Business

NEW YORK — New York state on Monday fined Pricewaterhouse Coopers (PwC) $25 million and suspended some consulting work for two years after finding the company hid a Japanese bank's US sanctions violations. Bank of Tokyo-Mitsubishi UFJ (BTMU), Japan's biggest lender, pressured PwC to scrub a report on wire transfers the bank submitted to regulators to hide its dealings with blacklisted Iran, Myanmar and Sudan, the New York State Department of Financial Services said. "Under pressure from BTMU executives, PwC removed a warning in an ostensibly 'objective' report to regulators surrounding the bank's scheme to falsify wire transfer information for Iran, Sudan, and other sanctioned entities," the department said. Under the terms of the settlement, PwC's Regulatory Advisory Services unit will be suspended for 24 months from accepting consulting work at financial institutions regulated by the New York state agency and undertake a series of reforms. Benjamin Lawsky, the superintendent of Financial Services, said this was the latest case of improper influence and misconduct in the bank consulting industry, which had a "troubling web of conflicts". In 2013, the DFS reached a similar settlement with Deloitte Financial Advisory Services that involved a 12-month suspension of consulting activities.

LONDON — An Iraqi Kurdish crude oil tanker has reappeared off the coast of Israel having offloaded its cargo, ship tracking data on Reuters showed, in the latest sign the autonomous region is finding buyers for its oil in defiance of Baghdad.

It was not possible to determine who bought the oil or where it was sent to, but crude originating from Iraqi Kurdistan was delivered to Israel in June even though many Middle Eastern states refuse to trade with the country.

A spokesman for the Kurdistan Regional Government (KRG) Ministry of Natural Resources did not respond to phone calls and e-mails seeking comment. The KRG has previously denied selling oil to Israel "directly or indirectly".

Baghdad has actively tried to block independent oil sales from Iraqi Kurdistan and cut the autonomous region's budget in January over the dispute, despite complaints from the KRG it needs funds to fight militants of the Islamic State.

But the latest delivery means the KRG has delivered at least four large cargoes or around $400 million worth of crude since May, when it first started major exports via the Turkish port of Ceyhan that is connected to a new pipeline from the region.

In the latest delivery, the Kamari tanker switched off its satellite transponder on August 17 before reappearing near Israel two days later having offloaded its cargo.

Growing oil sales could increase the KRG's economic independence from Baghdad and bolster their push to form a separate Kurdish state.

On Thursday, Turkish officials and industry sources said the capacity of the Kurdish pipeline has been upgraded to 200,000 barrels per day (bpd) with plans to soon increase it up to 250,000 bpd, doubling its previous capacity.

Iraq's central government in Baghdad has repeatedly called independent Kurdish exports "smuggling", saying only state marketer SOMO has the right to sell Iraqi oil. The KRG says the Iraqi constitution allows it to sell oil independently.

Baghdad has successfully blocked one Kurdish tanker that has now been anchored off Morocco for more than two months, while another was stopped from delivering to a refinery in the United States.

So far, 7.8 million barrels of Kurdish oil have flowed through the independent pipeline of which 6.5 million have been loaded onto tankers. Including the latest tanker, more than 60 per cent of that oil has now been successfully delivered.

Israel's prime minister and several officials openly called for the recognition of an independent Kurdistan this summer, though a Kurdish diplomat later played down coordination between the two countries.

Kamari tanker

The Suezmax tanker, Kamari, which can carry up to 1 million barrels of crude, has made two deliveries of Kurdish crude into the eastern Mediterranean since the start of August, tanker tracking data on Reuters show.

It was partially loaded with Kurdish crude when it turned off its satellite transponder on August 17 as it sailed near Egypt's Sinai Peninsula. When it reappeared on August 19, about 30 kilometres off the coast of Israel, its cargo had been offloaded, based on how high the ship was sitting in the water.

