DealBook: Autonomy's Ex-Chief Calls on H.P. Board to Defend Allegations

The former head of Autonomy, the British software maker that Hewlett-Packard acquired last year, is not happy about H.P.’s accusations of accounting fraud at his former company.

So he is calling on H.P. to defend its $8.8 billion write-down tied to the takeover.

In a public letter released on Tuesday, the executive, Mike Lynch, again rejected H.P.’s claims about Autonomy. (Mr. Lynch has not been accused of wrongdoing.) Instead, he argued that H.P. botched its takeover of the British company and mishandled its integration.

“Having no details beyond the limited public information provided last week, and still with no further contact from you, I am writing today to ask you, the board of H.P., for immediate and specific explanations for the allegations H.P. is making,” he wrote in the letter.

Mr. Lynch has been exceptionally vocal about defending his reputation and that of Autonomy, which grew over 16 years to become one of Britain’s most successful technology start-ups.

He emphasized that nothing improper had taken place at the company, and that it had followed all the rules set forth under British accounting guidelines. Possible discrepancies over how Autonomy recognized revenue from sales, he said, might be attributable to differences between British and American accounting rules.

In his letter, Mr. Lynch outlined a number of concerns about the $8.8 billion charge. Some of those questions were thinly veiled jabs at H.P., which fired him as the head of Autonomy in May after missing sales estimates. (He does not dispute that characterization, but has said he was hamstrung by a number of obstacles and a string of poor management decisions.)

Among his questions:

  • In order to justify a $5 billion accounting write-down, a significant amount of revenue must be involved. Please explain how such issues could possibly have gone undetected during the extensive acquisition due diligence process and H.P.’s financial oversight of Autonomy for a year from acquisition until October 2012 (a period during which all of the Autonomy finance reported to H.P.’s C.F.O., Cathie Lesjak).
  • Can H.P. really state that no part of the $5 billion write-down was, or should be, attributed to H.P.’s operational and financial mismanagement of Autonomy since the acquisition?
  • Why did H.P. senior management apparently wait six months to inform its shareholders of the possibility of a material event related to Autonomy?

An H.P. representative was not immediately available for comment.

Open Letter to the Board of Hp Final

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Protesters Gather Again in Cairo Streets to Denounce Morsi





CAIRO — Thousands of people flowed into the streets of Cairo, the Egyptian capital, Tuesday afternoon for a day of protest against President Mohamed Morsi’s attempt to assert broad new powers for the duration of the country’s political transition, dismissing his efforts just the night before to reaffirm his deference to Egyptian law and courts.




By early Tuesday afternoon in Cairo, a dense crowd of hundreds had gathered outside the headquarters of a trade group for lawyers, and thousands more had filed in around a small tent city in Tahrir Square. In an echo of the chants against Hosni Mubarak, Egyptian’s ousted president, almost two years ago, they shouted, “Leave, leave!” and “Bring down the regime!” They also denounced the spiritual leader of the Muslim Brotherhood, the Islamist group allied with Mr. Morsi.


A few blocks away, in a square near the American Embassy and the Interior Ministry headquarters, groups of young men resumed a running battle that began nine days ago, throwing rocks and tear gas canisters at riot police officers. Although those clashes grew out of anger over the deaths of dozens of protesters in similar clashes one year ago, many of the combatants have happily adopted the banner of protest against Mr. Morsi as well.


Egyptian television had captured the growing polarization of the country on Monday in split-screen coverage of two simultaneous funerals, each for a teenage boy killed in clashes set off by disputes over the new president’s powers. Thousands of supporters of Mr. Morsi and his allies in the Muslim Brotherhood marched through the streets of the Nile Delta city of Damanhour to bury a 15-year-old killed outside a Brotherhood office during an attack by protesters. And in Tahrir Square here in Cairo, thousands gathered to bury a 16-year-old killed in clashes with riot police officers and to chant slogans blaming Mr. Morsi for his death. “Morsi killed him,” the boy’s father said in a video statement circulated over the Internet.


“Now blood has been spilled by political factions, so this is not going to go away,” said Rabab el-Mahdi, a professor at the American University in Cairo and a left-leaning activist, adding that these were the first deaths rival factions had blamed on each other and not on the security forces of the Mubarak government since the uprising began last year. Still larger crowds were expected in the evening, as marchers from around the city headed for the square. Many schools and other businesses had closed in anticipation of bedlam, and on Monday, the Brotherhood called off a rival demonstration in support of the president, saying it wanted to avoid violence.


Egypt’s Supreme Judicial Council met again on Tuesday to consider its response to the president, and the leader of Al Azhar, a center of Sunni Muslim learning that is regarded as the pre-eminent moral authority here, met with groups of political leaders in an effort to resolve the battle over the president’s decree and the deadlock in the constitutional assembly, which is trying to draw up a new constitution.


But even as Mr. Morsi met with top judges Monday night in an effort to resolve the crisis, a coalition of opposition leaders held a news conference to declare that preserving the role of the courts was only the first step in a broader campaign against what Abdel Haleem Qandeil, a liberal intellectual, called “the miserable failure of the rule of the Muslim Brothers.” Mr. Morsi “unilaterally broke the contract with the people,” he declared. “We have to be ready to stand up to this group, protest to protest, square to square, and to confront the bullying.”


