior American corporate leaders, an association not often the case in US diplomacy. More senior American corporate leaders are actually represented in visits of the US-Asean Business Council to the region than previously.

Very importantly, American initiatives such as the Trans Pacific Partnership (TPP) and also, on the other side of the world, the Trans Atlantic Trade and Investment Partnership (TATIP), underline the basis of economic relations in significant and dominant blocs of the world. They represent the strengthening of the Washington consensus, if one examines the trade and investment rules being espoused.

Indeed they also seek to repair rules that have been violated to protect interests such as intellectual property, investment rights and financial flows. Fundamentally, these initiatives have significant geopolitical consequence. As I have written previously, the Americans are not about to roll over and die against a rising China. Their palms are still wrapped around the globe.

When I asked a senior Chinese official during a visit to Beijing earlier this month why China has chosen not to participate in the TPP, the answer was: It would only benefit the big countries and their big companies. When I suggested it would be better to participate to shape the rules that will govern trade and investment relations of the future, the answer was China’s Free Trade Agreements had worked well to the benefit of the member countries. The proposed Regional Comprehensive Economic Partnership (RCEP), which is a massive multilateral expression of such free trade agreements, is of course China’s preferred route.

Wrong turns

It would appear therefore that in terms of strategy in international politics, China would rather let the Americans make the running. Let the United States expend its “American exceptionalism” while China has the absorptive capacity of the Middle Kingdom. However, time may not always be on China’s side as it had been in the past. China has serious domestic problems with a discerning and demanding populace linked to the global democratic marketplace.

China has made a number of wrong turns in the conduct of its foreign policy which may make the Americans a more attractive strategic proposition. This is not the world where China will be left alone to get on with it. Better that China participates more actively in the making of that world even if it does not wish to upset it.

COMMENT BY TAN SRI DR MUNIR MAJID

Get 'smart’ pill is just sugar! What science are they teaching in schools?

The 'smart pills' sold in school are nothing more than just sugar.

PETALING JAYA: The pill that can supposedly make children “smarter and more obedient” is nothing more than sugar, said the Malaysian Medical Association (MMA).

According to its president Datuk Dr N.K.S. Tharma­seelan, upon analysis, it was found that 95% of the pill marketed as Dimensi 108 consists of sugar and other carbohydrates.

Herbs constituted only 7.5mg, or 1.5%, of the 500mg pill, he said.

“Although some of the herbs have been used in traditional Chinese medicine, the amount in this pill is minuscule to be of any use.

“In conclusion, Dimensi 108 is just a sugar pill with a tinge of herbs,” he said in response to The Star’s Thursday cover story which reported that schools in several states have been pushing the pills to pupils.

Dr Tharmaseelan called for the sale of the pills to be stopped immediately until the manufacturer can substantiate its claims through proper studies.

The Dimensi 108 pills were alleged to be able to “alter” children’s behaviour to make them more obedient and resistant to illnesses, and its listed ingredients include red dates, water lily seeds, rock sugar and spirulina.

Tiga G Dimensi Satu Kosong Lapan Sdn Bhd’s managing director Omar Mohd Yusos had claimed that the pills supplied by his firm were safe, and that the product had been distributed to schools since 2010.

Consultant psychiatrist Dr Ting Joe Hang said the notion of popping pills to make children more obedient was preposterous, and there was no drug in the world that could do that.

- Contributed by  By YUEN MEIKENG  meikeng@thestar.com.my/Asia News Network

What science are they teaching in schools?

I REFER to “Schools push ‘magic’ pills” and “Get smart pills are safe to be consumed, says firm” (The Star, Aug 29 - Malaysian schools push 'magic' pills!)

I’m sure in the coming days the reports will elicit many and varied responses from all the concerned stakeholders.

I am disturbed in particular by the “explanation” by the firm on how the pills are supposed to work.

In loading some scientific terms in its “explanation”, I opine that it is making not sense but rather nonsense out of its defence.

Let’s abstract from the reports: “When consumed, the hydrogen and nitrogen in the tablets will go into the bloodstream and form a molecule chain that acts like a ‘bullet’ to destroy negative molecules and generate positive energy ... This energy also works as a defense against bacteria or viruses that cause illnesses.”

What “defense molecule chain” is formed from “hydrogen and nitrogen” that can fight off “bacteria and viruses”?

And, what “negative molecules” and “positive energy”? What are these? I don’t remember coming across these in my studies of the sciences?

What is more alarming is we have school teachers and administrators who are buying into such arguments.

What sciences are we really teaching in schools nowadays?

It looks like not only the language of instruction and the pedagogy that need re-examining but also the contents of our science curriculum and syllabi. I cry for our innocent charges!

Indeed, our soon to be revealed Education Blueprint 2013-2025 and its implementation has a taunting and heavy task ahead, especially in the field of science education.

-  LIONG KAM CHONG Seremban

Related news:
 Stop distributing ‘magic pills’
From A CONCERNED MOTHER of Kuala Lumpur.

Related post:
Malaysian schools push 'magic' smart pills!

Malaysian schools push 'magic' smart pills!

So called food supplement supposedly makes pupuls cleverer

PETALING JAYA: Schools in several states have been “pushing” pills that supposedly make pupils cleverer.

The promoters also claim that the “get smart” pills, named Dimensi 108, which are marketed as food supplements, can alter children’s behaviour to make them more obedient and hard-working as well as resistant to illnesses.

Concerned parents from a school in Kuala Lumpur contacted The Star when the tablets were distributed to Year Six pupils earlier this week, saying their children were being forced to buy the pills.

One parent said she had asked her daughter to return the pills to the class teacher and refused to pay for them.

“When my daughter and a few of her friends returned the pills, the teacher told them not to blame her if they are tak pandai (not clever) in their UPSR (which starts on Sept 9).

“Can you believe that? The teacher is supposed to encourage the kids to work hard for their exams and not rely on some pills with so-called magical properties,’’ the outraged parent told The Star.