The tanker first loaded its latest cargo of Kurdish crude at the Turkish port of Ceyhan around August 8, and made a partial delivery to Croatia via a ship-to-ship transfer last week.

Hungary's MOL Group said on Monday that it had purchased just under 600,000 barrels of Kurdish crude that discharged at Croatia's Omisalj port at the weekend. The company has exploration and production assets in Iraqi Kurdistan.

Two weeks ago, the same 1 million barrel tanker loaded Kurdish oil at Ceyhan before sailing to a point just under 200 kilometres off the Israeli and Egyptian coasts.

Ship tracking showed the ship was fully loaded, based on its draft in the water. After turning its satellite tracking off on August 1, the ship reappeared four days later sitting far higher in the water, again indicating it had offloaded its cargo.

In June, a tanker carrying 1 million barrels of Kurdish oil sailed from Ceyhan that was delivered into Israel's Ashkelon port after first being transferred at sea to another vessel.

The KRG has repeatedly declined to identify buyers of its oil or say who is helping to coordinate the sales.

LONDON — Amman-based Hikma Pharmaceuticals Plc announced on Wednesday a 44 per cent jump in first-half profit helped by a strong performance at its US injectibles business, but the company cut its sales growth forecast for branded drugs citing shipment issues in some North African markets.

The Jordanian drugmaker, which makes and markets branded and non-branded generics and injectibles, lowered its full-year revenue growth forecast for the branded drugs business to a low-single digit percentage from about 10 per cent earlier.

Hikma said limited availability of foreign currency reserves restricted product shipments in Sudan, while a restructuring of distribution channels in Algeria dragged on sales in that country in the first half.

The Middle East and North Africa region accounted for 40 per cent of Hikma's branded drugs sales.

"The growth is going to slow in these markets... It might be slightly below last year, but we continue to expect to supply products into these markets," Chief Financial Officer Khalid Nabilsi told Reuters.

The company expects political disruptions in Iraq and Libya to further impact sales this year.

Hikma shares fell as much as 2.3 per cent on Wednesday morning on the London Stock Exchange.

"The only disappointment that came out of the first-half results was the weakness of the branded business as Sudan and Algeria performances disappointed," UBS analysts said in a note.

Injectibles sales soar

Hikma, which was founded in Amman in 1978, said adjusted profit attributable to shareholders rose 44 per cent to $176 million in the six months ended June 30.

Earnings rose 16 per cent to $738 million. Income from injectibles rose 41 per cent to $346 million.

The company, which benefitted from a shortage of the antibiotic doxycycline last year, said in May that it was focusing on high-value products in its injectibles business.

Adjusted operating margins in the business rose to 41 per cent in the first half from 28.5 per cent a year earlier.

"This reflects exceptionally strong sales from certain market opportunities in the US, a focus on higher-value products and tight control of overhead costs across our manufacturing facilities," the company said.

Hikma strengthened its injectibles business earlier this year by acquiring Boehringer Ingelheim's US generic injectibles business and manufacturing operations in Ohio.

According to Nabilsi, the company's low net-debt-to-EBITDA ratio even after the acquisition gave it significant headroom for more acquisitions.

"We have a war chest of $1 billion plus for acquisitions, so we have increased the number of merger and acquisition and business development teams across different regions," he said.

The company said it would pay a special dividend of 4 cents per share. It's regular interim dividend was unchanged at 7 cents per share.

Hikma paid a special dividend of 3 pence per share last year to reflect the strong performance of its generics business.

Hikma shares were down 1.6 per cent at 1775 pence at 0945 GMT. The stock has gained 50.4 per cent this year until Tuesday.

AMMAN — Jordan’s trade deficit widened  by 10.5 per cent during the first half of 2014 to around JD5.4 billion compared to JD4.8 billion at the end of the same period last year. 

According to the Department of Statistics (DoS), total exports (including re-exports) rose at the end of June this year by 6.8 per cent to JD2.9 billion compared to JD2.8 billion during the same period of 2013. 

