Paris, January 24
French bank Societe Generale said Thursday it has uncovered a $7.14 billion fraud, one of history’s biggest by a single futures trader who orchestrated a series of bogus transactions.

The fraud destabilised a major bank already exposed to the subprime crisis. France’s second largest bank by market value said it must seek 5.5 billion euros ($8.02 billion) in new capital, and the chief executive offered to resign.

Trading in Societe Generale’s shares, which have lost nearly half their value over the past six months, has been suspended.

The bank said it detected the fraud at its French markets division the weekend of Jan. 19-20. In a statement announcing the discovery, it called the fraud ‘’exceptional in its size and nature.’’

A bank official said the trader “acted alone.’’ It said a trader at the futures desk had misled investors in 2007 and 2008 through a ‘’scheme of elaborate fictitious transactions.’’

The trader, who was not named, used his knowledge of the group’s security systems to conceal fraudulent positions, a SocGen statement said. An analysis confirmed the ‘’exceptional nature’’ of the fraud, the bank said.

The trader confessed to the fraud, the bank said, and was being dismissed. His supervisors were to leave the group. Chief Executive Daniel Bouton offered his resignation but it was rejected by the board.

The trader at SocGen was responsible for basic futures hedging on European equity market indices, the company said, making bets on how the markets would perform at a future date.

Futures trading began with selling commodities such as sugar or oil to be delivered at a specified date. The practice has expanded enormously in recent years to include extremely complex financial instruments, but the company statement said the trader was involved in the more basic forms of hedging.

If confirmed, the fraud would far outstrip the Nick Leeson trading scandal in 1995 that bankrupted British bank Barings. Barings collapsed after Leeson, the bank’s Singapore general manager of futures trading, lost 860 million pounds then worth $1.38 billion on Asian futures markets, wiping out the bank’s cash reserves. The company had been in business for more than 230 years.

The Bank of Credit and Commerce International failed after a 1991 scandal that led to claims by depositors and creditors exceeding $10 billion at the time.

Gilles Glicenstein, president of asset management at rival French bank BNP Paris France’s largest said, “It shows that we are in a very troubled period for banks, and I think that it’s in such troubled periods that difficult things happen.”

“This is not good news for Societe Generale, but also for banks in general. It can create doubt, but at the same time in this period, we are making efforts to be transparent in order to give confidence back,” he said at the World Economic Forum in Davos, Switzerland.

Axel Pierron, senior analyst at Celent, an international financial research and consulting firm, was stunned that a trader could be involved in such a massive fraud 13 years after the Barings Bank collapse.

At Societe Generale, the fraud announcement came on the back of subprime-related difficulties. Subprime writedowns linked to the crisis in financial markets amounted to 2.05 billion euros ($2.99 billion), Societe Generale said.

The Paris-based bank said that with the fraud and writedowns, it expects net profit of 600 million euros to 800 million euros ($874 million to $1.16 billion) for all of 2007. The Bank of France said it was immediately informed of the fraud and was investigating. The French market regulator said it had no comment. France’s Banking Federation also declined to comment.

Shares of SocGen were suspended after falling 4.1 per cent to 79.08 euros ($115.25) Wednesday. Full-year results will be announced February 21. — AP

New Delhi, January 24
Leveraging the buoyancy in the BPO, finance and banking segments in India, Aspect Software, one of the world’s largest contact centre solutions companies, is looking at a business growth of 30 per cent and increase its headcount in the country by about 20 per cent.

“The BPO, finance and banking segment in India is set to grow phenomenally in 2008 and we see immense opportunity to expand our presence and business here,” Lui Simhua, vice-president, Asia-Pacific and Middle East, Aspect Software, told The Tribune here.

As the company widens its market in the country, it is set to increase its headcount by about 20 per cent in the current year, he revealed. The company, which currently has four offices in India at Delhi, Mumbai, Chennai and Bangalore, has 250 employees on its roll.

Simhua, who is on a business visit to India, said the company being the solution provider to top 14 Indian BPOs, is all set to leverage its Indian presence in the West Asian region where potential for IT-related business is fast emerging.

The Chelmsford-headquartered company has also set up a Competency Centre in Delhi to provide hands-on experience in integrated Internet Protocol and traditional voice-based products and services for customer service, collections and sales and telemarketing business processes.

Asked whether the company plans to set up its office in Chandigarh or in the Punjab region, Lui said the geographical location would depend on the movement of business. In this context, he noted that a lot of Indian BPO companies are contemplating on setting up their BPO units in Chandigarh to take advantage of the skilled manpower available there.