Another complainant, whose brother is studying at the school, has lodged a written complaint with the Health Ministry.

“A ministry official told me that they will look into the matter, and I have also sent pictures of the packaging of the pills with the ministry’s logo on it.

“I hope they will get to the bottom of this as quickly as possible because we need to know whether the product is legitimate or not,” said the complainant.

The school’s headmistress said parents had “misunderstood” the nature of the pills and it was not compulsory for pupils to buy them.

“We would not promote anything that is bad for the pupils ... these are just like herbal supplements to help pupils concentrate and build energy for the upcoming examination.

“They have ingredients such as spirulina and red dates, which are known for their health-giving properties. I myself give them to my child near the examination period.

“The product also has the endorsement of the Malaysian Federation of the Council of Headmasters, meaning that it has been approved by the Health and Education ministries,” she said.

The headmistress claimed that the pills were supplied to the school by the council.

“One parent shared her concerns with me personally, and when I explained the situation, she was very supportive,” she added.

Some parents remained sceptical.

“Only RM5 for a behaviour altering drug? This is way too affordable for the best thing since the discovery of DNA,” quipped a parent on Facebook.

“Spend a few hundred bucks, behavioural issues solved ... Where can I mass order? Or how to sign up to be an agent?” added another.

- Contributed by PRIYA KULASAGARAN  educate@thestar.com.my/The Star/Asia News Network

 Related news:  
Get smart pills are safe to be consumed says firm
Health Ministry to probe pillpopping schools

Currency spikes in London provide rigging Clues!

An employee counts a stack of U.S. one hundred dollar bills inside a currency exchange center in Mexico City. Photographer: Susana Gonzalez/Bloomberg 

In the space of 20 minutes on the last Friday in June, the value of the U.S. dollar jumped 0.57 percent against its Canadian counterpart, the biggest move in a month. Within an hour, two-thirds of that gain had melted away.

The same pattern -- a sudden surge minutes before 4 p.m. in London on the last trading day of the month, followed by a quick reversal -- occurred 31 percent of the time across 14 currency pairs over two years, according to data compiled by Bloomberg. For the most frequently traded pairs, such as euro-dollar, it happened about half the time, the data show.

The recurring spikes take place at the same time financial benchmarks known as the WM/Reuters (TRI) rates are set based on those trades.


Fund managers and scholars say the volatile forex trading patterns look like an attempt by currency dealers to manipulate rates -AFP

Now fund managers and scholars say the patterns look like an attempt by currency dealers to manipulate the rates, distorting the value of trillions of dollars of investments in funds that track global indexes. Bloomberg News reported in June that dealers shared information and used client orders to move the rates to boost trading profit. The U.K. Financial Conduct Authority is reviewing the allegations, a spokesman said.

“We see enormous spikes,” said Michael DuCharme, head of foreign exchange at Seattle-based Russell Investments, which traded $420 billion of foreign currency last year for its own funds and institutional investors.

 “Then, shortly after 4 p.m., it just reverts back to what seems to have been the market rate. It adds to the suspicion that things aren’t right.”

Global Probes

Authorities around the world are investigating the abuse of financial benchmarks by large banks that play a central role in setting them.

Barclays Plc (BARC), Royal Bank of Scotland Group Plc and UBS AG (UBSN) were fined a combined $2.5 billion for rigging the London interbank offered rate, or Libor, used to price $300 trillion of securities from student loans to mortgages.

More than a dozen banks have been subpoenaed by the U.S. Commodity Futures Trading Commission over allegations traders worked with brokers at ICAP Plc (IAP) to manipulate ISDAfix, a benchmark used in interest-rate derivatives. ICAP Chief Executive Officer Michael Spencer said in May that an internal probe found no evidence of wrongdoing.

Investors and consultants interviewed by Bloomberg News say dealers at banks, which dominate the $4.7 trillion-a-day currency market, may be executing a large number of trades over a short period to move the rate to their advantage, a practice known as banging the close.

Because the 4 p.m. benchmark determines how much profit dealers make on the positions they’ve taken in the preceding hour, there’s an incentive to influence the rate, DuCharme said. Dealers say they have to trade during the window to meet client demand and minimize their own risk.

Currency Patterns

“There are some patterns in currencies that are very similar to what I have seen in other markets, such as the way the price-fixings’ effects disappear so often by the following day,” said Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business, whose August 2008 paper, “Libor Manipulation?,” helped trigger the probe into the rigging of benchmark interest rates. “You also see large price moves at a time of day when volume of trading is high and hence the market is very liquid. If I were a regulator, it’s certainly something I would consider taking a look at.”

WM/Reuters rates, which determine what many pension funds and money managers pay for their foreign exchange, are published hourly for 160 currencies and half-hourly for the 21 most-traded. The benchmarks are the median of all trades in a minute-long period starting 30 seconds before the beginning of each half-hour. Rates for less-widely traded currencies are based on quotes during a two-minute window.

London Close

Benchmark providers such as FTSE Group and MSCI Inc. base daily valuations of indexes spanning different currencies on the 4 p.m. WM/Reuters rates, known as the London close. Index funds, which track global indexes such as the MSCI World Index, also trade at the rates to reduce tracking error, or the drag on funds’ performance relative to the securities they follow caused by currency fluctuations.

The data are collected and distributed by World Markets Co., a unit of Boston-based State Street Corp. (STT), and Thomson Reuters Corp. Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters and ICAP in providing news and information as well as currency-trading systems.

Reuters and World Markets referred requests for comment to State Street. Noreen Shah, a spokeswoman for the custody bank in London, said in an e-mail that the rates are derived from actual trades and the benchmark is calculated anonymously, with multiple review processes to monitor the quality of the data.

“WM supports efforts by the industry to determine and address any alleged disruptive behavior by market participants and we welcome further discussions on these issues and what preventative measures can be adopted,” Shah said.

