05/31/2011 (10:24 pm)
Turkish President Abdullah Gul met with his counterpart in Turkmenistan on Monday for urgent talks thought to be related to $1 billion in outstanding bills owed to Turkish construction companies that have revamped the capital city.
Turkish companies have played a leading role in transforming this old sleepy post-Soviet backwater into a city of soaring marble-clad government offices and apartment blocks.
But a report this month by risk analyst D&B said 25 Turkish firms are preparing to take legal action against Turkmenistan over the hitherto unexplained nonpayments.
Turkish media reported Gul’s visit is aimed at recovering the debt and heading off complaints to the International Center for Settlement of Investments Disputes, or ICSID. Several Turkish businessmen said they believed it to be the central issue of Gul’s visit, speaking on condition of anonymity for fear of imperiling their investments in the tightly controlled Central Asian nation.
Gul himself was coy on the nature of the visit, but warned what was at stake before leaving Turkey earlier Monday.
“With my visit, we will be reviewing all aspects of our cooperation in the fields of economy, trade, energy, investments and education,” Gul said.
“Turkmenistan is the country where Turkish businessman have undertaken the largest number of projects in Central Asia,” he said, adding that Turkish companies have developed projects worth $21 billion since Turkmenistan gained independence after the collapse of the Soviet Union in 1991.
Turkey’s daily newspaper Hurriyet reported last month that the Turkmen government was refusing to pay Turkish companies $1 billion owed for building work. It also said Gul, who is known to take a close interest in Turkish investors abroad, had scheduled a trip to discuss the issue with Turkmen officials.
Foreign companies based in Turkmenistan, run as an opaque and authoritarian fiefdom since independence, are normally highly reluctant to publicize problems with the government. Turkish builder Ickale Insaat Ltd. broke ranks late last year, however, when it filed a complaint against with the ICSID.
“More are to follow,” said Ozan Ickale, of the Ankara-based builder. “The Turkish companies are slowly all seeking their rights through arbitration.”
He said a number of Turkish contractors have been jailed in Turkmenistan or are barred from leaving the country “for simply seeking their rights.” Ickale itself is owed over $50 million, he said.
“Not only have we stopped our activities, but we were lucky to have come out of there,” he said.
Ickale said the Turkish government has promised to help them and the Turkish Undersecretariat for Trade is following their case. He said he did not know, however, if the president was expected to discuss their grievances in Turkmenistan.
Ickale said three other companies had cases pending at the International Center for Settlement of Investments Disputes.
It is unclear what would have prompted a delay of payments by the Turkmen government, although revenues were reportedly badly hit in 2009, when Russia stopped buying the country’s gas following a pipeline explosion for which both sides denied responsibility. China has since stepped in to buy large amounts of gas, but the Turkmen government will likely face straitened financial conditions over the next few years as its borrows and spends billions on developing its large energy reserves.
International energy majors have been actively courting Turkmenistan for access to its massive natural gas reserves, but complications experienced by mid-level investors have highlighted the dangers of committing financial resources in the country.
According to Turkmen government estimates, there are more than 600 Turkish companies operating in Turkmenistan in areas including the textile and construction sectors.
Turkmenistan has for more than a decade been using revenues from gas sales to finance a construction spree that has changed the face of the capital, Ashgabat. Much of the work there and in its fledgling Avaza tourist resort on the Caspian Sea coast has been completed by Turkish companies.
The problems reportedly endured by Turkish companies come in tandem with a high-profile and acrimonious dispute between Turkmenistan and Russian telecommunications company MTS, which serviced around 2.4 million mobile customers until it had its license pulled in December. That left the country’s 5 million-strong population entirely reliant on inefficient state-owned mobile provider Altyn Asyr, which has struggled to meet popular demand.
Prince Alwaleed bin Talal said an oil price of $70 to $80 a barrel is in the best interests of Saudi Arabia because it diminishes the urgency in the U.S. and Europe to develop alternative energy sources.
“We don’t want the West to go and find alternatives,” Alwaleed, a nephew of Saudi King Abdullah, said in an interview on CNN’s “Fareed Zakaria GPS,” scheduled for broadcast today. “The higher the price of oil goes, the more they have incentives to go and find alternatives.”
