B U S I N E S S

HSBC probe: Bank’s India staff under scanner
Washington, D.C., July 18
Global banking giant HSBC’s staff in India have come under the scanner for deficiencies in their role as "offshore reviewers" of the global banking giant's compliance to safety mechanism against money laundering and terrorist financing.

Residents sit by the Angel of Independence monument near HSBC’s headquarters in Mexico City on Tuesday. Mexico's banking regulator said HSBC Holdings Plc was guilty of "administrative errors" in allowing illicit funding to move to its US operations but stopped short of saying the British-based bank had committed a crime. — Reuters

Govt close to decision on LPG subsidy cut, partial diesel decontrol
Bangalore, July 18
The government is close to taking a decision on capping the number of subsidized LPG (liquefied petroleum gas) cylinders to "economically not weaker" sections to bring down the subsidies by up to Rs 10,000 crore annually, Minister of State for Petroleum & Natural Gas R.P.N. Singh said Wednesday.

Eurozone in danger, ECB should ride to the rescue: IMF
Brussels, July 18
The eurozone is in "critical" danger but can restore credibility with urgent action for a banking union, with some form of eurobonds, and if the ECB ramps up injections of cash, the international Monetary Fund said on Wednesday.

Bajaj Auto Q1 net up despite export slump
Mumbai, July 18
Bajaj Auto Ltd , India's second-largest motorcycle maker, reported flat net profit for the June quarter, but saw its shares jump as its profit margin weathered a slump in exports of its lucrative commercial vehicles.

EGoM to meet again Friday on 2G auction price
New Delhi, July 18
The contentious issue of deciding the base price for the auction of the 2G spectrum continued to hang fire as the empowered group of ministers (EGoM), which met here Thursday under the chairmanship of Home Minister P. Chidambarm, could not arrive at any decision on the issue.

Haryana urges Korean cos to step up investments
Sonepat, July 18
Haryana Chief Minister Bhupinder Singh Hooda said Wednesday the state government had framed liberal FDI policies and had strengthened infrastructure for setting up industrial units by MNCs. He was speaking at the first international conference on ‘India-Korea Relations: Past & Present’ organized by the Centre for Indic-Asian Studies here.

Haryana CM Bhupinder S. Hooda (R) inaugurating the two-day international conference on ‘India-Korea Relations: Past & Present’ in Sonepat on Thursday — Tribune photo

Consumer inflation dips a tad
	Annual consumer price inflation slowed slightly in June to 10.02%, government data showed on Wednesday, but food prices accelerated as concerns rose about below-average monsoon rainfall. Food inflation in the Consumer Price Index accelerated to 10.71% in June from 10.66% in May. The revised CPI number for May remained unchanged at 10.36%. — PTI

HSBC probe: Bank’s India staff under scanner

HSBC Bank USA president & CEO Irene Dorner (L) and HSBC Holdings chief legal officer Stuart Levey testify before the Senate Homeland Security & Governmental Affairs Committee in Washington on July 17. — Reuters

Washington, D.C., July 18
Global banking giant HSBC’s staff in India have come under the scanner for deficiencies in their role as "offshore reviewers" of the global banking giant's compliance to safety mechanism against money laundering and terrorist financing.

A probe by the US Senate's Permanent Subcommittee on Investigations found that HSBC's Anti-Money Laundering (AML) Compliance Department, which included employees in India, was highly inadequately staffed.

Besides, deficiencies were found in the quality of the work done by HSBC's "offshore reviewers in India", who were used for clearing a major backlog of suspected transaction alerts at the bank.

More than one-third of the alerts already resolved by the Indian reviewers and others "had to be re-done" after an independent assessment by the OCC (the US Office of the Comptroller of the Currency, which is the bank's primary federal regulator in the country). The probe further found that an OCC visit to India in 2007 had revealed "Weak Monitoring Procedures" in the bank's internal control systems.

At a hearing before the Senate Subcommittee on the matter here yesterday, HSBC apologized for its mistakes and gave its "absolute commitment" to fix the problems.

The 340-page investigation report, which was released yesterday, found HSBC to have used its US bank (HSBC US Bank or HBUS) as a gateway into the US financial system to provide US dollar services to clients while "playing fast and loose with US banking rules," Senator Carl Levin, the chairman of the subcommittee, said.

The investigations found that HSBC, with its headquarters in London, allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the US without adequate controls.

Besides, HSBC in 2009 authorized its affiliate to supply Indian rupees to Saudi Arabia's Al Rajhi Bank, which, the report said, has links to financing terrorism.

The report also said that Al Rajhi Bank handled IIRO's (International Islamic Relief Organisation) "charitable contributions intended to benefit suicide bombers by directing Al Igatha Journal advertisements ... In Somalia, Sri Lanka, India, and the Philippines."