Mr. Morsi’s effort to remove the last check on his power over the political transition had brought the country’s fractious opposition groups together for the first time in a united front against the Brotherhood. But the show of unity papered over deep divisions between groups and even within them, said Ms. Mahdi of the American University.


“This is not a united front, and I am inside it,” she said. “Every single political group in the country is now divided over this — is this decree revolutionary justice or building a new dictatorship? Should we align ourselves with folool” — the colloquial term for the remnants of the old political elite — “or should we be revolutionary purists? Is it a conflict between the Muslim Brotherhood and the pro-Mubarak judiciary, or is this the beginning of a fascist regime in the making?”


Mayy El Sheikh contributed reporting.



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DealBook: S.E.C. Chief Who Overhauled Agency to Step Down

11:42 a.m. | Updated

Mary L. Schapiro, who overhauled the Securities and Exchange Commission after the financial crisis, announced Monday that she was stepping down as chairwoman of the agency.

In recent days, the S.E.C. informed the White House and Treasury Department that Ms. Schapiro planned to leave Dec. 14, becoming the first major departure from the Obama administration’s team of financial regulators. Ms. Schapiro will also relinquish her position as one of the five members of the agency’s commission, the group that oversees Wall Street and the broader financial markets.

The White House announced on Monday that President Obama was naming Elisse B. Walter, a commissioner at the S.E.C., as the new chairwoman. In a somewhat surprising move, Ms. Walter will not step into an interim post, but will take over the top spot for the foreseeable future.

Ms. Walter’s appointment does not require Congressional approval because the Senate previously confirmed her as a commissioner. Eventually, the White House is expected to nominate another agency chief, according to a person briefed on the matter.

Ms. Schapiro’s departure, which follows a bruising four-year tenure, was widely telegraphed. Ms. Schapiro, 57, has confided in staff members for more than a year that she was exhausted and hoped to leave after the November elections.

“It has been an incredibly rewarding experience to work with so many dedicated S.E.C. staff who strive every day to protect investors and ensure our markets operate with integrity,” Ms. Schapiro said in a statement. “Over the past four years we have brought a record number of enforcement actions, engaged in one of the busiest rule-making periods, and gained greater authority from Congress to better fulfill our mission.”

In 2008, Mr. Obama nominated Ms. Schapiro, a political independent, to head the S.E.C. at a time when extreme economic turmoil had shaken investor confidence in the country’s securities regulators.

The agency was faulted for its lax oversight of brokerage firms like Lehman Brothers, which failed in 2008 and contributed to the worst economic downturn since the Great Depression. Just weeks before Ms. Schapiro started as chairwoman, the Wall Street investor Bernard L. Madoff was accused of running a large Ponzi scheme, further damaging the credibility of regulators like the S.E.C., which missed crucial warning signs about the fraud.

“When Mary agreed to serve nearly four years ago, she was fully aware of the difficulties facing the S.E.C. and our economy as a whole,” Mr. Obama said in a statement. “But she accepted the challenge, and today, the S.E.C. is stronger and our financial system is safer and better able to serve the American people – thanks in large part to Mary’s hard work.”

Ms. Schapiro, a lifelong regulator who previously ran the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority, quickly gained a reputation as a consensus builder determined to repair the agency’s reputation. A tireless preparer and self-described pragmatist, Ms. Schapiro overhauled the agency’s management ranks, revived the enforcement unit and secured more money and technology at a time when other agencies were being asked to cut back. She also helped craft new rules for Wall Street oversight, as part of the Dodd-Frank regulatory overhaul.

“The S.E.C. came back from the brink,” said Harvey L. Pitt, a former chairman of the agency under President George W. Bush. “I give her enormous credit for that.”

Consumer advocates and other critics, however, say she failed to grab the bully pulpit at a time the country needed a vocal critic of Wall Street. Since the financial crisis, the agency brought few enforcement cases against the Wall Street executives at the center of the crisis.

The S.E.C. notes it has brought a record number of cases over the last two years. While no top banking executives have been charged, the agency has filed actions against 129 people and firms tied to the crisis.

Ms. Walter, a Democrat who became an S.E.C. commissioner in 2008 and briefly served as the agency’s acting leader a year later, is a longtime ally of Ms. Schapiro. They overlapped at the Commodity Futures Trading Commission and Finra, where Ms. Walter was a senior regulator and lawyer. At the S.E.C., Ms. Walter was often the only reliable vote for Ms. Schapiro’s rule-making efforts and is now expected to carry out a similar agenda as chairwoman.

While Ms. Walter will take over, she may not serve the whole term. Among the other people that Mr. Obama may consider naming as agency chief include Mary J. Miller, a senior Treasury Department official, a person briefed on the matter said. Sallie L. Krawcheck, a former top executive at Citigroup and Bank of America, is also in the running, according to people with knowledge of the matter. The agency’s enforcement chief, Robert Khuzami, is a long-shot contender.

As for Ms. Schapiro, few expect her to follow her predecessors and move into private legal practice, where she would defend the banks she has spent years regulating. Instead, they say she is more likely to seek out a position at a university or research group.

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Chia Seeds Gain Popularity for Nutritional Benefits





First there were Chia Pets; now there are chia people.