The rebellion in Libya, political turmoil in Bahrain and speculative buying are responsible for driving oil prices to more than $100 a barrel, Alwaleed said. Crude for July delivery rose 36 cents to settle at $100.59 a barrel on the New York Mercantile Exchange May 27. Prices have increased 35 percent in the past year.
Alwaleed, who owns Citigroup Inc. (C) shares and ranks 26th on Forbes magazine’s list of the world’s richest billionaires with a net worth of $19.6 billion, said he continues to invest in the U.S. and that the nation is “down, for sure, but it is not out.” Standard & Poor’s lowered its U.S. credit-rating outlook on April 18 to negative, citing the widening budget deficit.
Saudi Arabia needs to enact laws that allow for greater public participation in government, Alwaleed said. U.S. President Barack Obama’s administration is seeking to encourage pro-democracy movements inspired by those that ousted longtime leaders in Tunisia and Egypt as part of the so-called Arab Spring to create broader, regional changes.
How does a trade management partnership work in a construction project?
A trade management partnership, or TMP, is a streamlined delivery method that engages key subcontractors in project planning to tap their knowledge of specific types of installation details and their cost. Subcontractors in the “trades” work with the project designer and construction manager to solve problems, devise schedules and sequence construction steps before building begins.
TMP starts with developing broad schematic drawings finalized by team members who share the risk of delivering a guaranteed maximum price on the project. The method is especially useful for large-scale health care construction projects in which the owner wants greater control over meeting goals by avoiding contractual rigidity.
HOK most recently used TMP in construction of the 705,000-square-foot Columbia St. Mary’s Hospital in Milwaukee.
TMP delivered several advantages to the project. First, the steel contractor was able to lock in a firm price on steel at a time of extreme price fluctuation because of heavy demand in China and Milwaukee. The glass curtain wall installer offered cost-saving strategies that standardized window production while maintaining the owner’s desire to flood patient floors with light. Ductwork design was dissected by the mechanical contractor to produce the aesthetics and performance required by the owner, including ultra quiet ventilation on patient floors.
By cultivating constant communication that results in effective resolutions, TMP produces a high degree of trust among partners. TMP also delivers significant transparency in budget adherence with all savings going to the owner.
Three of the nation’s four largest banks are launching a system that lets customers transfer money from their checking accounts using only a mobile number or email address.
The banks say the service, called clearXchange, will make payments easier than traditional money transfers, which require a bank routing number and move through a system controlled by Federal Reserve banks.
The service is a joint venture between Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. The banks expect to add other financial institutions, eventually creating an industry-wide utility for moving money.
ClearXchange is an attempt by the banks to retain fee-weary customers who have embraced alternatives such as prepaid debit cards and eBay Inc.’s PayPal service.
The clearXchange system will be available nationally to customers of the three banks. The banks noted that clearXchange is linked to existing accounts, so customers don’t have to sign up and provide new personal information as they would with PayPal.
“Customers will be able to send and receive money even more quickly and easily _ with full confidence their funds are in a bank account without worrying about cash, checks or higher-cost services,” said Jack Stephenson, director of Mobile, eCommerce and Payments at JPMorgan cash advance.
The service is a direct threat to PayPal, which dominates the market for online electronic payments with nearly 100 million active users.
EBay said last month that PayPal processed $27.4 billion in payments during the first quarter, a 28 percent increase over the previous year. PayPal’s revenue was $992.3 million, and eBay expects PayPal’s revenue to surpass that of the auction site in the next few years.
“This is yet another sign that the traditional payment industry’s model is looking more and more like PayPal’s,” said Dan Schatt, head of financial innovations for PayPal, in an e-mailed statement.
ClearXchange will be managed by John Feldman, a Bank of America employee. Like Bank of America, it will be based in Charlotte, N.C.
Test results returned Monday found that DNA from former International Monetary Fund leader Dominique Strauss-Kahn matched material on the work clothes of a Manhattan hotel maid who says he attacked her, two people familiar with the investigation told The Associated Press.
The two people would not describe the material found on the shirt, but said DNA matched a sample from Strauss-Kahn, who submitted to testing after his arrest more than a week ago. He denies the charges.
The two people said additional testing was being performed on other items. They were not authorized to speak publicly about the matter and spoke to the AP on condition of anonymity.