Davos, January 24
The USA has said it is committed to a global trade deal by reducing tariffs and subsidies but expects other key WTO countries to reciprocate for successful completion of the Doha Round of talks.

Addressing delegates at the World Economic Forum (WEF) meeting yesterday, US secretary of state Condoleezza Rice said the USA was ready to work in concert with other nations to remove trade barriers before expiry of President George Bush's term later this year.

Referring to the ongoing WTO talks, she said President Bush has pledged that the USA would cut tariffs, subsidies to facilitate free flow of goods and services, including agriculture, if other nations do the same.

Earlier, India's commerce and industry minister Kamal Nath said Europe has indicated its willingness to review subsidies on agriculture products provided the USA took a decision in this regard.

Nath is expected to meet his Brazilian and Indonesian counterparts along with European trade commissioner Peter Mandelson and WTO chief Pascal Lamy on the sidelines of WEF meeting.

The informal luncheon meeting, to be hosted by Swiss economy minister Doris Leuthard on January 26, is aimed at bridging differences between the developed and developing countries.— PTI

Davos: Ahead of the monetary policy review by Reserve Bank, finance minister P Chidambaram today said if interest rates were a dampener to growth, appropriate response would be ensured.

"Our interest rates are set in order to contain inflation but if (high interest rate) is a dampener to growth, we will respond through appropriate fiscal and monetary measures," Chidambaram, who is here to attend the World Economic Forum, told reporters.

Admitting that there could be an indirect impact of the financial crisis in the US, whose central bank just cut interest rates to keep the economy from slipping into recession, he said the government was, however, not in favour of putting curbs on capital (inflow).

The drastic rate cut in the US would have consequences for India, including higher capital inflow and faster appreciation of the rupee.

Despite the fears of global recession the Indian economy is set to grow by a healthy 8.5 per cent next fiscal, the finance minister said, but sounded caution that high interest rates may have an impact on the growth trajectory.

The Reserve Bank of India is due to review its monetary policy stance on January 29. The scheduled quarterly review comes on the heels of a surprise 75 basis points cut in interest rates by the US Federal Reserve on Tuesday. — PTI 

Chandigarh, January 24
In an effort to check pilferage of oil from its oil tankers, Indian Oil Corporation has embarked on an ambitious project to install ground positioning system (GPS) to track the route taken by its tankers.

Highly placed sources in the IOC informed The Tribune that the project is now being implemented in all state offices of the company. It is expected that the project will become functional by the end of June. Surveys have already been carried out to for route mapping in various states. A final survey by a private consultancy is now on after which the GPS instrument will be installed on each tanker lorry. The cost of each instrument is around Rs 20,000.

It is learnt that the movement of all tanker lorries ferrying oil from the various terminals and depots will be monitored at the area head office in the states. In case of any deviation from the designate route, the tanker lorry drivers can be immediately pulled up.

This move follows large scale complaints of pilferage while the oil is being ferried from terminals to customers. Two years ago, tanker lorries ferrying oil from terminals and depots in Punjab to the army filling stations in Ladakh, were caught supplying water as the oil was pilfered along the way. It was then that the tankers were installed with a unique locking system, wherein they could be opened either by officials at the terminal or by the customer. However, as incidents of pilferage were still reported, IOC decided to install a GPS system.

H.S. Bedi, general manager, Punjab state office, IOC, informed The Tribune that about 2,200 tanker lorries in Punjab, Haryana and Himachal Pradesh, will be installed with a GPS instrument and the system will be in place in the next five months. 

Chandigarh, January 24
In a significant move to boost investors' sentiments in the state, the Punjab government's empowered committee on mega projects, headed by Chief Minister Parkash Singh Badal, today cleared industrial and agro projects worth Rs 749.2 crore.

A spokesman of the Punjab government said industrial projects worth Rs 499 crore comprising three manufacturing units and one industrial park besides three agro projects to the tune of Rs 250.20 crore were approved in today's meeting. It may be recalled earlier, nine pending projects worth Rs 1,345 crore were approved in the committee's meeting on November 6, 2007.