Ubiquitous in television ads that began 30 years ago, Chia Pets were called “the pottery that grows.” Mixing chia seeds and water on the outside of an animal-shaped terra-cotta figurine produces a plant resembling green hair almost overnight.


Now, chia is having a second life as a nutritional “it” item. Whole and ground chia seeds are being added to fruit drinks, snack foods and cereals and sold on their own to be baked into cookies and sprinkled on yogurt. Grown primarily in Mexico and Bolivia, chia, like fish, is rich in omega-3 fatty acids, though of a different sort. It also has antioxidants, protein and fiber. Recognition of its nutritional value can be traced as far back as the Aztecs.


Companies like Dole and Nature’s Path have introduced chia products, which have begun showing up on shelves in mainstream grocery stores like Ralphs, Vons and Albertsons. Mintel, a market research firm, counted 100 products containing chia in a presentation it did in March on the potential of increasing the use of the seeds in dairy products.


“About two years ago, our retailers came to us and said, ‘We need you to be in this business everyone is talking about, the business of chia seeds,’ ” said Michael P. Hirsch, vice president of Joseph Enterprises, which sells Chia Pets and other novelty products and has now added chia seeds and milled chia called — what else? — Ch-Ch-Ch-Chia Omega.


Last spring, high demand collided with weather patterns that depressed production, raising prices and the awareness that chia had moved beyond the realm of health food stores into the broader market.


Janie Hoffman, founder of Mamma Chia fruit juices, was one of the first people to recognize chia’s potential as a food. She was complaining about flax seed — “I hate how you have to grind it and then it goes rancid” — to a friend, who asked why she wasn’t using chia instead. “She said it had no taste, it’s high in antioxidants, huge in omega-3, a far superior seed,” Ms. Hoffman said. “In short, she made me feel like an idiot — no one was using flax seed anymore.”


So she bought some chia seeds online and was quickly sold on their benefits. “I started incorporating it into everything I was eating,” she said. “Stir fries, yogurt, beverages — there really wasn’t anything in my kitchen that didn’t have chia in it.”


In 2009, Ms. Hoffman developed fruit juices with chia seeds suspended in them. (Exposure to liquid gives the seeds a sticky, gelatinous coating, which is how they bond to the terra-cotta pets.)


“My first sales call a year and a half later was to Whole Foods in the southern Pacific region,” she said. “I walked in to meet the buyer and presented this chia beverage and said I would like it to go into a few stores. She said, ‘No, I want you in all of them’ ” — about 40 stores — “and that was that.”


Within 11 months, Mamma Chia products were in Whole Foods stores across the nation, as well as in hundreds of bodegas and health and natural foods stores. They are now sold in Ralphs and Vons stores and will soon be in Albertsons.


“I personally think demand for it will grow for sure, though how big it will get is still a question,” said Brad C. Bartlett, president of Dole Food Company’s packaged foods business.


Dole chose chia as the first ingredient it would promote in its new Nutrition Plus line of products, which aim to provide a functional benefit to consumers. It won out over other candidates, Mr. Bartlett said, because of its long history as a source of nutrition — the Aztecs used it for many purposes — and because it does not require much processing to confer its benefits.


The company does independent clinical testing on each product in the Nutrition Plus line to back up claims it makes about their health benefits, and it was surprised by one finding: significantly more alpha-linolenic acid in omega-3 reached the bloodstream and was converted into eicosapentaenoic acid, a long-chain fatty acid considered good for the heart, when the seeds were milled rather than whole.


“That came as quite a surprise, and we stopped the rollout and reformulated our clusters to use milled chia instead of whole seeds,” Mr. Bartlett said, referring to Dole’s Chia & Fruit Clusters.


Nature’s Path, an organic cereal company, introduced its first chia-laced cereal, Apple Crumble Love Crunch, last December, and now has eight products that include the seed in some form. “Business has been great with these products — overwhelmingly positive and, perhaps surprisingly, not just in health food stores but also in regular grocery stores,” said Arjan Stephens, executive vice president of sales and marketing at Nature’s Path.


Mr. Stephens said chia’s nutritional attributes, along with its many uses in food processing, could turn it into a staple. “It can be used in gluten-free breads or waffles to add fluffiness or to replace eggs in vegan products,” he said. “It offers an alternative to those with nut allergies.”


Mr. Hirsch, the Joseph Enterprises vice president, was less certain that chia would be a blockbuster, even though his company is adding protein bars to its line of edible chia products, which are sold in Walgreens, CVS and other drugstores. He said he was concerned about the supply of chia seeds, which are harvested once a year and grown in rotation, usually with corn.


Australia has recently joined Mexico and Bolivia in the chia-production act with its own type of seed that is grown somewhat differently, Mr. Hirsch said. But it is a difficult crop to grow outside of the traditional areas, and the market is tiny, about $70 million.


“Everybody is looking at this because everybody is always looking for something new,” Mr. Hirsch said. “I also know from the sales at this point it’s a niche market still, and we don’t know how big the niche is yet.”


If that niche fails to expand, there will always be another Chia Pet. This year, Chia Hello Kitty is joining the lineup.


Read More..

Chia Seeds Gain Popularity for Nutritional Benefits





First there were Chia Pets; now there are chia people.