The DoS report indicated that national exports rose by 8.6 per cent to JD2.5 billion whereas re-exports dropped by 3.4 per cent to JD406 million.

It also indicated that imports rose by 9.2 per cent to JD8.3 billion compared to JD7.6 billion. 

Subsequently, exports coverage of imported goods stood at  around 35.5 per cent down from 36.3 per cent during the first six months of last year. 

Garments, fruits and vegetables, pharmaceuticals and fertilisers were foremost of the country’s exports which increased  while the value of potash and crude phosphate exports dropped, according to the DoS report. 

Imports of crude oil and its derivatives, machinery, vehicles and their spare parts were among the main imports that went up while the value of imported electric machines and steel products declined. 

The DoS report showed that exports to Greater Arab Free Trade Area countries including Iraq, the North American Free Trade Agreement, including the US, and the European Union countries, including Italy, increased while national exports to non-Arab Asian countries, including India, regressed. 

Imports from Gulf Cooperation Council countries were valued at JD2.3 billion while Jordan’s total exports to those states totalled JD605.8 million. 

The Kingdom’s energy bill rose by 22.7 per cent during the first six months of 2014 to JD2.3 billion compared to JD1.9 billion during the January-June period of 2013. 

BENGHAZI, Libya — Libya may be on the brink of chaos but it is gradually boosting output in the vital oil sector after a crisis blocked export terminals for a year, sector executives say. "The country's production is rising constantly and should return to its level prior to this year if the situation stabilises in the various oilfields," interim Oil Minister Omar Al Shakmak said. Mohammed Hrari, spokesman for Libya's National Oil Corporation, said: "Production on Monday reached 550,000 barrels, up from around 400,000 barrels a day previously." In a statement to AFP, Hrari forecast "a production level of one million barrels a day [bpd] in September, with an increase in production in the Sharara and Al Fil [southwest] fields and a resumption of production in other fields in the east, west and south of the country". A first export cargo of 690,000 barrels of crude left Ras Lanuf, 700 kilometres east of Tripoli, last week bound for Italy, Hrari indicated. Another cargo should leave Al Sedra terminal "probably next week”, he said. Libya's return to the market has hit oil prices, which slumped to a four-month low in London on Monday before recovering in Asian trade on Tuesday.

RAMALLAH, Palestinian Territories — In Gaza, Israelis and Palestinians are battling it out with rockets and air strikes. But in Israel and the West Bank, the two sides have found a new weapon: boycotting.

Local products are flying off the shelves in the occupied West Bank while Israeli goods are being left untouched. 

And in Israel, Arab shops are deserted — even on the Jewish day of rest, when Arab Israeli businesses have always made their biggest takings. 

“These days I have changed my habits. Because of the Israeli war against Gaza, we stopped buying any Israeli products,” said Salah Mussa, a Ramallah resident. “Now we are only buying Palestinian products. This is not only my decision, it’s a family decision.”

Overseas, a Palestinian-led boycott campaign has seen growing success in recent years. 

Known as the BDS movement — boycott, divestment and sanctions — it aims to put political and economic pressure on Israel over its occupation of the Palestinian territories in a bid to repeat the success of the campaign which ended apartheid in South Africa. 

Now, spurred on by the recent bloodshed in Gaza, the campaign is making its first inroads in the West Bank where locals have had little alternative to Israeli products due to import restrictions. 

Omar Barghouthi, a Palestinian human rights activist and co-founder of the BDS movement, believes the deaths of more than 2,000 people in Gaza has changed the picture and will lead to a sustained boycott campaign.

“The massacre committed by the Israeli regime... in Gaza has triggered almost unprecedented popular campaigns of boycott against Israeli companies and institutions,” he told AFP. 

The movement, he says, is working to ensure the boycott lasts “well after the end of the current phase” of the Gaza war.

Product warnings  

To boost the campaign, the boycott is being widely publicised through television ads as well through social media.