It cited a lawsuit to say that charitable organisations such as the IIRO use banks like Al Rajhi Bank to "gather donations that fund terrorism and terrorist activities" under the guise of IIRO funds labeled and designated for purposes such as 'war and disaster' or 'sponsor a child'.

IIRO is a Saudi-based nonprofit organization that was added to the SDN list by the United States for "facilitating fund raising for Al Qaida and affiliated terrorist groups," the report said, while adding that HSBC's internal Financial Intelligence Group (FIG) itself had raised questions about IIRO in 2003.

The SDN (Specially Designated Nationals) List, published by the US government, names individuals and entities with whom US citizens are prohibited from doing business.

Again in 2006, an FIG report noted that "the IIRO had been linked to Al Qaeda and other terrorist groups. — Reuters

Govt close to decision on LPG subsidy cut, partial diesel decontrol

Bangalore, July 18
The government is close to taking a decision on capping the number of subsidized LPG (liquefied petroleum gas) cylinders to "economically not weaker" sections to bring down the subsidies by up to Rs 10,000 crore annually, Minister of State for Petroleum & Natural Gas R.P.N. Singh said Wednesday.

The government is also looking at partial decontrol of diesel, he added.

Singh said the government gives Rs 36,000 crore in subsidy on LPG and a lot of people who are "not economically weaker sections" and don't require them, take benefit, adding, the government is looking at reducing the subsidy on LPG by capping the amount (number) of cylinders given on subsidy.

Stating the government is in an advanced stage of taking a decision on reducing LPG subsidies, he told reporters on the sidelines of a function: "If we cap some cylinders, which don’t infringe on the right of poor people who get subsidies, I think we can save Rs 8,000 crore to Rs 10,000 crore just by capping the cylinders for the rich (restricting the number of subsidized cylinders for them).

But he sounded cautious on the issue of raising prices of diesel, saying its a very delicate issue.

"If you try to raise the prices of diesel, it has a cascading effect on the economy. We are trying to work out a solution where it impacts the economy in the least manner but also brings down the fiscal deficit", Singh said.

The minister, who earlier inaugurated the 17th refinery technology meet jointly organized by the Centre for High Technology and Hindustan Petroleum Corp Ltd, ruled out absolute decontrol of diesel in the near term.

"It's extremely difficult for us to absolutely decontrol diesel at the moment because it would impact the economy in a very, very serious manner," he said, but added the government is looking at partial decontrol of diesel so that the impact on the people would be of "reduced magnitude”, Singh said. — PTI

Eurozone in danger, ECB should ride to the rescue: IMF

Brussels, July 18
The eurozone is in "critical" danger but can restore credibility with urgent action for a banking union, with some form of eurobonds, and if the ECB ramps up injections of cash, the international Monetary Fund said on Wednesday.

The European Central Bank should pull harder on its levers of special measures to buy government debt and fund banks, and should be open about its targets, the IMF said.

In a hard-hitting review of policies for the euro area, it warned: "The euro area crisis has reached a new and critical stage. Despite major policy actions, financial markets in parts of the region remain under acute stress, raising questions about the viability of the monetary union itself. A worsening of the crisis would have a big impact on neighbouring European countries "and the rest of the world."

It warned: "A determined move toward a more complete union is needed now."

On growth, the IMF said the "stark" truth was that eurozone countries had lagged the best performers for 50 years. The euro is slightly overvalued by zero to 5.0%, the IMF estimated, but some countries in crisis needed a much bigger adjustment, of 5.0%-10.0% for Italy and 10.0%-15.0% for Spain.

Determined programmes for structural reforms to raise competitiveness were vital, the IMF said, warning also of a risk of deflation and suggesting that strong countries in northern Europe could allow wages and inflation to rise. — AFP

Bajaj Auto Q1 net up despite export slump

EGoM to meet again Friday on 2G auction price
Tribune News Service

New Delhi, July 18
The contentious issue of deciding the base price for the auction of the 2G spectrum continued to hang fire as the empowered group of ministers (EGoM), which met here Thursday under the chairmanship of Home Minister P. Chidambarm, could not arrive at any decision on the issue.

The EGoM will meet again on Friday to take this contentious issue that Telecom Minister Kapil Sibal said was still being discussed.

The Telecom Regulatory Authority of India has recommended a minimum price of over Rs 3,622 crore for auction of a single unit of spectrum amounting to over Rs 18,000 crore for a pan-Indian operations in case of a new entrant.

However, the department of telecom is seeking a higher reserve price for second generation airwaves in the 1800 MHz band and is of the opinion that it should be revised to Rs 4,245 crore per unit (on a pan India basis).

Reports suggested that with differences of opinion prevailing, a decision on the 2G spectrum base price was put off for another day.

Haryana urges Korean cos to step up investments