Ubiquitous in television ads that began 30 years ago, Chia Pets were called “the pottery that grows.” Mixing chia seeds and water on the outside of an animal-shaped terra-cotta figurine produces a plant resembling green hair almost overnight.


Now, chia is having a second life as a nutritional “it” item. Whole and ground chia seeds are being added to fruit drinks, snack foods and cereals and sold on their own to be baked into cookies and sprinkled on yogurt. Grown primarily in Mexico and Bolivia, chia, like fish, is rich in omega-3 fatty acids, though of a different sort. It also has antioxidants, protein and fiber. Recognition of its nutritional value can be traced as far back as the Aztecs.


Companies like Dole and Nature’s Path have introduced chia products, which have begun showing up on shelves in mainstream grocery stores like Ralphs, Vons and Albertsons. Mintel, a market research firm, counted 100 products containing chia in a presentation it did in March on the potential of increasing the use of the seeds in dairy products.


“About two years ago, our retailers came to us and said, ‘We need you to be in this business everyone is talking about, the business of chia seeds,’ ” said Michael P. Hirsch, vice president of Joseph Enterprises, which sells Chia Pets and other novelty products and has now added chia seeds and milled chia called — what else? — Ch-Ch-Ch-Chia Omega.


Last spring, high demand collided with weather patterns that depressed production, raising prices and the awareness that chia had moved beyond the realm of health food stores into the broader market.


Janie Hoffman, founder of Mamma Chia fruit juices, was one of the first people to recognize chia’s potential as a food. She was complaining about flax seed — “I hate how you have to grind it and then it goes rancid” — to a friend, who asked why she wasn’t using chia instead. “She said it had no taste, it’s high in antioxidants, huge in omega-3, a far superior seed,” Ms. Hoffman said. “In short, she made me feel like an idiot — no one was using flax seed anymore.”


So she bought some chia seeds online and was quickly sold on their benefits. “I started incorporating it into everything I was eating,” she said. “Stir fries, yogurt, beverages — there really wasn’t anything in my kitchen that didn’t have chia in it.”


In 2009, Ms. Hoffman developed fruit juices with chia seeds suspended in them. (Exposure to liquid gives the seeds a sticky, gelatinous coating, which is how they bond to the terra-cotta pets.)


“My first sales call a year and a half later was to Whole Foods in the southern Pacific region,” she said. “I walked in to meet the buyer and presented this chia beverage and said I would like it to go into a few stores. She said, ‘No, I want you in all of them’ ” — about 40 stores — “and that was that.”


Within 11 months, Mamma Chia products were in Whole Foods stores across the nation, as well as in hundreds of bodegas and health and natural foods stores. They are now sold in Ralphs and Vons stores and will soon be in Albertsons.


“I personally think demand for it will grow for sure, though how big it will get is still a question,” said Brad C. Bartlett, president of Dole Food Company’s packaged foods business.


Dole chose chia as the first ingredient it would promote in its new Nutrition Plus line of products, which aim to provide a functional benefit to consumers. It won out over other candidates, Mr. Bartlett said, because of its long history as a source of nutrition — the Aztecs used it for many purposes — and because it does not require much processing to confer its benefits.


The company does independent clinical testing on each product in the Nutrition Plus line to back up claims it makes about their health benefits, and it was surprised by one finding: significantly more alpha-linolenic acid in omega-3 reached the bloodstream and was converted into eicosapentaenoic acid, a long-chain fatty acid considered good for the heart, when the seeds were milled rather than whole.


“That came as quite a surprise, and we stopped the rollout and reformulated our clusters to use milled chia instead of whole seeds,” Mr. Bartlett said, referring to Dole’s Chia & Fruit Clusters.


Nature’s Path, an organic cereal company, introduced its first chia-laced cereal, Apple Crumble Love Crunch, last December, and now has eight products that include the seed in some form. “Business has been great with these products — overwhelmingly positive and, perhaps surprisingly, not just in health food stores but also in regular grocery stores,” said Arjan Stephens, executive vice president of sales and marketing at Nature’s Path.


Mr. Stephens said chia’s nutritional attributes, along with its many uses in food processing, could turn it into a staple. “It can be used in gluten-free breads or waffles to add fluffiness or to replace eggs in vegan products,” he said. “It offers an alternative to those with nut allergies.”


Mr. Hirsch, the Joseph Enterprises vice president, was less certain that chia would be a blockbuster, even though his company is adding protein bars to its line of edible chia products, which are sold in Walgreens, CVS and other drugstores. He said he was concerned about the supply of chia seeds, which are harvested once a year and grown in rotation, usually with corn.


Australia has recently joined Mexico and Bolivia in the chia-production act with its own type of seed that is grown somewhat differently, Mr. Hirsch said. But it is a difficult crop to grow outside of the traditional areas, and the market is tiny, about $70 million.


“Everybody is looking at this because everybody is always looking for something new,” Mr. Hirsch said. “I also know from the sales at this point it’s a niche market still, and we don’t know how big the niche is yet.”


If that niche fails to expand, there will always be another Chia Pet. This year, Chia Hello Kitty is joining the lineup.


Read More..