Opaque Market

The foreign-exchange market is one of the least regulated and most opaque in the financial system. It’s also concentrated, with four banks accounting for more than half of all trading, according to a May survey by Euromoney Institutional Investor Plc. Deutsche Bank AG (DBK) is No. 1 with a 15 percent share, followed by Citigroup Inc. (C) with almost 15 percent and London-based Barclays and Switzerland’s UBS, which both have 10 percent. All four banks declined to comment.

Because they receive clients’ orders in advance of the close, and some traders discuss orders with counterparts at other firms, banks have an insight into the future direction of rates, five dealers interviewed in June said. That allows them to maximize profits on their clients’ orders and sometimes make their own additional bets, according to the dealers, who asked not to be identified because the practice is controversial.

‘Incredibly Large’

Even small distortions in foreign-exchange rates can cost investors hundreds of millions of dollars a year, eating into returns for savers and retirees, said James Cochrane, director of analytics at New York-based Investment Technology Group Inc., which advises companies and investors on executing trades.

“What started out as a simple benchmarking tool has become something incredibly large, and there’s no regulatory body looking after it,” said Cochrane, a former foreign-exchange salesman at Deutsche Bank who has worked at Thomson Reuters. “Every basis point is worth a tremendous amount of money.”

An investor seeking to change 1 billion Canadian dollars ($950 million) into U.S. currency on June 28 would have received $5.4 million less had the trade been made at the WM/Reuters rate instead of the spot rate 20 minutes before the 4 p.m. window.

“Funds that consistently trade using the WM/Reuters fix are basically trading against themselves, and their portfolio is taking a hit,” Cochrane said.

FCA Complaint

One of Europe’s largest money managers, who invests on behalf of pension holders and savers, has complained to the FCA, alleging the rate is being manipulated, said a person with knowledge of the matter who asked that neither he nor the firm be identified because he wasn’t authorized to speak publicly.

The regulator sent requests for information to four banks, including Frankfurt-based Deutsche Bank and New York-based Citigroup, according to a person with knowledge of the matter. Chris Hamilton, a spokesman for the FCA, declined to comment, as did spokesmen for Deutsche Bank and Citigroup.

Bloomberg News counted how many times spikes of at least 0.2 percent occurred in the 30 minutes before 4 p.m. for 14 currency pairs on the last working day of each month from July 2011 through June 2013. To qualify, the move had to be one of the three biggest of the day and have reversed by at least half within four hours, to exclude any longer-lasting movements.

The sample was made up of currency pairs ranging from the most liquid, such as euro-dollar, to less-widely traded ones such as the euro to the Polish zloty.

Pounds, Kronor

End-of-month spikes of at least 0.2 percent were more prevalent for some pairs, the data show. They occurred about half the time in the exchange rates for U.S. dollars and British pounds and for euros and Swedish kronor. In other pairs, including dollar-Brazilian real and euro-Swiss franc, the moves occurred about twice a year on average.

Such spikes should be expected at the end of the month because of a correlation between equities and foreign exchange, said two foreign-exchange traders who asked not to be identified because they weren’t authorized to speak publicly on behalf of their firms. A large proportion of trading at that time is generated by index funds, which buy and sell stocks or bonds to match an underlying basket of securities, the traders said.

Banks that have agreed to make transactions for funds at the 4 p.m. WM/Reuters close need to push through the bulk of their trades during the window where possible to minimize losses from market movements, the traders said. That leads to a surge in trading volume, which can intensify any moves.

Index Funds

For 10 major currency pairs, the minutes surrounding the 4 p.m. London close are the busiest for trading at the end of the month, quarter and year, according to Michael Melvin and John Prins at BlackRock Inc. who examined trading data from the Reuters and Electronic Broking Services trading platforms from May 2, 2005, to March 12, 2010.

Reuters and ICAP, which owns EBS, declined to provide data on intraday trading volumes for this article.

Index funds, which manage $3.6 trillion according to Morningstar Inc., typically place the bulk of their orders with banks on the last day of the month as they adjust rolling currency hedges to reflect relative movements between equity indexes in different countries and invest inflows from customers over the previous 30 days. Most requests are placed in the hour preceding the 4 p.m. London window, and banks agree to trade at the benchmark rate, regardless of later price moves.

Opposite Effect

“Since the major fix-market-making banks know their fixing orders in advance of 4 p.m., they can ‘pre-position’ or take positions for themselves prior to the attempt to move prices in their favor,” Melvin and Prins wrote in “Equity Hedging and Exchange Rates at the London 4 P.M. Fix,” an update of a report for a 2011 Munich conference. “The large market-makers are adept at trading in advance of the fix to push prices in their favor so that the fixing trades are profitable on average.”

Recurring price spikes, particularly during busy times such as the end of the month, can indicate market manipulation and possibly collusion, according to Abrantes-Metz.

“If the volume of trading is high, each trade has less importance in the overall market and is less likely to impact the final price,” said Abrantes-Metz, who’s also a principal at Chicago-based Global Economics Group Inc. and a World Bank consultant. “That’s exactly the opposite of what we’re seeing here. That could be a signal of a problem in this market.”

‘Massive Trades’

U.S. regulators have sanctioned firms for banging the close in other markets. The CFTC fined hedge-fund firm Moore Capital Management LP $25 million in April 2010 for attempting to manipulate the settlement price of platinum and palladium futures. The regulator ordered Dutch trading firm Optiver BV to pay $14 million in April 2012 for trying to move oil prices by executing a large number of trades at the end of the day.

Melvin, head of currency and fixed-income research at BlackRock’s global markets strategies group in San Francisco, and Prins, a vice president in the group, said that because banks could lose money if the market moves against them, their profit may be viewed as compensation for the risk they assume. Both declined to comment beyond their report.

“Part of the problem is it’s all concentrated over a 60-second window, which gives such an opportunity to bang through massive trades,” said Mark Taylor, dean of the Warwick Business School in Coventry, England, and a former managing director at New York-based BlackRock.