During their investigation, authorities cut out a piece of carpet and swabbed sinks and other surfaces in his hotel room. Investigators told the AP they believed the carpet in the hotel room may contain Strauss-Kahn’s semen, spat out after an episode of forced oral sex by the maid.
The forensic evidence is the first to link Strauss-Kahn to the woman _ and it’s also on track with what his lawyers have suggested would be his defense.
Strauss-Kahn’s attorney Benjamin Brafman declined to comment on Monday. At a court hearing last week, he told a judge that forensic evidence developed in the investigation “will not be consistent with a forcible encounter” _ leading to speculation that Strauss-Kahn’s defense would argue that it was consensual.
NYPD spokesman Paul J. Browne and the Manhattan district attorney’s office would not comment.
The one-time French presidential contender has been charged with a criminal sex act, attempted rape and sexual abuse and is free on $1 million bail, under house arrest at a lower Manhattan apartment. He has been accused of attacking the 32-year-old West African immigrant on May 14 in his luxury suite at the Sofitel hotel near Manhattan’s Times Square. His lawyers say he is innocent.
Staff at the Sofitel told authorities that the 62-year-old had made passes at them the day before the alleged attack, including flirting with a clerk and calling another employee to ask her up to his room, according to a third person with direct knowledge of investigators’ interviews with staff.
Strauss-Kahn had flirted with one female staff member who accompanied him to his suite to make sure his accommodations were satisfactory after he checked in on May 13, the person said. Later, he phoned the desk clerk who had checked him in, asking her if she would like to get together with him when she got off duty, the person said. The desk clerk refused, saying she was not allowed to socialize with the VIP guest, the person said.
That person also wasn’t authorized to speak publicly and spoke to the AP on condition of anonymity.
On Monday, lawyers for Strauss-Kahn continued to search for new digs for their client as he awaits trial. His bail agreement hit a snag late last week after tenants at the Upper East Side apartment building chosen for his house arrest refused to allow him, citing unwanted media attention.
Strauss-Kahn is currently being housed at a temporary location under watch by armed guards with Stroz Friedberg, the same company that guarded disgraced financier Bernard Madoff. It was not clear when he would be moved. French and U.S. media have been staking out the building where Strauss-Kahn spent the weekend after he was released from his Rikers Island jail cell.
He resigned last Wednesday from the IMF.
His attorneys have described Strauss-Kahn as a loving father and family man. They say his actions after the alleged attack are not those of a guilty man eager for a quick escape. He left the hotel, had lunch and then phoned later to ask if he’d left anything behind. When he was told by hotel staff they had his cellphone, he told them exactly where he was: at John F. Kennedy International Airport on a flight bound for Paris. Authorities pulled him from the jetliner.
Almost every resale home purchase is conditional on the buyer being satisfied with the results of a home inspection.
But what does satisfied mean? When can a buyer back away and when are they just using the inspection as a convenient way to find a loophole when they get cold feet?
If the buyer decided not to do an inspection and then just cancelled the deal, they would likely lose their deposit and could probably be sued for breach of contract by the seller if they sold to anyone else for less money.
Inspection conditions are not an automatic option to terminate, as many buyers believe. A lot will depend on the exact wording of the condition language. It will help a buyer if it says that the buyer has to be satisfied with the inspection in their
The company behind Fila shoes and clothing is taking a swing at golf, forming a foursome to purchase the maker of Titleist golf balls and FootJoy shoes from liquor company Fortune Brands Inc.
Korean investors led by athletic company Fila Korea Ltd. and Mirae Asset Private Equity plan to buy Fortune’s golf giant Acushnet Co. for $1.2 billion. The purchasing group also includes the National Pension Service of Korea and Korea Development Bank.
Titleist is the top-selling golf ball and a leader in golf clubs, while the unit’s FootJoy brand is the leader in golf shoes and also makes golf gloves and jackets, Fortune said.
The legions of golfers who tee up with Titleist balls and clubs won’t notice any difference, Fila Korea spokeswoman Lauren Mallon said.
“We’re going to stay consistent,” she said in a phone interview.
Meanwhile, the deal is a major step in Fortune’s plan to transform itself into a standalone liquor company. The company plans to separate its Beam liquor business and its home and security businesses into two companies later this year.
The buyers will keep Acushnet’s headquarters in Fairhaven, Mass., and will retain the management team led by CEO Wally Uihlein.
