Executive Business Briefing
From the Business & Economics Desk
Published 11/1/2002 10:09 AM
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Here are some of Friday's top business stories:
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Pressure mounts on SEC's Pitt to quit
WASHINGTON, Nov. 1 (UPI) -- Securities and Exchange Commission Chairman Harvey Pitt has come under increasing pressure from congressional Democrats to step aside after he failed to disclose relevant information about the background of the recently appointed U.S. accounting monitor.
House Minority Leader Dick Gephardt, D-Mo., called on Pitt to resign, saying he had deprived fellow commissioners of material information about William Webster's role as chairman of an auditing committee for a company facing fraud allegations.
In a letter to President George W. Bush on Thursday, Sens. Christopher Dodd, D-Conn., and Jon Corzine, D-N.J., said that the integrity of the SEC and the new accounting oversight board have been tarnished because of the circumstances surrounding Webster's appointment to the board and allegations that Pitt had failed to disclose to members of the SEC information that could have affected Webster's nomination.
The senators said that by not disclosing information that had an impact on Webster's suitability to head the oversight board, Pitt had failed to fulfill his duty as head of the SEC. They added that they feared that these circumstances would further undermine confidence in the U.S. financial markets.
White House spokeswoman Jeanie Mamo told United Press International late Thursday: "The White House supports Chairman Pitt."
Earlier, aboard Air Force One en route to South Bend, Ind., White House spokesman Scott McClellan told reporters that Pitt didn't tell fellow commissioners before they voted on Webster's nomination that the former FBI director had been in charge of an audit committee of a company sued for fraud.
McClellan said the first time the administration learned of the matter was when it was contacted by The New York Times.
The paper reported Thursday that Webster formerly headed the audit committee of U.S. Technologies, which is facing shareholder lawsuits for alleged fraud over accounting problems.
"We don't know all the facts," McClellan said. "This was a decision made by the SEC."
Webster wasn't available for comment on Thursday.
On Friday, the SEC voted 3-2 to appoint Webster, 78, as chairman of the Public Company Accounting Oversight Board. The panel, which is the centerpiece of the Sarbanes-Oxley Act, will oversee the audits of the financial statements of U.S. public companies.
On Thursday, Pitt asked the commission's inspector general to investigate Webster's appointment.
Earlier this month, the Times reported that the accounting industry, working with Rep. Michael Oxley, R-Ohio, covertly pressured Pitt to drop John H. Biggs, who is retiring as the head of pension fund giant TIAA-CREF, as his first choice.
Webster, the former head of the FBI and CIA, was selected over the objections of the SEC's two Democratic commissioners who said he lacked the financial expertise to head the board. The two Democratic SEC members had favored Biggs.
"Pitt not only deprived his fellow commissioners of vital information about one of the most important appointments they would ever make, he knowingly endorsed a candidate for chairman ... without seriously investigating this matter," said Gephardt.
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US firms more cautious on hiring, spending
WASHINGTON, Nov. 1 (UPI) -- Companies have become increasingly cautious about hiring and capital expenditure, despite signs of rising demand, the National Association for Business Economics said Thursday.
The association, in its third-quarter industry survey, said U.S. companies reported that "profit margins fell, as prices weakened slightly, but cost pressures did not."
The group's president and chief economist, Tim O'Neill, said panelists' forecasts "have become more pessimistic about the outlook." Partly as a result, companies had weaker hiring and spending plans.
NABE said demand had improved in the services and finance industries but had fallen sharply in the transportation, utility and communications sector. It also found that while the export outlook was more positive, all of the improvement had come from companies in the services sector, since manufacturers "continued to report falling overseas demand."
More than half of the respondents had become more pessimistic about projected real grosses domestic product growth in second-half 2002. About half expect growth of 2 percent to 3 percent.
The group also found that:
-- Third-quarter capital spending had fallen for a sixth consecutive quarter, the longest declining span in the survey's 20-year history.
-- Profits dipped during the third quarter, after rising in the first two quarters of 2002.