The projects cleared today included M/s Kaur Sain Spinners Limited, Ludhiana (Rs 120 crore), M/s Jindal Cotex Limited, Ludhiana (Rs 138 crore), M/s InBeu India International (P) Limited, Pathankot (Rs 65 crore), M/s Malhotra Land Developers & Colonisers Pvt. Ltd., Ludhiana (Rs 176 crore), M/s Khet-Se Agriproduce India Private Limited (Rs 90 crore), M/s Sunstar Overseas Limited, Amritsar (Rs 44.20 crore) and M/s SKOL Breweries Ltd. (Rs 116 crore), which is a subsidiary of SAB Miller India. The company started Indian operations in year 2000 and in a period of over seven years, an investment of over Rs 600 crore with 10 breweries in nine states has been made. 

New Delhi, January 24
The government today decided to grant more powers, including right to impose hefty fines, to the commodity market regulator Forward Markets Commission (FMC) to check manipulation and bring about greater trade discipline.

The empowerment would be done by bringing an ordinance, a decision on which was taken by the union cabinet, I&B minister Priya Ranjan Dasmunsi told reporters here.

After the amendments to Forward Contracts (Regulation) Act, 1952, the Commission will get power to decide on its own listing and de-listing of commodity bourses and give approval to exchanges to start options trading and other regulatory issues.

The amendments will also allow the regulator to undertake search and seizure operations and initiate steps to stop "dabba trading" (illegal futures trading), FMC chairman B C Khatua told PTI.

The proposed amendments would also strengthen penal provisions by empowering the Commission to impose fines up to Rs 25,000 on defaulters against the present limit of Rs 1,000.

The ordinance, which will be promulgated shortly, comes in the backdrop of government's decision this fiscal to ban futures trading in staple commodities like wheat and lentils following a steep hike in their prices. — PTI 

New Delhi, January 24
The Cabinet Committee on Economic Affairs (CCEA) today approved the State Data Centre Scheme (SDCS), which is part of the core infrastructure for the National e-Governance Plan (NeGP), across all states/UTs in the country.

As part of the scheme, the centre shall provide technical and financial support to the states/UTs for setting up State Data Centres. The scheme has an outlay of Rs 1,623.20 crore, which includes both capital and operational expenses for a period of five years.

State Data Centre shall enable the States/UTs to set up highly reliable/robust, shared and secure infrastructure to host state level e-Governance applications to deliver Government to Government (G2G), Government to Citizen (G2C) and Government to Business (G2B) services electronically.

The scheme will be implemented in a period of 12 months from the date of approval of individual State Data Centres based on proposals from the states.

The CCEA also gave its nod for the implementation of the ongoing Plan Scheme for creation of consumer awareness during the 11th Five-Year Plan Period (2007-2012) through awareness campaign in print/electronic/outdoor/other media covering the entire country.

The awareness would help in emergence of consumers who irrespective of age, socio-economic class or gender are empowered enough to make free, fair and informed choices of products or services with the help of information, standards and safeguards that are available, accessible and responsive.

Bhubaneswar, January 24
The World Bank has informed that Orissa’s former health minister Bijoyshree Routray was the official involved in taking a bribe for showing undue favours to a firm, it was revealed here Thursday.

The bank, in a report uncovering the corruption scandal, had said a state minister had taken a bribe of Rs.500,000 in return for favours to a particular firm. But the bank had not revealed the name so far. The minister was named after the Orissa government put pressure on the World Bank.

“The bank has named Bijoyshree Routray who had allegedly taken the bribe when he was state health minister,” Orissa Chief Secretary Ajit Kumar Tripathy said.

A World Bank team met the chief secretary in the secretariat Thursday. Routray was not available for comment.

A detailed implementation review (DIR) report of the World Bank into the $76.4 million Orissa Health System Development Project (OHSDP), launched in 1998 and completed in 2006, said that a health minister and some officials had taken Rs.5,00,000 in bribes to give undue favours to a particular firm. — IANS

New Delhi, January 24
Punjab National Bank today said it would review the prospects of its subsidiaries and joint ventures and might opt out of a life insurance venture with the US partner Principal Finance Group. “We are examining the prospects of our subsidiaries and joint ventures like PNB Gilts, PNB Housing, Principal PNB Asset Management and Principal PNB Insurance Broking,” PNB chief KC Chakrabarty said.

The bank has posted a 26 per cent increase in net profit at Rs 541.26 crore for the third quarter ended December 31, 2007. Net profit for the nine months ended December 2007 amounted to Rs1,505.01 crore, against Rs 1,302.37 crore during the same period in December 2006. Total income rose by 26 per cent to Rs 4,120 crore. — TNS