Acushnet’s revenue exceeded $1.2 billion in 2010, with nearly half of that coming outside the U.S., Fortune said. Operating income before charges was $80 million last year. Acushnet has about 5,000 employees.
“This just underscores the next chapter in the company,” Uihlein said. “… We’re a global company now. We already knew it, but now we’re officially global. The last thing you want to be is U.S.-centric.”
Uihlein’s son, Peter, is the top-ranked golf amateur in the world. He won the U.S. Amateur last summer at Chambers Bay and earlier this week won the Ben Hogan Award as the nation’s top college player. He is playing the U.S. Open and British Open this year before returning to Oklahoma State for his senior season.
Fila Korea acquired the global Fila shoe and clothing brand in 2007. Fila Korea already has a foothold in golf, with a golf clothing and footwear line in Korea. But the acquisition of Acushnet makes the buyers a major player in the golf business.
“It really gives Fila Korea another entree to build a business in emerging markets with great growth potential,” Mallon said.
Fila executives predicted strong growth opportunities in Asia for the golf brands.
Gene Yoon, chairman and CEO of Fila Korea, said the acquisition will add “a stable of premiere world-class brands.”
“With our extensive knowledge and reach in Asia, we believe that the Acushnet brands have incredible new opportunity for growth in the emerging markets in Asia,” he said.
Fortune, which acquired Acushnet in 1976, expects to reap $1.1 billion after taxes and expenses when the deal to sell the unit closes this summer.
The company, based in Deerfield, Ill., announced late last year that it was splitting into three companies, keeping its liquor business led by Jim Beam bourbon, while shedding units that make Titleist golf balls, Moen faucets and Master Locks.
Fortune is the world’s fourth-largest premium spirits business with brands that also include Canadian Club, Maker’s Mark bourbon and Sauza tequila. The spirits business from its Beam Global Spirits & Wine subsidiary generated 2010 revenue of $2.7 billion in 2010.
“The proceeds from this sale will strengthen Fortune Brands’ balance sheet and support strong capital structures for both Beam and Fortune Brands Home & Security as they look to the prospect of competing as independent companies later this year,” Carbonari said.
Fortune said earlier this month that it had submitted filings with federal regulators as part of its proposed spinoff of its home and security business, which also includes MasterBrand cabinets.
Fortune Brands’ shares were down 57 cents at $64.32 in early afternoon trading Friday.
Federal Reserve Bank of St. Louis President James Bullard said the central bank may keep its monetary-policy unchanged until late this year, and that declining inflation expectations have curbed the need to begin withdrawing record stimulus.
“It does take some pressure off the Fed,” Bullard, 50, said in an interview at Bloomberg News headquarters in New York. “I take it seriously that market indicators of inflation have come down. The data has been softer, and these global uncertainties have weighed on markets.”
Fed officials are discussing how quickly to begin tightening policy after completing the purchase of $600 billion in U.S. Treasuries by the end of June. They are also discussing a strategy for the exit, with a majority favoring ending the policy of reinvesting proceeds from maturing securities first before raising interest rates or selling assets, minutes of their April 26-27 meeting showed today.
“We will get some more data through the summer, have some meetings in the fall and by that time we will have more information of how things are moving along,” he said to response to a question on how long the Fed would “hold” policy after June.
Policy makers have differed in public comments on the timing of an exit. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said this month he favors raising the target interest rate this year, while Philadelphia’s Charles Plosser urged a pull-back in the “not-too-distant future.” New York Fed President William C. Dudley said the recovery hasn’t met the central bank’s goals.
Bullard said he sees Treasury securities as a key indicator of the public’s views on inflation. The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, shrank to as low as 2.26 percentage points today from 2.67 points April 11.
Bullard said his and other Fed members’ forecasts for as much as 4 percent growth over the remainder of this year are more optimistic than most private forecasts, and the central bank would be slower to tighten policy if Fed forecasts aren’t met. Growth will be 2.7 percent for the year, according to the median of 66 economists surveyed this month by Bloomberg News.
“We need to see a bit stronger data,” he said. “If we don’t, we are going to have to mark down a little bit.”
“If it is a little weaker, you could stay on hold longer,” Bullard said. “If it is stronger, you could take a move toward a tighter policy sooner.”