And in shops across the West Bank, Israeli products have been slapped with labels reading: “Boycott Israel” and “For your information: in buying this product, 16 per cent of the price goes to the Israeli army.”

Other shops have gone even further and taken Israeli products off the shelves. 

“We have completely removed Israeli products from the supermarket and replaced them with local substitutes,” explained Nidal Hamerani, manager of a Ramallah supermarket.

Boycotting Israeli products is also a way of strengthening the Palestinians economy which has been badly stifled by restrictions imposed by Israel, says campaigner Riyad Hamad. 

“We need to make people aware of the damage they cause to the Palestinian economy when they buy Israeli products: a high unemployment rate and a ravaged economy,” he said.

The boycott has already paid dividends for some Palestinian businesses.

Pinar, a Ramallah-based firm which manufactures diary products, has already had to increase its number of employees, who are working round-the-clock to meet the surge in demand. 

Managing Director Muntasser Bedarna says production had increased by “between 30 and 40 per cent”.

He believes that Palestinian dairy producers now hold “a 60 to 65 per cent market share of the milk market in the West Bank and Gaza. 

“Before the boycott, Israel controlled 60 per cent while the Palestinians shared the remaining 40 per cent,” he indicated. 

According to Avi Nudelman, former head of the Israeli-Palestinian Chamber of Commerce, the boycott is unlikely to have much of an effect on Israel’s economy.

“It’s a nice idea but it won’t last long,” he said. “The Palestinian sector is only a tiny part of the overall market for Israel.”

Data from Israel’s Central Bureau of Statistics show that in the first quarter of 2014, Israel exported $816 million worth of goods to the Palestinian Authority. 

The overall volume of Israeli exports in the same period was $12.9 billion, meaning trade with the Palestinian Authority accounted for around 6.3 per cent of the total.

Arab Israeli shops struggle 

On the Israeli side, Foreign Minister Avigdor Lieberman, known for his bellicose anti-Arab statements, called on the public to boycott Arab businesses after the community staged a one-day solidarity strike early on in the war with Gaza. 

At the Arab market in the northern port city of Haifa, William Rahil who runs the Mama Pita eatery says he has lost “100 per cent” all of his Jewish customers.

Next to his restaurant, someone has put up a sign requesting donations for medicine for the children of Gaza, which he says has sparked calls to boycott his restaurant and even extreme postings calling for the air force to “blow up Mama Pita”, he said. 

At a cafe nearby, Fawzi Hanadi said he’d lost “50 per cent” of his customers since the beginning of the Israeli offensive which began on July 8.

Effects of the boycott can also be seen on the roads where Jewish taxi drivers display Israeli flags in order to attract customers who don’t want to pay an Arab driver.

For Arab Israeli MP Bassel Ghattas, the boycott is reason to reflect on the economic contribution of Israel’s Arab minority who represent about 20 per cent of a population of around 8 million people. 

The descendants of the 160,000 Palestinians who remained on their land after the creation of Israel in 1948, Arab Israelis account for around $14 million of consumer spending every year, he indicated.

AMMAN — The Jordan Phosphate Mines Company (JPMC) will increase its production and exports in the coming months, JPMC  Chief Executive Officer Shafiq Ashqar told representatives of cement and phosphate transporting companies during a meeting. He said JPMC plans to increase exports to consuming markets and allied companies in Indonesia. Ashqar noted that these plans would benefit JPMC and the transport companies. Participants at the meeting discussed obstacles facing the sector and the importance of land transport in sustaining the phosphate industry.

AMMAN – Jordanians topped the list of Arab investors in Dubai’s property market during the first half of this year, according to official data from the Gulf emirate. 

Figures released by Dubai Land Department (DLD) on Saturday showed that Jordanian investors registered 640 transactions valued at 1.347 billion United Arab Emirates dirhams –– around JD260 million or $366 million –– during the January-June period of 2014. 