World Markets, the administrator of the benchmark, could extend the periods during which the rates are set to 10 minutes or use randomly selected 60-second windows each day, said Taylor, who began his career as a currency trader in London.

‘Fiduciary Duty’

Trading at the highly volatile 4 p.m. close instead of at a daily weighted average could erase 5 percentage points of performance annually for a fund tracking the MSCI World Index, according to a May 2010 report by Paul Aston, then an analyst at Morgan Stanley. (MS) For an asset manager trading $10 billion of currencies, that equates to $500 million that would otherwise be in the hands of investors. Aston, now at TD Securities Inc. in New York, declined to comment.

Fund managers rarely complain about getting a bad deal because they’re assessed on their ability to track an index rather than minimize trading costs, according to consultants hired by companies and investors to help execute trades efficiently.

“Where possible, I would always advise clients not to trade at the fix -- but minimizing tracking error is so important to them,” said Russell’s DuCharme. “That doesn’t seem to be the right attitude to take when you have a fiduciary duty to seek the best execution for pension holders.”

- Contributed by Bloomberg, Liam Vaughan & Gavin Finch - Aug 28, 2013

Related posts:
'The year of shame 2012' get any worse in 2013? 
For the sake of money people will risk anything - Rightways 
The rotten heart of capitalism: interest rate-fixing scandals
Rightways Technologies: An American-Made Business Model Has less success overseas

• Malaysian Ringgit drops to three-year low !
• Malaysian currency weaken as foreign capital outfllow

Malaysian property sector no immediate bubble risk

PETALING JAYA: The Malaysian property sector is not in any immediate risk of experiencing a bubble, according to property consultant CBRE Malaysia executive chairman Chris Boyd.

He said despite rising residential property prices, houses in Malaysia were still among the cheapest in the region.

“Residential property prices increased at a constant pace in Malaysia until 2009, but have been accelerating until recently.

“However, prices are not as volatile as those observed in Hong Kong and Singapore,” he said in a presentation during the 16th National Housing and Property Summit 2013.

“In comparison with selected Asian luxury residential prices, Kuala Lumpur remains one of the cheapest cities in the region,” said Boyd.

According to him, the average luxury residential property in Hong Kong costs nearly US$3,000 (RM10,200) per sq ft, compared with US$250 (RM850) per sq ft in Kuala Lumpur.

He pointed out that to overcome the issue of rising property prices, the Government had launched two schemes to make houses affordable, namely the Malaysia My First Home Scheme, which was introduced in 2011, and the 1Malaysia Housing Programme, which came into effect in 2012.

Meanwhile, Universiti Putra Malaysia Housing Research Centre professor Datuk Abang Abdullah Abang Ali said the recent Government initiatives were addressing the issue of rising prices but added that it was not clear if that was enough.

He said artificial increase in prices would create a bubble, noting that there was a serious mismatch between income and property prices, especially in the Klang Valley.

“This indicates that affordable homes are not being built to cater to the general market and most buyers in the Klang Valley are likely to be investors or speculators.

“As market prices head for a correction and speculation decreases, there may be an oversupply of properties above RM550,000.”

Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan, in his opening speech, said the Government had to mitigate excessive investment and speculative activity in the property market so as to prevent a property bubble.

“Moving forward, the Government would not hesitate to further tighten the fiscal policies in order to curb property speculation and ensure reasonable and affordable property prices in the country.”

Abdul Rahman said the low real property gains tax, which was increased from 5% to 15% last year, had not been effective in preventing the increase in house prices.

Contributed by EUGENE MAHALINGAM  The Star/Asia News Network

Investing in things that count

Sometimes it is not what we want that bears the richest blessings, but where we are sent that makes the difference.

THERE must be moments in our life when we pass by, say, a high-end store, and wish that we could pick up the latest electronic gadget without even thinking about the price.

The young father who wants the best education for his son may be convinced that the correct route is through a private or international school, if only he has a million ringgit to spare.

Day by day, we may wish for a lot of things. But aren’t we thankful that we do not always get our prayers answered?

The August month on the calendar in my office has a poem supposedly written by an unknown Confederate soldier. Titled “Prayers and Answers”, it includes the following verses:

“I asked for strength, that I might achieve. I was made weak, that I might learn humbly to obey.
“I asked for riches, that I might be happy. I was given poverty, that I might be wise.

“I asked for power, that I might have the praise of men. I was given weakness that I might feel the need of God.”

A friend gave up a nice job in the city to “Teach for Malaysia” in a rural school. The stories she shares regularly on Facebook are truly touching.

The first time I met her was at Fraser’s Hill some years back, when I was one of the facilitators at a writers’ camp.

While the purpose was to teach them to write well, I also told them that I would not expect them to eventually become journalists.

What is more important, I said, is to have a passion for life and a desire to make a difference wherever one is placed.

This friend did go through a stint in journalism but I now see her blooming in her real calling, which is to teach – not to the children of the rich and famous at some private school – but children who still struggle with the basic necessities of life.

The skills she honed as a communicator have allowed her to be practical and creative in teaching these children even the simplest of words. Here is a recent example:

•   She draws a picture of a globe.
•   Students: World!
•   Teacher: Very good! Another word that starts with “E”? We learned it recently.
•   Student: Earth!
•   Teacher: Ada nampak telinga dalam perkataan ini? (Do you see another word in ‘Earth’?)
•   Student: EAR! Ear! Ear!
•   Teacher: *smiling ear to ear* Thank you, Class!

 I should add that this is a Form One class whose standard of English has recently been diagnosed at Level 1.
It is a long haul, certainly, but my friend perseveres.

Meanwhile, another friend is doing something similar among the refugee community somewhere in Chad. Back on home leave, she showed me a clip of the children learning the alphabet by writing on the sand of an outdoor classroom.

These two young women gave up the comfort of home to venture into places where there are no high-end stores and where richness is definitely not measured by material possessions.