-- Employment contracted further during the third quarter, and companies planning to reduce their workforce through attrition or layoffs outnumber those planning expansion by a margin of 2:1.
The survey is based on responses of 108 NABE members regarding business conditions in their company or industry. The group, founded in 1959, has about 3,000 members in the United States. The latest survey, reflecting third-quarter 2002 results, was conducted from Oct. 3 to Oct. 22. The quarterly survey originated in 1982.
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Asian stocks lower on U.S. GDP, Tokyo up
SINGAPORE, Nov. 1 (UPI) -- Most Asian stock markets moved lower Friday, following the poor overnight performance of Wall Street with the Dow Jones Industrial Average down 0.36 percent, and disappointing U.S. economic growth data. Tokyo escaped the selling on the back of a few blue-chips which reported good earnings.
The Nikkei 225 Stock Average rose marginally, up 0.5 percent to 8685.72 supported by a few blue-chips. TDK gained 3.1 percent after announcing its first-half net profit had more than doubled from a year ago helped by strong sales of capacitors and hard-disk drive heads. Canon was also up 0.7 percent and Fanuc up 4.5 percent.
But in Taiwan, the benchmark index fell 1.7 percent as profit-taking hit heavyweights TSMC, down 3.3 percent, and United Microelectronics Corp, down 3.6 percent. The two stocks make up around 20 percent of market capitalization.
In Hong Kong, the Hang Seng Index lost 0.36 percent, weighted down once again by telecom stocks on the back of China Telecom's planned hikes in interconnection charges for international calls. China Mobile fell 1.04 percent, while China Unicom lost 1.55 percent. However, buying in HSBC, up 0.88 percent, helped offset some of those losses. Standard Chartered, which made its local stock exchange debut Thursday, added another 3.74 percent.
The Korea Composite Stock Price Index fell 1.7 percent to 647.65 in thin trading, as investors remained concerned about the near term local economic prospects. Kookmin Bank lost 3.5 percent, while Samsung Electronics fell 1.2 percent.
In Singapore, the Strait Times Index lost 2.44 percent at 1,427.60 amid concerns the economy is heading for a double-dip recession. A government survey of business sentiment released on Friday found manufacturers expected a weaker business outlook up to March 2003. Banks were especially hit, with DBS down 4 percent, United Overseas Bank down 3 percent and OCBC Bank down 3.9 percent.
Kuala Lumpur's benchmark 100-stock Composite Index closed down 0.33 percent at 657.38, with news of a higher-than-expected September trade surplus failing to lift the market.
The market in the Philippines was closed for a national holiday.
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US firms urge SE Asia anti-corruption pact
SINGAPORE, Nov. 1 (UPI) -- The American Chambers of Commerce in Southeast Asia have urged the Association of Southeast Asian Nations to work towards a binding regional agreement to fight corruption.
In a joint statement released Friday in advance of the ASEAN summit in Cambodia, set for Sunday, the chambers said they encouraged the community of Southeast Asian nations "to put in place effective legal and judicial measures and enforcement tools for eliminating corruption."
The chambers said that a good starting point would be a binding agreement to make it unlawful for executives in ASEAN countries to bribe government officials and judicial authorities either in their home jurisdiction or other ASEAN countries.
They said that such an agreement -- which would be the first in Asia -- would attract much-needed positive attention from the international investment community.
A June survey of AmCham members identified corruption as a major disincentive for U.S. investment in the region. American companies were "extremely dissatisfied" or "dissatisfied" with levels of business-related illicit payments in the region.
Among the opinions expressed by members were that "even if everything is done legally and properly, one still has to pay 'the boys' to move goods efficiently through customs."
The survey highlighted the Philippines, and to a lesser extent Thailand and Malaysia. No survey was conducted in Indonesia, although investors there also complained about the level of corruption, especially in the judicial system.
Singapore was the only exception in the region, receiving high marks for its clean image and behavior.
The Southeast Asian AmChams represent an estimated $50 billion in investment.
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