The report  revealed that a total of 20 foreign and Arab nationalities invested 37.5 billion dirhams (JD7.2 billion, $10.2 billion) in Dubai properties during the first six months.

Jordanian investors were followed by Lebanese who purchased 459 properties valued at 1.2 billion dirhams (JD238 million). Egyptians came third on the list followed by Iraqis. 

According to DLD’s report, Indians were the top investors as they spent over JD2 billion on 4,417 properties by the end of June of this year.

Britons came second on the table of foreign investors with 2,258 transactions worth JD1.1 billion, followed by investors from Pakistan, Iran and Canada. 

DLD Director General Sultan Butti Bin Mejren expects demand on properties in Dubai to grow even further in the near future as there would be some major real estate projects.    

“We are extremely proud of these positive results, as they reflect a building momentum in Dubai’s real estate market which has now re-asserted itself on both the regional and global stage. We are certain that the future will see even more demand, especially in light of the government’s declaration of forthcoming major projects,” he was quoted as saying on the Facebook page of the DLD. 

WASHINGTON — Following an unprecedented series of spin-offs by major US media companies, the print news industry now faces a rocky future without financial support from deep-pocketed parent firms.

The wave of corporate breakups comes with newspapers and magazines struggling in a transition to digital news, and shareholders of media conglomerates increasingly intolerant of the lagging print segment.

Gannett, publisher of USA Today and dozens of other newspapers, became the latest to unveil its plan, splitting its print and broadcast operations into two separate units in a move to "sharpen" the focus of each.

This follows the recently completed spin-off by Tribune Co. of its newspaper group, which includes the Los Angeles Times and Chicago Tribune, and Time Warner's separation of its magazine publishing group Time Inc.

Two other newspaper groups, EW Scripps and Journal Communications, announced last month they would merge and then spin off their combined newspaper operations while creating a separate entity focused on broadcasting and digital media.

The trend arguably took hold last year with Rupert Murdoch's split of his empire into separate firms focused on media-entertainment and publishing — 21st Century Fox and the newly structured News Corp.

'Cast out of house' 

The wave of spin-offs "certainly plays into the perception that these are children being cast out of the house by their parents", said Mark Jurkowitz, associate director of the Pew Research Centre's Journalism Project.

Newspapers were snapped up by media groups in an era when print was hugely profitable, but other segments of the media conglomerates are now driving profits, such as local television.

"The market doesn't think much of the newspaper industry's future," Jurkowitz added.

Industry consultant Alan Mutter argues that publicly traded newspaper firms still produce an average profit margin of 16 per cent, higher than that of Walmart and Amazon.

But Mutter said on his blog that profits and newsroom staffing have taken a huge hit in recent years, and that newspapers have failed to do enough in the digital arena.

"Rather than reliably 'owning' their audiences as they once did in print, the internal metrics at every newspaper show an increasing dependence on the likes of Google, Facebook and Twitter to generate the traffic that is the lifeblood of any media enterprise," he indicated.

According to Dan Kennedy, a journalism professor at Northeastern University, newspapers are recovering from the negative impact of earlier corporate tie-ups.

"It's really corporate debt and the expectations of Wall Street that have done as much to damage the newspapers business as Craigslist," Kennedy said. "Newspaper margins are still pretty good. And when you have newspapers owned by private companies without debt, some of them are doing pretty well."

Some analysts say that the breakup of big media firms may force publishers to create ways to connect with readers online.

"The real problem with newspaper industry has not been with the dead tree part, it is the failure to monetise the digital eyeballs," Jurkowitz indicated. "Unless there is an increase in digital revenue streams it's hard to imaging them getting out of the situation they are in."

The industry is closely watching the efforts of newspapers like The New York Times, which is experimenting with new digital access plans, and The Washington Post, which under new owner Jeff Bezos has boosted online readership to record highs.

'Not the death phase' 

Kennedy said that while newspapers may be profitable and an important part of the community, they may not be able to meet Wall Street's expectations for growth.