In places like this, strength, power and riches do not matter. Faith, hope and love are what really count.

SUNDAY STARTERS BY SOO EWE JIN

> Soo Ewe Jin (ewejin@thestar.com.my), in this season of Merdeka, salutes the many people, unknown and unseen, making a difference in many parts of our country.

American banks need further capital topping

It is important that stress tests are being conducted to asses the health of US banks, some of which are so large that they pose a systemic risk to the world's financial sector - EPA

 Fed's stress tests unveil flaws in planning process

LARGE US banks have lagged in terms of stress tests conducted by the Fed, pointing to possible further capital topping.

The Fed said in a paper released recenty that banks participating in regular “stress tests” had flaws in their capital planning processes, such as being unable to show that they considered all of the relevant risks to their businesses, said Reuters.

The paper pointed to problems such as modeling techniques that did not address bank-specific risks, loss and revenue projections that could not be replicated, or problems with governance of the planning process.

It is important that stress tests are being conducted to assess the health of US banks, some of which are so large that they pose a systemic risk to the world’s financial sector.

It is a tedious process but there is no choice; it is on the Fed to come up with increasingly sophisticated tools to conduct these stress tests.

It is not only in terms of stress tests that the US banks are lagging; progress has been slow in terms of adopting the Dodd-Frank Act.

Four years into the 2008 financial crisis, financial reform is still creeping along.

This is despite the collapse of a 100-year old bank, Lehman Brothers.

In fact, President Barack Obama had recently met with Fed Reserve chairman Ben Bernanke and other regulators, where he received an update and he also urged them to fully implement the Dodd-Frank Act.

Banks are said to be resentful of the Volcker rule that prohibits proprietary trading.

China has set up an agency to co-ordinate among other things, monetary and financial regulatory policies and help regulate financial products where jurisdiction overlaps.

It also coordinated information-sharing and statistics, an announcement on the Chinese government’s Web site said.

Withdrawal of stimulus packages, tightening of monetary and regulatory policies have impacted the financial sector severely.

Hence the timely setting up of such an agency which has no decision making powers; nevertheless the members of this advisory scheme have considerable weight.

The entity would be led by the central bank and would include representatives from banking, stock market and insurance regulators, as well as the State Administration of Foreign Exchange, said the International Herald Tribune.

In its aim towards sustainable financial reform, the Chinese Government hopes that this agency will help smoothen a lot of the hiccups on the way. This agency will have plenty of work ahead, considering the size of the Chinese financial sector.

Despite a 28.4% year-on-year decline in revenue from continuing operations to S$7.38mil from S$10.31mil, the Singapore Exchange is proposing to reduce the standard size of securities traded from 1,000 units to 100 units, and one unit eventually.

Besides improving liquidity and retail interest, the exchange hopes to make the larger, more well-established available to investors.

This will have positive implications for Malaysians trading on the shared platform.

With the change, the minimum needed to buy a SS$10 stock falls to S$1,000, or 100 units of S$10.

Currently, eight out of the 30 stocks in the benchmark Straits Times Index (STI), a collection of the most stable and liquid stocks, trade at S$10 or higher.

In view of capital outflows experienced by emerging markets, this is a timely move to capture back some of the investors’ money.

Contributed by Plain Speaking by Yap Leng Kuen
Columnist Yap Leng Kuen hopes to see more measures aimed at preventing outflows.

Related posts:
 'The year of shame 2012' get any worse in 2013?

 Serious deficits that cannot be financed could lead to bigger global crisis

 For the sake of money people will risk anything

 Malaysian currency weaken as foreign capital outflow

Weibo brings public confidence in Bo Xilai's trial openness; Bo contradicts wife made up evidence

 

A mobile phone held by the photographer shows a photo from a court's microblog page of disgraced Chinese politician Bo Xilai standing trial (Reuters)

The widely watched trial of former senior official Bo Xilai was broadcast live on Weibo over the past two days, a surprise for many people at both home and abroad.

Pictures and video clips were shown. Transcripts from both the defense and prosecution were also released, including parts where Bo denied evidence presented by prosecutors.

This degree of transparency has not happened before. This will create a precedent that will bring lasting impact to the future trials of sensitive cases.

 This Weibo live feed has served as an important guarantee of a fair trial for Bo in accordance with the law. The live show has addressed various doubts and rumors in and outside China. It demonstrated that the authorities are ready to receive more public scrutiny.

This is not a political trial, nor a moral one. This will only be a trial by law. Even if someone might have personal goals, before the public eye, there is no way to achieve anything in this trial, anything that is not tolerated by the law.

Besides assuring a fair trial for Bo's case, the Weibo live feed has also convinced more people about China's sincere desire to improve the rule of law.

For a while, the Chinese public has been complaining about injustice in constant news reports of scandals or social issues.

The open and transparent trial of Bo provided a different picture to the public, which will significantly change the image of the judicial system.

The most important thing now is to have a fair trial for Bo's case, which will naturally boost the public's confidence.

We have seen a very good opening of this trial, with widespread applause and support from various walks of life.

Of course, the Weibo live feed is not without risks. Breaking news about Bo's scandal had already become a sensation. People have been expressing all kinds of opinions online, no matter how much they know of China's legal system. Foreign media have also shown great interest in covering this.

No matter what ruling the court eventually gives, there must be some different opinions from the public. The Weibo live feed provided great details of the trial, which will only add fuel to the public discussion about this case.

The development of the rule of law needs both the judicial authorities' hard work in each case and public support.

Major cases will not only avoid "political judgment," but also "public opinion judgment."

A fair trial needs to follow strict legal procedures, while under public scrutiny.

But in the end, it is the court that is responsible for giving a ruling according to the law.

Contributed by By Global Times

Bo Contradicts Wife as Chinese Media Stress Trial’s Transparency

Ousted Politburo member Bo Xilai suggested his wife made up evidence to avoid a death sentence and denied covering up a British man’s murder at a trial that state media said was proof no one’s above the law in China.