Building Start-Ups Using Stars’ Social Media Ties to Fans


You might have heard Jessica Alba on daytime TV talking about her new e-commerce company, which sells diapers and other baby supplies, or seen Kim Kardashian pitching her online shoe store in the tabloids.


The man behind the companies, Brian Lee, is far from a household name. Yet in the world of tech start-ups, he is an emerging force.


Mr. Lee, a lawyer turned entrepreneur, has a simple formula: partner with a celebrity that fans associate with a certain product, whether stilettos or baby supplies. He first did it in 1999, when he cold-called Robert Shapiro, O.J. Simpson’s lawyer, and persuaded him to join him at his first start-up, LegalZoom, for creating your own legal documents.


Hiring a famous face to represent your brand is the oldest marketing trick in the book. But Mr. Lee is doing it with an Internet twist. He uses celebrities’ social media connections with fans, coupled with recent innovations in e-commerce, to sell things in ways that were not possible just a few years ago.


The Honest Company, Ms. Alba’s start-up selling eco-friendly baby supplies, has raised $27 million from investors, including Lightspeed Venture Partners. ShoeDazzle, Ms. Kardashian’s shoe company, has raised $66 million from Andreessen Horowitz, Lightspeed and others. But despite this investment, it has recently struggled, replacing its chief executive, laying off employees and raising bigger questions about the new breed of subscription e-commerce companies.


E-commerce is going through a shift, as retailers move beyond publishing print catalogs online to creating new business models for the Web. According to the National Venture Capital Association, venture capitalists invested $2.2 billion in e-commerce start-ups last year, almost three times as much as the year before and more than they have invested since the first Internet boom, which created Amazon.com and eBay.


Mr. Lee’s companies tap the latest e-commerce trends, including selling monthly subscriptions, using software algorithms to determine personal style suggestions and eliminating middlemen by designing products in-house and selling them directly to consumers.


“Given the choice between shopping at a boutique or warehouse, if the styles were right, which would my wife choose?” Mr. Lee said, describing the strategy behind ShoeDazzle and Honest. “A large group of women would choose that kind of curated boutique.”


At Honest, customers sign up for monthly deliveries of diapers festooned with anchors or hearts as well as items like shampoo and detergent, each formulated in-house to reduce chemicals. Ms. Alba conceived the idea, along with Christopher Gavigan, former chief of the nonprofit Healthy Child Healthy World, and turned to Mr. Lee for a business model.


When ShoeDazzle was founded in 2009, it was the first of a flurry of subscription e-commerce start-ups. The shoes, generally $39.95, are suggested based on the results of a style quiz the customer takes. They are designed by ShoeDazzle and manufactured at the same factories that big shoe brands use.


But ShoeDazzle has been struggling with that model, and analysts say that could foreshadow problems for its many imitators, which, in addition to Honest, include Birchbox for cosmetics, Wittlebee for children’s clothing, JustFab for shoes and handbags, and BeachMint, which has sites for jewelry, T-shirts, skin care, shoes, home décor and lingerie. Earlier this month, Walmart joined the trend, introducing a monthly subscription box of food called The Goodies Company.


“Subscriptions were the hot trend in the last year, but I think some of that energy has really flattened,” said Sucharita Mulpuru, an e-commerce analyst at Forrester.


While subscriptions have worked well at companies like Amazon.com and Diapers.com for necessities like toilet paper and diapers, shoppers might find it harder to justify a recurring credit-card charge for colorful suede booties.


ShoeDazzle switched to a nonsubscription model this year, so shoppers log on whenever they are in the mood to shop instead of receiving monthly boxes. In September, the company replaced its chief executive, Bill Strauss, with Mr. Lee. He laid off 20 of its 220 employees and cut expenses like corporate apartments. Both Honest and ShoeDazzle are capital-intensive because they design, store and ship their own inventory.


“We lost our way,” said Jeremy Liew, managing director of Lightspeed Venture Partners. “But there’s real value in this company and customers love the product.”


Mr. Lee said ShoeDazzle would approach $100 million in revenue this year and become profitable next year. Honest is not yet a year old, but its founders say it has proved popular with shoppers. Mr. Lee is the right person for the job, Mr. Liew said, because he has a Hollywood sensibility that Bay Area executives lack.


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Rebels Claim They Seized Air Bases and a Dam in Syria


Reuters


The bodies of Syrian civilians in a street in the northern city of Aleppo on Sunday, after opposition activists said they were shot by government forces.







BEIRUT, Lebanon — Fresh from declaring that they had seized an important military airport and an air defense base just outside Damascus, Syrian rebels on Monday said they overran a hydroelectric dam in the north of the country, adding to a monthlong string of tactical successes — capturing bases, disrupting supply routes and seizing weaponry — that demonstrate their ability to erode the government’s dominance in the face of withering aerial attacks.




The battlefield advances coincided with fresh claims of bloody events on the ground, with rebels saying a government airstrike on Sunday killed several schoolchildren in a playground. Video from the playground, which activists said was taken in the village of Dayr al-Asafir close to the Marj al-Sultan air base, showed at least half a dozen children who were dead or wounded from what activists said was a cluster bomb. The asphalt was pockmarked and littered with bomb casings.