"It's not a growing business," Kennedy remarked.

Private owners can still keep the business in the black, said Kennedy, citing the record of Boston Globe's new owner, sports magnate John Henry.

But he added that newspapers need to make considerable investments "to make a smart transition to digital" in the coming years.

Peter Copeland, a former Scripps Howard News Service editor and general manager who now is a media consultant, noted that the breakups are logical and generally positive for newspapers.

"It's better for the newspapers and TV to be separate," Copeland said. "They were never a match. They are very different businesses".

Now, he added, the owners "will be able to focus 100 per cent on the newspapers".

According to Copeland, newspapers may end up severing their corporate ties and going back to their roots of local and private ownership.

"Newspapers always had difficulty" being part of corporate empires, Copeland indicated. "I think newspapers are entering another phase. It's not the death phase, it's just another phase in the life cycle."

SAO PAULO — Russia's embargo on US and European Union (EU) food products has opened a window of opportunity for Latin America, which could capitalise on the Ukraine crisis to become a major food supplier to Moscow.

Furious over the sanctions Western countries have imposed on Russia over its support for Ukraine's separatist rebels, the Kremlin announced on August 7 it was placing a "full embargo" on most food imports from the United States and EU.

That could enable major Latin American food producers like Brazil, Argentina, Chile and Mexico to get a foothold in the Russian market, analysts told AFP.

But challenges abound, including long shipping distances, production costs, the difficulty of scaling up production to meet massive Russian demand, and the political tensions such exports could create with Western allies.

"This could motivate Latin American companies to turn towards the Russian market. It would be with considerable caution though, because of the political situation," said Mexican academic Jesus Valdes Diaz de Villegas of Iberoamericana University's business department.

Such a move would have to come from private firms, "without any kind of statement of support for Russia on the part of the government", he added.

Russian President Vladimir Putin reached out to Latin America last month on a six-day tour that included a stop in Brazil, the region's largest food producer.

Moscow then sealed import deals with two dozen Brazilian poultry companies and five pork producers, just days before announcing its Western import embargo.

Russian health regulators have since granted new import permits to 87 meat producers and two dairies in Brazil.

"From the commercial point of view, it's an opportunity for Brazil. From the political point of view, it's a problem Brazil will have to deal with," Jose Augusto de Castro, the director of the Brazilian Foreign Trade Association, told AFP.

The South American country's bilateral trade with Russia totalled $3 billion in the first six months of the year, $563 million of it in beef.

Castro estimated the country's additional exports to Russia this year could add up to an extra $300 million to $500 million over previous years.

'Strictly business' 

Other Latin American countries are smelling similar opportunities.

Russia is currently just the sixth-largest market for Chilean food exports, but businesses there have been in talks with Russian officials to increase exports of fruits and fish.

"The Russians have asked us to help them find suppliers," said Diego Vicente, the manager of the National Agriculture Society's Russia-focused Business Development Platform.

The Russian embargo is an "opportunity" for Chile, said the director of the country's International Economic Relations office, Andres Rebolledo, insisting it was "strictly a business matter".

Russian officials have also been in contact with Argentine farmers.

"We've gotten a lot of requests from Russia, mainly in citrus, dairy and meats," said Matias Garcia of the Argentine-Russian Chamber of Commerce and Industry.

"Consultations have increased, because the major Russian distributor has to replace the products it used to import from countries like Germany, Italy or Holland. There's unprecedented potential," he added.

But he noted that insufficient production capacity and finding mutually attractive prices could pose obstacles.

For Mexico, which currently sends just one per cent of its exports to Russia, the situation provides an opportunity to diversify its partners and reduce its food industry's dependence on the US.

Currently, Mexico runs a trade deficit with Russia, but the embargo could change that, said Antonio Gazol Sanchez of the National Autonomous University of Mexico's school of economics.

"Now an opportunity has opened to balance our trade with Russia if we take advantage of the gap the European Union is leaving," he added.