“I feel there are big discrepancies in the charges I have been accused of,” Bo said yesterday of the claim that he tried to hide his wife Gu Kailai’s involvement in Neil Heywood’s murder, according to a transcript released by the court. Gu was given a suspended death sentence last year for killing Heywood, and Bo is accused of bribery, embezzlement and abuse of power.

People watch a recorded testimony by Gu Kailai, wife of former Chinese Politburo member Bo Xilai, broadcast at a hotel near the Jinan Intermediate People's Court in Jinan on Aug. 23, 2013. Photographer: Mark Ralston/AFP/Getty Images

Aug. 22 (Bloomberg) -- Fraser Howie, a director at Newedge Singapore and co-author of "Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise," talks about former Politburo member Bo Xilai's trial. Bo went on trial today for bribery and embezzlement with China’s judiciary as much in the spotlight as the man at the center of the country’s most politically charged case in 30 years. Howie speaks from Singapore with Angie Lau on Bloomberg Television's "Asia Edge." (Source: Bloomberg)

Aug. 23 (Bloomberg) –- Bloomberg’s Stephen Engle reports on the start of day two of the Bo Xilai trial on Bloomberg Television’s “First Up.” (Source: Bloomberg) 

Aug. 23 (Bloomberg) –- Chinese University Of Hong Kong Adjunct Professor Willy Lam discusses the Bo Xilai trial with Rishaad Salamat on Bloomberg Television’s “On The Move Asia.” (Source: Bloomberg)

Bo, 64, mounted a defense that did an effective job of exposing gaps in the case against him, even though the Communist Party remains in control and a guilty verdict is almost certain, according toNicholas Bequelin, a Hong Kong-based researcher for Human Rights Watch. The case has broken with past political trials because the court is releasing live updates and detailed transcripts of the proceedings.

“It’s clear that the party is trying to give maximum legitimacy to the judiciary proceedings that will put an end to the Bo Xilai affair,’ Bequelin said. ‘‘But I think that the effect has been somewhat unexpected for the authorities. Bo is coming out looking pretty good.”

Party Secretary

Bo, a former commerce minister and party secretary of Chongqing municipality, was once considered a rising star in the Communist Party. His downfall in March of last year upended a once-a-decade leadership transition and shone a spotlight on corruption at the party’s highest levels.

Along with bribery and embezzlement charges that had been the focus since the trial began Aug. 22, Bo is charged with abuse of power for allegedly trying to cover up Gu’s role in Heywood’s 2011 murder. The court came to that charge yesterday, and the trial continues today.

Bo was removed as Chongqing party secretary and ousted from the Politburo last year after his former police chief in the city, Wang Lijun, fled to a U.S. consulate with evidence about his wife’s alleged involvement in Heywood’s death. Wang testified yesterday that Bo slapped him in the face when confronted with the possibility that Gu was responsible for the murder.

“My body twitched, and when he was done hitting me, he went back to sit at the table,” Wang testified yesterday. “I noticed my mouth was bleeding, and something was flowing out of my ear.”

Wang was convicted of “bending the law for selfish ends” and sentenced to 15 years in prison last year.

Central Part

Testimony by Gu has been a central part of the prosecution’s case, and included claims yesterday that Bo knew about a 5 million-yuan ($817,000) “consulting fee” given to the family by Wang Zhenggang, a former urban planning official in Dalian when Bo was the city mayor.

“I have feelings for Gu Kailai -- she is a relatively weak woman,” Bo said yesterday, according to the transcript. “By telling on someone else she could soon get out of the death penalty. Who could she accuse? All the accusations against me come from Gu Kailai.”

Police cordoned off the streets around the courthouse with metal barricades and yellow plastic tape, emptying out an area about the size of two football fields in what’s normally a crowded city center. The only people on the streets nearby were police in blue uniforms, while black sedans and white vans occasionally came and went from the court building.

Bo’s testimony gave details about his life with Gu, and why she and their son, Bo Guagua, moved abroad. Guagua went to the elite British boarding school Harrow and later to Oxford University, and then graduated from Harvard’s John F. Kennedy School of Government.

Had Affairs

“I did have extramarital affairs -- she was very angry about that,” Bo said, adding that he had no need to embezzle money because his wife had made millions of yuan as a lawyer. “So her bringing Guagua abroad was out of anger.”

In a country where the Communist Party maintains strict control of sensitive political trials, the state-run Global Times newspaper said in an editorial the decision to release updates on Weibo, Sina Corp.’s Twitter-like microblogging platform, “served as an important guarantee of a fair trial for Bo in accordance with the law.”

“This degree of transparency has not happened before,” the editorial said. “This will create a precedent that will bring lasting impact to the future trials of sensitive cases.”

The details revealed in the trial demonstrate that “no one is above the law,” the party’s flagship People’s Daily newspaper said. “In the fight against corruption we are after both flies and tigers.”

Hailed Openness

The official Xinhua News Agency said both domestic and foreign media have “hailed the openness and transparency” of the live blogging.

“The public also generally believe that this showcases the Communist Party of China’s resolve in combating corruption and that the move represents historic progress for the rule of law in China,” Xinhua said.

Allowing so much of Bo’s trial to be aired publicly is risky for the Communist Party because it may garner Bo new support from people impressed by his vigorous defense, according to Randy Peerenboom, a law professor at La Trobe University in Melbourne, Australia. That, in turn, may backfire on Bo because the party is still in control, he said.

“If it is the case that Bo Xilai has once again wandered off-script, and the leadership is worried that his cool performance under pressure has won him new admirers, then it is possible that he will receive a much harsher punishment than originally planned,” Peerenboom wrote in an e-mail. 

- Contributed by Bloomberg News - Aug 25, 2013 

Wife and police chief ‘in love triangle’

The most spectacular trial that China has ever witnessed closed with its biggest shock of all as Bo Xilai revealed a tragic love affair between his wife and his city Chongqing’s police chief.