On the ground lay two children: a young girl, identified as Anoud Mohammed, in a purple sweatsuit, and a child who appeared to be a toddler in a red sweater, their eyes open and staring. Around them people were carrying the limp bodies of other children whose bare feet were smeared with blood, as a woman knelt beside Anoud and screamed at the sky. In a later video, Anoud lay dead in a hospital.


“What’s her fault, this child?” a man’s voice shouted. “What’s her fault, Bashar, this little girl?”


On Monday, the conflict was reported once again to have spilled beyond Syria’s border, drawing in Turkish antiaircraft gunners who were said by the insurgents to have opened fire on a government warplane that appeared to have entered Turkish airspace as it attacked rebel positions in the Syrian town of Atma, just across the 550-mile Turkish-Syrian border.


According to two antigovernment Syrian opposition groups — the Syrian Observatory for Human Rights and the Local Coordinating Committees — and a fighter on the ground, who gave his name only as Saado, the Turkish fire deterred an attack on an area that includes a rebel headquarters and a camp for internally displaced Syrians. But there was no confirmation of the episode from Turkey, and the Syrian state news agency did not refer to the rebels’ claims.


Government warplanes also attacked the Bab al-Hawa border crossing at the Turkish border, an area where rebels have enjoyed control for several months, according to an antigovernment activist in Turkey. Many internally displaced Syrians have taken refuge in the area and fled in terror from the fighting, said the activist, who gave his name as Abu Zaki. The strike showed the government’s ability to strike at will from the air even in rebel-held territory where it has no control on the ground.


Syria and Turkey have exchanged mortar fire on numerous occasions in recent months, and Turkey, a NATO member, has requested that the alliance provide it with Patriot antimissile batteries, a possible step toward creating a de facto no-fly zone in northern Syria to protect rebels from Syrian government air attacks. Turkey has come under criticism from Russia and others for the request.


On Monday, Turkey’s military insisted that the Patriot missiles would be used only to defend Turkish territory. “Deployment of air and missile defense systems is a measure solely against potential air and missile threats that might come from Syria,” said a statement posted on the Turkish Army’s Web site. “It is out of question for it to be used either for a ‘no fly zone’ or an offensive operation.”


A group of NATO experts was expected to start assessing Turkey’s 550-mile southern border with Syria to identify sites for possible bases, and determine staffing and other technical details. The foreign troops that would accompany the Patriot systems would be subject to a special agreement, the statement said.


On Monday, amateur video, which could not be verified, showed what was purported to be rebel soldiers ransacking boxes of captured weapons, including hand grenades and rocket-propelled grenades at the Tishreen Dam near the town of Menbej. “Here are your spoils, Bashar,” a voice can be heard saying, referring to President Bashar al-Assad. “Here are your weapons, Bashar. God is great,” a rebel exclaims as two men are filmed carrying off a trunk of munitions.


Rebel forces had been besieging the dam’s defenses on the Euphrates River for days.


Anne Barnard reported from Beirut, C.J. Chivers from the United States, and Alan Cowell from Paris. Reporting was contributed by Hwaida Saad, Hania Mourtada and Hala Droubi from Beirut



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Lobbying, a Windfall and a Leader’s Family


The New York Times


Ping An, one of China’s largest financial services companies, is building a 115-story office tower in Shenzhen. The company is a $50 billion powerhouse now worth more than A.I.G., MetLife or Prudential.







SHENZHEN, China — The head of a financially troubled insurer was pushing Chinese officials to relax rules that required breaking up the company in the aftermath of the Asian financial crisis.




The survival of Ping An Insurance was at stake, officials were told in the fall of 1999. Direct appeals were made to the vice premier at the time, Wen Jiabao, as well as the then-head of China’s central bank — two powerful officials with oversight of the industry.


“I humbly request that the vice premier lead and coordinate the matter from a higher level,” Ma Mingzhe, chairman of Ping An, implored in a letter to Mr. Wen that was reviewed by The New York Times.


Ping An was not broken up.


The successful outcome of the lobbying effort would prove monumental.


Ping An went on to become one of China’s largest financial services companies, a $50 billion powerhouse now worth more than A.I.G., MetLife or Prudential. And behind the scenes, shares in Ping An that would be worth billions of dollars once the company rebounded were acquired by relatives of Mr. Wen.


The Times reported last month that the relatives of Mr. Wen, who became prime minister in 2003, had grown extraordinarily wealthy during his leadership, acquiring stakes in tourist resorts, banks, jewelers, telecommunications companies and other business ventures.


The greatest source of wealth, by far, The Times investigation has found, came from the shares in Ping An bought about eight months after the insurer was granted a waiver to the requirement that big financial companies be broken up.


Long before most investors could buy Ping An stock, Taihong, a company that would soon be controlled by Mr. Wen’s relatives, acquired a large stake in Ping An from state-owned entities that held shares in the insurer, regulatory and corporate records show. And by all appearances, Taihong got a sweet deal. The shares were bought in December 2002 for one-quarter of the price that another big investor — the British bank HSBC Holdings — paid for its shares just two months earlier, according to interviews and public filings.


By June 2004, the shares held by the Wen relatives had already quadrupled in value, even before the company was listed on the Hong Kong Stock Exchange. And by 2007, the initial $65 million investment made by Taihong would be worth $3.7 billion.


