My finance view

PARIS–A trader blamed by the French bank Soci?t? G?n?ral for a massive fraud was taken into custody on Saturday, judicial officials said.

Financial police in Paris were to question Jerome Kerviel as part of a probe into the bank’s announcement Thursday the 31-year-old trader was behind a fraud costing the bank $7.14 billion, judicial officials said. They spoke on condition of anonymity because the investigation is ongoing.

Skeptics from Kerviel’s neighbours to France’s prime minister have questioned whether a single futures trader could have managed such large sums savings account payday advance. Adding to the mystery, the bank said Kerviel may not have made any personal gain from his unauthorized trades.

The bank said it discovered the fraud last weekend and unwound the trader’s losing bets starting Monday, when world markets tumbled.

Some analysts have questioned whether the bank exacerbated the fall and indirectly led to the U.S. Federal Reserve’s subsequent decision to cut rates.

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DETROIT–General Motors Corp reported worldwide sales yesterday of 9.37 million vehicles in 2007, coming in just ahead of Japanese rival Toyota Motor Corp. in a closely watched race for the top spot in global sales.

GM, which was expected to lose its title of the world’s largest automaker for the first time in 76 years, sold 9,369,524 vehicles in 2007. Toyota sold about 9,366,000 units, a source said yesterday.

The Japanese automaker earlier this month publicly announced global sales of 9.37 million for 2007, saying it would disclose more precise figures in late January.

GM said its total global sales rose 3 per cent from a year earlier, driven by strong growth outside North America.

Still, the two automakers are neck-and-neck, with only about 3,500 vehicles separating them at a time when Toyota has been growing in the United States – the world’s single largest market for vehicle sales – while GM’s domestic market share has been slipping.

Since 1998, GM’s global sales have grown at an average annual rate of 1.5 per cent, while Toyota’s growth rate has been five times that.

The two automakers have been perceived to be in a heated race this year after Toyota overtook GM in the first quarter and then fell behind by just a few thousand units later in the year.

"We are very competitive here at GM and obviously we’d like to win," said GM’s chief sales analyst Mike DiGiovanni cash advance.

After losing more than $12 billion (U.S.) in 2005 and 2006, GM is in the middle of a restructuring of its North American operations that includes slashing more than 34,000 jobs and closing 12 plants.

GM’s annual sales in North America, its largest and historically most profitable market, fell 6.1 per cent, hurt by factors including high gasoline prices, a weak housing market and a subprime mortgage meltdown.

The automaker, which has been struggling in the U.S. – has been growing overseas as it loses market share to Japanese competitors at home.

Outside the U.S., sales totalled 5.5 million vehicles, 59 per cent of total sales. Sales in the Asia Pacific region rose 15.1 per cent led by China, while sales in Latin America, Africa and the Middle East rose 19.4 per cent. Sales in Europe rose 8.9 per cent.

DiGiovanni also said he expected global industry vehicle sales to grow 3.5 per cent to 73 million units in 2008.

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Grand juries in Clayton and Fulton counties have handed down indictments against three metro Atlanta residents for state income tax violations, the Georgia Department of Revenue reported Wednesday.

Quileisha Jones Mosley, 29, of Riverdale, Ga., was indicted on seven counts of theft by taking. The indictment alleges Mosley in got refunds greater than $500 on seven separate occasions by filing fraudulent returns for tax-year 2003 with the Georgia Department of Revenue. Mosley faces up to 10 years on each count. The Clayton County grand jury issued the indictment.

Anitra Myles, 31, of Atlanta, was indicted by the Fulton County grand jury on two counts of theft by taking and two counts of computer forgery. The indictment alleges Myles received refunds greater than $500 on two occasions by filing fraudulent returns with the Georgia Department of Revenue in 2003 faxless payday loan. Also in 2003 on two separate occasions, Myles allegedly electronically filed returns using the names of two different people with the intent to defraud the state. Myles could get up 10 years on each count. The indictment was issued by the Fulton County grand jury.

Arnold Gervais, 29, Marietta, Ga., was indicted on one count of computer theft and one count of criminal attempt to commit theft by taking. The indictment claims during 2006, Gervais unlawfully used a computer network to file a Georgia tax return that contained false information with the intention to receive a fraudulent refund in an amount greater than $500. Gervais could be imprisoned up to 10 years on each count. The indictment was issued by the Fulton County grand jury.

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INVESTORS continued to pile out of stocks en masse yesterday as the sharemarket capped off its worst start to a new year in 17 years due to continuing concerns about a likely recession in the US.

The sharemarket extended its losing streak to five days after falling 1.6 per cent yesterday, taking its losses for the week to more than 5 per cent. The benchmark ASX 200 Index closed down 97.1 points at 5981.6 yesterday, while the broader All Ordinaries Index slumped 92.9 points to 6054.4.

Shaw Stockbroking’s head dealer, Jamie Spiteri, said offshore investors were continuing to reduce their stakes in Australian stocks, leaving a vacuum because of insufficient interest from local institutions.

“It’s decaying fortunes. We have an equity market here in Australia that is feeling the effects of all the global uncertainty, in particular the uncertainty out of the US,” he said. “The ripple effect of the downturn in the US just doesn’t go away.”

The banks - often safe havens in volatile periods - were among the hardest hit again yesterday as investors continued to assess the institutions’ exposure to the subprime mortgage crisis in the US and the wider credit crunch in global financial markets.

Australia’s two biggest investment banks, Babcock & Brown and Macquarie Group, fell 11 per cent and 4.5 per cent respectively over the week. Babcock dropped 80c to $22.78 yesterday and Macquarie fell $1.42 to $69.88.

Westpac and St George joined the other large retail banks yesterday by raising their mortgage interest rates 15 and 20 basis points respectively. Westpac fell 60c, or 2 per cent, to $26 and St George dropped 61c to $30.63.

Commonwealth Bankshed $1.06 to $55.89, ANZ fell 39c to $25.72 and National Australia Bank dropped 12c to $35.20 guaranteed approval cash advance loans. “The continued uncertainty attached to Centro probably doesn’t sit well with the assessment of overseas holders in our banks,” Mr Spiteri said.

The market this week recorded its second technical correction - classified as a fall of 10 per cent - in less than six months. Even the resources sector, the main driver of the past five years of growth in equities, is finding any positive news overshadowed by negative sentiment emanating from the US.

Mr Spiteri said the main reason for a decline in resource companies yesterday was not a dip in prices for some metals and oil but the dismal outlook overseas. BHP Billiton fell 79c to $38.30 yesterday, or 6 per cent over the week, while Rio Tinto dropped $2.40 to $125.60, or almost 5 per cent over the five trading days. Earlier, market strategists interpreted comments by the US Federal Reserve chairman, Ben Bernanke, as an indication the central bank will reduce rates by up to 50 basis points later this month. Dr Bernanke said the Fed was ready to take “substantive additional action as needed”.

“Yes, I am sure the Fed will reduce rates over the course of 2008 but … the horse might have bolted,” Colonial First State’s head of investment markets research, Hans Kunnen, said yesterday.

“The outlook that Dr Bernanke painted wasn’t particularly attractive to equities investment, at least in the early part of 2008. The slowdown that is currently in train will inflict pain.”

While economic data in Australia remained strong, Mr Kunnen said it hinted at higher interest rates here, “and that doesn’t go down well with investors”.

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