Defiant until the end of his trial on charges of corruption and abuse of power, the 64-year-old fallen leader brushed his lawyers aside to make a final oration that displayed all the bravura that made him such a magnetic figure, and caused China’s other leaders such anxiety.

Behind the biggest drama to hit China's Communist Party since the protests in Tiananmen Square, Mr Bo said, was a story of how Chongqing’s police chief, Wang Lijun, had fallen inexorably in love with his wife, Gu Kailai.

 ^{Gu Kailai, wife of ousted Chinese Communist Party Politburo member Bo Xilai}

When Mr Bo caught the pair, he claimed, the police chief of the city he ruled had fled his wrath, running to the safety of the United States consulate in a city 160 miles away, a treason which led to their mutual downfall.

“Wang was secretly in love with Gu Kailai for a long time,” Mr Bo told the court, adding that the police chief had declared his passion in a love letter. “In the letter it said he had always had feelings for Kailai and he could not help himself. He even slapped himself in the face eight times.”

“You are acting crazily,” Gu told her suitor, according to Mr Bo. “No, I used to be crazy, but now I am sane,” Wang allegedly replied.

  ^{Former police chief Wang Lijun (Reuters)}
Mr Bo said Wang had visited his home every day because he was drawn to his wife, and suggested the relationship did not go unrequited.

“They had an extremely special relationship. I was fed up with it,” said Mr Bo. “Gu Kailai even brought Wang’s shoes into my house. I told Zhang Xiaojun (an aide) to get rid of them immediately”.

But when Mr Bo uncovered the relationship, his city’s police chief knew he had made a potentially fatal mistake. “He knew my character. He hurt my family. He hurt my feelings,” Mr Bo said.

There had long been rumours in Chongqing that the previously close bond between Mr Bo and Wang was shattered when they became tangled in a love triangle.

But the allegations by Mr Bo raise new and intriguing questions about the planning of, and the motive for, the murder of Neil Heywood. Wang had previously confessed that he helped Gu plan Mr Heywood’s killing.

Mr Bo’s tale of mad passion caused an instant sensation on the Chinese internet, with one popular post suggesting that the lovers were doomed from the start: Gu was a Scorpio while Wang was a Capricorn and therefore incompatible.

Before revealing the drama in his household, Mr Bo had earlier ridiculed the prosecution’s closing statement, saying: “Even the lowest level television soap cannot have this kind of plot,” he said.

Responding to accusations that he must have been aware of the luxurious lifestyle his family was living, under his nose, Mr Bo asked: “Is Gu Kailai a civilised woman or not?

“Did she want me to love her or not? Would she have come and bothered me with these trifles every day? I was the governor of Liaoning province,” he added.

To accusations that his 25-year-old son, Guagua, spent huge sums travelling the world and carousing, Mr Bo said: “If Guagua kept asking for money for fancy watches and cars and international travel, if he wanted us to pay for his friends and owed the bank huge sums of money, would I have loved such a son?”.

Instead, Mr Bo said, his family was so frugal that he was still wore padded winter trousers that his mother had bought for him in the 1960s.

Mr Bo also repeated that much of the evidence against him had been coerced.

“All of the written confessions I signed before were made against my will,” he said, adding that he had hoped, by confessing, to win rehabilitation.

“I had a hope deep in my heart that I would not be expelled from the Party, I would keep membership and I would keep my political life.”

It was unclear whether Mr Bo’s impressive rhetoric would win him more public support, with hundreds of thousands of people reading his statement on the live-feed from court.

But it did little to help his legal case, and his lawyers even admitted that it was only after 2005, when Mr Bo was promoted to higher office, that corruption had stopped. “He woke up,” they said.

Mr Bo’s defiance may also cost him dearly, in the form of a tougher sentence.

“He not only denied crimes that have been fully backed up with solid evidence, but he also recanted his earlier testimony,” the prosecutors said. “His attitude is to refuse to confess wrongdoing... he should receive harsh punishment.”

If convicted, Mr Bo technically faces the death penalty, although a member of China’s Communist Politburo has never been executed.

As he made his final statement, perhaps the last statement he will ever make in public, Mr Bo said: “I know I am not a perfect man, I am subjective and easily angered. I have made some serious mistakes and problems. I failed to manage my family.”

The court will reconvene at a later date to reveal the verdict.

- Contributed by Malcolm Moore, Jinan  Telegraph UK

Related posts:

• China's Bo Xilai on trial
• China's content-rich microblogs 

China's Bo Xilai on trial

JINAN, Aug. 23 -- Jinan Intermediate People's Court in east China's Shandong Province continued to hear the case of bribery, embezzlement and abuse of power involving Bo Xilai for a second day on Friday.
 

The 64-year-old Bo is former secretary of the Chongqing Municipal Committee of the Communist Party of China (CPC) and former member of the CPC Central Committee Political Bureau.

Prosecutors accuse Bo accepted bribes worth about 21.8 million yuan (about 3.5 million U.S. dollars) from businessmen Tang Xiaolin and Xu Ming and embezzled five million yuan in public funds from the Dalian municipal government. He was also accused of abusing power when dealing with his wife Bogu Kailai's murder case and the defection of his associate, Wang Lijun, in 2012.

On the second day of the trial, prosecutors presented evidence that Bo accepted a large sum of money and property from Xu Ming through his wife, Bogu Kailai, and his son, Bo Guagua.

In the morning session prosecutors presented documentary evidence and played a video recording of Bogu Kailai's testimony on Aug. 10 this year.

Prosecutors also read testimony by Bogu Kailai and Frenchman Patrick Devillers.

Video and audio evidence shown in court indicated that Xu Ming provided funds for Bogu Kailai to buy a villa in France worth over 2.32 million Euros (16.25 million yuan), and that Bo Xilai was aware of this.