Corporate records show that the relatives’ stake of that investment most likely peaked at $2.2 billion in late 2007, the last year in which Taihong’s shareholder records were publicly available. Because the company is no longer listed in Ping An’s public filings, it is unclear if the relatives continue to hold shares.


It is also not known whether Mr. Wen or the central bank chief at the time, Dai Xianglong, personally intervened on behalf of Ping An’s request for a waiver, or if Mr. Wen was even aware of the stakes held by his relatives.


But internal Ping An documents, government filings and interviews with bankers and former senior executives at Ping An indicate that both the vice premier’s office and the central bank were among the regulators involved in the Ping An waiver meetings and who had the authority to sign off on the waiver.


Only two large state-run financial institutions were granted similar waivers, filings show, while three of China’s big state-run insurance companies were forced to break up. Many of the country’s big banks complied with the breakup requirement — enforced after the financial crisis because of concerns about the stability of the financial system — by selling their assets in other institutions.


Ping An issued a statement to The Times saying the company strictly complies with rules and regulations, but does not know the backgrounds of all entities behind shareholders. The company also said “it is the legitimate right of shareholders to buy and sell shares between themselves.”


In Beijing, China’s foreign ministry did not return calls seeking comment for this article. Earlier, a Foreign Ministry spokesman sharply criticized the investigation by The Times into the finances of Mr. Wen’s relatives, saying it “smears China and has ulterior motives.”


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Indian Prostitutes’ New Autonomy Imperils AIDS Fight


Kuni Takahashi for The New York Times


Sex workers in Mumbai’s long-established red-light district, where brothels are dwindling.







MUMBAI, India — Millions once bought sex in the narrow alleys of Kamathipura, a vast red-light district here. But prostitutes with inexpensive mobile phones are luring customers elsewhere, and that is endangering the astonishing progress India has made against AIDS.




Indeed, the recent closings of hundreds of ancient brothels, while something of an economic victory for prostitutes, may one day cost them, and many others, their lives.


“The place where sex happens turns out to be an important H.I.V. prevention point,” said Saggurti Niranjan, program associate of the Population Council. “And when we don’t know where that is, we can’t help stop the transmission.”


Cellphones, those tiny gateways to modernity, have recently allowed prostitutes to shed the shackles of brothel madams and strike out on their own. But that independence has made prostitutes far harder for government and safe-sex counselors to trace. And without the advice and free condoms those counselors provide, prostitutes and their customers are returning to dangerous ways.


Studies show that prostitutes who rely on cellphones are more susceptible to H.I.V. because they are far less likely than their brothel-based peers to require their clients to wear condoms.


In interviews, prostitutes said they had surrendered some control in the bedroom in exchange for far more control over their incomes.


“Now, I get the full cash in my hand before we start,” said Neelan, a prostitute with four children whose side business in sex work is unknown to her husband and neighbors. (Neelan is a professional name, not her real one.)


“Earlier, if the customer got scared and didn’t go all the way, the madam might not charge the full amount,” she explained. “But if they back out now, I say that I have removed all my clothes and am going to keep the money.”


India has been the world’s most surprising AIDS success story. Though infections did not appear in India until 1986, many predicted the nation would soon become the epidemic’s focal point. In 2002, the C.I.A.’s National Intelligence Council predicted that India would have as many as 25 million AIDS cases by 2010. Instead, India now has about 1.5 million.


An important reason the disease never took extensive hold in India is that most women here have fewer sexual partners than in many other developing countries. Just as important was an intensive effort underwritten by the World Bank and the Bill and Melinda Gates Foundation to target high-risk groups like prostitutes, gay men and intravenous drug users.


But the Gates Foundation is now largely ending its oversight and support for AIDS prevention in India, just as efforts directed at prostitutes are becoming much more difficult. Experts say it is too early to identify how much H.I.V. infections might rise.


“Nowadays, the mobility of sex workers is huge, and contacting them is very difficult,” said Ashok Alexander, the former director in India of the Gates Foundation. “It’s a totally different challenge, and the strategies will also have to change.”


An example of the strategies that had been working can be found in Delhi’s red-light district on Garstin Bastion Road near the old Delhi railway station, where brothels have thrived since the 16th century. A walk through dark alleys, past blind beggars and up narrow, steep and deeply worn stone staircases brings customers into brightly lighted rooms teeming with scores of women brushing each other’s hair, trying on new dresses, eating snacks, performing the latest Bollywood dances, tending small children and disappearing into tiny bedrooms with nervous men who come out moments later buttoning their trousers.


A 2009 government survey found 2,000 prostitutes at Garstin Bastion (also known as G. B.) Road who served about 8,000 men a day. The government estimated that if it could deliver as many as 320,000 free condoms each month and train dozens of prostitutes to counsel safe-sex practices to their peers, AIDS infections could be significantly reduced. Instead of broadcasting safe-sex messages across the country — an expensive and inefficient strategy commonly employed in much of the world — it encircled Garstin Bastion with a firebreak of posters with messages like “Don’t take a risk, use a condom” and “When a condom is in, risk is out.”


Surprising many international AIDS experts, these and related tactics worked. Studies showed that condom use among clients of prostitutes soared.