Change From July
Bullard’s concern this year over inflation represents a change from last July, when he urged purchases of Treasuries to head off the risk deflation. He was the first Fed official to support a second round of so-called quantitative easing. Policy makers in November approved the asset purchase plan.
The St. Louis Fed president said any tightening campaign should begin by shrinking the Fed’s balance sheet, which could be done “passively” by not reinvesting maturing mortgage- backed securities or by outright asset sales.
“Allowing the runoff to occur seems to be a likely first step,” he said. “Whether you would supplement that with actual sales is controversial and undecided at this point.” Interest rate changes would represent “bringing out the big guns” and likely come later, he said.
“If you could get away with it, it would make sense to shrink the balance sheet a fair amount and then come with interest rate increases,” he said.
Asked how long it would take to return the Fed to a normal balance sheet, Bullard said “five years is a reasonable number.” Many participants in the April Federal Open Market Committee Meeting agreed with that timetable, according to today’s minutes.
“Obviously we would not dump a lot on the market at any one time,” he said. “You would sell in a controlled way.”
Bullard said signs of job growth are among the reasons he’s more optimistic than many economists. The Labor Department said May 6 the economy added 244,000 jobs in April, more than forecast by economists, while the unemployment rate climbed to 9 percent.
The U.S. central bank should move ahead with a formal inflation target now because of rising doubts in “parts of financial markets” about its commitment to stem price gains.
“I and many others are determined to get this done,” he said. “It is the best of times to make a decision on this.”
In other comments, Bullard said the European debt crisis has overtaken rising oil prices as the top risk for the U.S. economy, and he urged politicians in Washington to reach agreement on reducing budget deficits.
“I’m a little more worried about Europe than anything else,” Bullard said. Any move to restructure Greek debt, an idea floated by European Union finance ministers for the first time this week, “has the potential to rock global financial markets, so it has to be handled very carefully,” he said.
In the U.S., lawmakers and investors shouldn’t take comfort in low borrowing costs because markets are often “complacent” about the risk from excessive deficit spending, he said. The yield on the benchmark 10-year Treasury note was 3.18 percent at 4:07 p.m. in New York today, below its average of 4.08 percent during the last decade, Bloomberg data show.
“You cannot take too much comfort from the fact that ‘Oh, nobody is worried about this today,’ because when the crisis is upon you it will really hit,” Bullard said. “It’s like the markets are almost asleep about the whole issue until one day you wake up and it becomes the primary issue.”
U.S. homebuilders are concerned that the struggling housing market won’t recover this year and some feel it may be getting worse.
Builders’ outlook for the industry in May was unchanged at 16, the National Association of Home Builders said Monday. It has been at that level for six of the past seven months.
Any reading below 50 indicates negative sentiment about the market. The index hasn’t been above that level since April 2006.
When asked about where they see sales of single-family home heading over the next six months, the builders offered their most pessimistic outlook since September.
Last year was the worst in more than a decade for sales of previously owned homes and the worst for new-home sales in nearly a half-century.
Fewer homes mean fewer jobs. Each new home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the builders’ trade group.
The trade group cited a handful of factors weighing on the housing market. Some were familiar _ tighter lending standards, high unemployment and an increase in the number of homes sold at foreclosure.
But the builders’ group also noted that higher gas prices were creating “consumer anxiety and reluctance to go forward with a home purchase,” said the group’s chairman, Reno, Nev., home builder Bob Nielsen.
About 90 percent of the builders surveyed said potential buyers are also holding back on purchases because they are concerned they won’t be able to sell their current home at a favorable price online cash advance.
Economists expect home prices will continue to struggle this year before a modest recovery takes hold. The hardest-hit states, including Arizona, California, Florida and Nevada, are inundated with foreclosures and short sales, when a lender allows a borrower to sell their property for less than what is owed on the mortgage.
Builders had been hopeful that a strong spring season, traditionally the best time for home construction, could help power a turnaround. But that has yet to happen.
Regionally, the West saw a two-point gain and the South received a one-point gain in their index of construction activity, both to 16. The Midwest held steady at 14. The Northeast fell five points, to 15.
The index gauging current conditions rose one point, to 16, while the recorded foot traffic of prospective buyers also rose by a point, to 14. But the outlook for the next six months fell two points, to 20. That was the lowest level in eight months.
The survey is analyzed by the builders’ trade group and Wells Fargo. This month’s survey was based on the responses of 339 builders.