In the afternoon session, evidence included testimony of witnesses including Zhang Xiaojun, photographs of material evidence, confessions and the handwritten confessions of the defendant, proving that through his wife and son, Bo received almost 4.43 million yuan from Xu Ming, to pay for international and domestic air tickets, accommodations and travelling expenses, to pay off credit card debt, and buy a Segway scooter.

Prosecutors, the defendant and his lawyers examined the evidence.

Facing key facts of the charges, Bo defended that the evidence was irrelevant, saying he had only a vague impression of amounts and no one had told him exactly how much money was spent. His lawyers expressed views on the truth of witnesses' testimonies and the legality of the documentary evidence.

Prosecutor responded directly, pointing out that the defendant had expressed numerous conflicting views on key facts during his defense.

Prosecutors said that the evidence presented in court was taken legally from clear sources and should be examined comprehensively in the context of the entire case.

Wang Zhenggang, then director of the Dalian municipal bureau of urban and rural planning and land, appeared in the afternoon to testify on embezzlement charge against Bo.

Wang was handled in a separate case.

The court will continue to hear the case on Saturday to maintain the continuity of the trial, as agreed by prosecutors, the defendant and his lawyers. 

- Contributed by DuMingming、Liang Jun

Bo's trial updated live on microblog

A woman views the Chinese social media website Weibo at a cafe in Beijing on April 2, 2012 (AFP/File, Mark Ralston)



The highly anticipated trial of former politburo member Bo Xilai began Thursday, surprisingly with an almost unprecedented flood of real-time information about the proceedings.

The Jinan Intermediate People’s Court used Weibo, a popular Twitter-like microblog service, to deliver a running account of the trial since its start. The number of followers of its microblog page has jumped from less than 10,000 on Wednesday to over 300,000 by 7 pm Thursday. The court also arranged a media lobby at a nearby hotel, to provide live feed of trial details to reporters.

This is the first time details of a trial of a senior Chinese official have been released real-time to the public. In the past, such high level court trials took place behind closed doors, with details being released only after sentencing.

Bo calls wife mad after she testifies against him 

JINAN, China (Reuters) - Fallen Chinese politician Bo Xilai called his wife insane after she testified at his landmark trial on Friday that he knew of money and a villa in the French Riviera that prosecutors say were given to the couple by a businessman friend.

The video and written testimony by Gu Kailai directly contradicted Bo's robust defence on Thursday, and appear to set him up to be found guilty in China's most dramatic trial since the Gang of Four were dethroned in 1976 at the end of the Cultural Revolution.

"He should know about it all," Gu said in a video recording shown in court and posted on the court's microblog, when asked whether Bo knew that she and their son, Bo Guagua, had received money from plastics-to-property entrepreneur Xu Ming.

Bo dismissed Gu's testimony as the ravings of a madwoman.

"Bogu Kailai has changed, she's insane, often tells lies," Bo said, according to transcripts on the court microblog, using Gu's official but rarely used name. "Under the circumstances of her mental illness, the investigators placed huge pressure on her to expose me.

"Her testimony as far as I am concerned, was (given) under psychological pressure, and driven by (hope of) a reduced sentence," he added.

Gu has been jailed for the murder of British businessman Neil Heywood in November 2011, the crime which eventually led to Bo's downfall.

The businessman Xu, who is also in custody, was once close to the Bo family, but also testified against him on Thursday, according to the transcripts. Foreign reporters were not allowed into the court.

Bo, the 64-year-old former Communist Party chief of Chongqing metropolis, has been charged with illegally taking almost 27 million yuan (2.82 million pounds), corruption and abuse of power. Of that amount, about 21.8 million yuan came from Xu and another businessman Tang Xiaolin, the court said, citing the indictment.

Bo was a rising star in China's leadership circles when his career was stopped short last year by the scandal involving Gu.

Supporters of Bo's Maoist-themed social programmes say he lost out in a power struggle with capitalist-leaning reformists in Beijing, exposing divisions within the ruling party as well as Chinese society.

Last week, two sources told Reuters that Gu would only testify against her husband if a deal had been reached with authorities to protect their son.

A deal in which Bo can be swiftly convicted and sent to jail, sparing him a death penalty and with no repercussions for his son, would be in the interest of China's leadership, which wants the trial to be concluded without causing open friction between Bo's followers and critics.

On Thursday, observers said the court proceedings were probably scripted and that Bo could receive a pre-arranged sentence in exchange for limited outbursts that would show that the trial was fair, appeasing his followers.

The trial will continue for a third day on Saturday, the court said, despite expectations it could last just a single day.

VILLA IN NICE

In written testimony, Gu said she had shown Bo the graphics and slideshows for the design of a villa in Nice, France that was paid for by Xu. Bo asked her about the slideshows and according to Gu, she told Bo about Xu's involvement.

"Therefore he knew that I asked Xu Ming to pay for this villa in France," Gu said in her written statement.

In the poorly shot video, Gu appeared soft-spoken and composed as she was questioned by a worker from the state prosecutor's office. She laughed when asked whether she had been coerced into giving evidence.

Gu did not link Bo with Heywood's murder, but said he was aware she considered the Briton a threat to their son. According to testimony at Gu's trial, she killed Heywood because he had threatened Guagua after a business dispute with Gu.

Gu said Bo was also aware of her fears about the safety of Guagua, who is now in the United States
preparing for a law degree at Columbia University. Gu said she was afraid Guagua "would be kidnapped and killed in America".

"In 2011, Guagua's personal safety was threatened and Bo Xilai understood this," she said in her written testimony.

"We drew up a blacklist of suspicious people. One of them was Neil Heywood. I explained all of this to Bo Xilai."

Bo could face the death sentence, though a suspended death sentence is more likely, which effectively means life imprisonment, or a 20-year term.

Contributed by John Ruwitch - The Star (Additional reporting by Judy Hua in JINAN and Sui-Lee Wee, Ben Blanchard and Hui Li in BEIJING, Writing by Sui-Lee Wee; Editing by Raju Gopalakrishnan)

Bo's trial updated live on microblog

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