“To the credit of the Indian strategists, their focus on these high-risk groups paid off,” said Dr. Peter Piot, the former executive director of U.N.AIDS and now director of the London School of Hygiene and Tropical Medicine. A number of other countries, following India’s example, have achieved impressive results over the past decade as well, according to the latest United Nations report, which was released last week.


Sruthi Gottipati contributed reporting in Mumbai and New Delhi.



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Bangladesh Fire Kills More Than 100 and Injures Many





MUMBAI — More than 100 people died Saturday and Sunday in a fire at a garment factory outside Dhaka, Bangladesh, in one of the worst industrial tragedies in that country.




It took firefighters all night to put out the blaze at the factory, Tazreen Fashions, after it started Saturday around 7 p.m., a retired fire official said by telephone from Dhaka, Bangladesh’s capital. At least 111 people were killed and scores of workers were taken to hospitals with burns and smoke inhalation injuries.


“The main difficulty was to put out the fire; the sufficient approach road was not there,” said the retired official, Salim Nawaj Bhuiyan, who now runs a fire safety company in Dhaka. “The fire service had to take great trouble to approach the factory.”


Bangladesh’s garment industry, the second largest exporter of clothing after China, has a notoriously poor record of fire safety. Since 2006, more than 500 Bangladeshi workers have died in garment factory fires, according to Clean Clothes Campaign, an anti-sweatshop advocacy group based in Amsterdam. Experts say many of the fires could have been easily avoided if the factories had taken the right precautions. Many factories are in cramped neighborhoods, have too few fire escapes and widely flout safety measures. The industry employs more than three million workers in Bangladesh, mostly women.


Activists say that global clothing brands like Wal-Mart, Tommy Hilfiger and the Gap need to take responsibility for working conditions in Bangladeshi factories that produce the clothes that they sell.


“These brands have known for years that many of the factories they choose to work with are death traps,” Ineke Zeldenrust, the international coordinator for Clean Clothes Campaign, said in a statement. “Their failure to take action amounts to criminal negligence.”


The fire at the Tazreen factory in Savar, northwest of Dhaka, started in a warehouse on the ground floor used to store yarn and quickly spread up the building, which was nine stories high with the top three floors under construction, according to an garment industry official at the scene who asked not to be named because he was not authorized to speak to the media. Though most workers had left for the day when the fire started, the industry official said as many as 600 workers were still inside, working overtime.


The factory, which started operations in May 2010, employed about 1,500 workers and had sales of $35 million a year, according to a document on the company’s Web site. It made T-shirts, polo shirts and fleece jackets.


Most of the workers who died were on the first and second floors and were killed, fire officials said, because there were not enough exits for them to get out and none that opened to the outside.


“The factory had three staircases, and all of them were down through the ground floor,” said Maj. Mohammad Mahbub, the operations director for the fire department, according to The Associated Press. “So the workers could not come out when the fire engulfed the building.”


In a telephone interview later on Sunday, Major Mahbub said the fire could have been caused by an electrical fault or by a spark from a cigarette.


In a brief phone call, Delowar Hossain, the managing director of the Tuba Group, the parent company of Tarzeen Fashions, said he was too busy to comment. “Pray for me,” he said and then hung up.


Television news reports showed badly burned bodies lined up on the floor in what appeared to be a government building and showed the injured receiving treatment in hallways of local hospitals.


The industry official said that many of the bodies were burned beyond recognition and that it would take some time to identify them.


One survivor, Mohammad Raju, 22, who worked on the fifth floor, said he escaped by climbing out of a third-floor window onto the bamboo scaffolding that was being used by construction workers. But he said he lost his mother, who also worked on the fifth floor, when they were making their way down.


“It was crowded on the stairs as all the workers were trying to come out from the factory,” Mr. Raju said. “There was no power supply, it was dark and I lost my mother in dark. I tried to search for her for 10 to 15 minutes but did not find her.”


A document posted on Tarzeen Fashions’ Web site appeared to show that an “ethical sourcing” official for Walmart flagged “violations and/or conditions which were deemed to be high risk” at the factory in May 2011, though it did not specify the nature of the infractions. The notice said that the factory had been given an “orange” grade and that any factories given three such assessments in two years from their last audit would not receive any orders from Walmart for one year.


It was unclear whether Walmart had suspended the company or was still buying clothes from it. The Web sites of Tuba Group lists the retailer and others like Carrefour, the French retail chain, as customers. A spokesman for Walmart, Kevin Gardner, said the company was “so far unable to confirm that Tazreen is supplier to Walmart nor if the document referenced in the article is in fact from Walmart.”


Bangladesh exports about $18 billion worth of garments and is a big supplier to American, European and Japanese brands. Employees in the country’s factories are among the lowest-paid in the world with entry-level workers making a government-mandated minimum wage of about $37 a month.


Tensions have been running high between workers, who have been demanding an increase in minimum wages, and factory owners and the government. Earlier this year, a union organizer, Aminul Islam, who campaigned for better working conditions and higher wages, was found tortured and killed outside Dhaka.


Fire safety remains weak across much of the region. In September, nearly 300 workers were killed in a fire at a textile factory in Karachi, Pakistan, just weeks before it passed an inspection that covered several issues including health and safety.


Julfikar Ali Manik contributed reporting from Dhaka, Bangladesh, and Stephanie Clifford from New York.



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