Saturday, January 3, 2009

Bank of America, Wells close mergers as banking transforms

By Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp completed its purchase of Merrill Lynch & Co and Wells Fargo & Co finished buying Wachovia Corp, the latest sea changes in a transformed banking industry facing dire economic times ahead.

The Merrill takeover was completed on Thursday, ending more than 94 years of independence for the Wall Street investment bank and brokerage. The Wachovia merger closed on Wednesday, marking the denouement for a lender that started in 1879 with what it deemed a "very adequate" $100,000 of capital.

Bank of America has said it would issue about 1.71 billion common shares to buy Merrill, equal to about $24.1 billion, plus 359,100 preferred shares. The Wachovia merger valued that bank at roughly $12.7 billion.

By adding Merrill, Bank of America vaulted over JPMorgan Chase & Co and Citigroup Inc to become the largest U.S. bank by assets, with about $2.7 trillion. Wells Fargo ranks fourth, with about $1.4 trillion. Bank of America and Wells Fargo are also the largest U.S. mortgage providers.

The mergers follow a year that saw several major U.S. financial providers find buyers, fail, or adopt new business structures amid the biggest financial crisis in decades, prompting the U.S. Treasury Department to craft the $700 billion Troubled Asset Relief Program to bail out the industry.

A year-long U.S. recession has caused banks' credit problems to soar. Economists believe the U.S. economy shrank as much as 6 percent in the fourth quarter and could decline at least through June, and expect the unemployment rate to soar well above 8 percent in 2009, up from November's 6.7 percent.

Merrill and Wachovia together suffered more than $48 billion of losses from January to September, largely because of writedowns tied to mortgages and other troubled debt.

Another big lender hurt by mortgage losses, Cleveland's National City Corp, was acquired Wednesday by Pittsburgh-based PNC Financial Services Group Inc for about $3.9 billion, based on reported common shares.


Kenneth Lewis, chief executive of Charlotte, North Carolina-based Bank of America, had already spent some $110 billion on major acquisitions before buying Merrill, but his latest purchase may pose his greatest challenge yet.

He must stem defections from Merrill's "thundering herd" of 17,000 brokers and its investment bank, as he prepares to shed at least 30,000 jobs overall to help save $7 billion a year.

This follows a year when Bank of America shares fell 65.9 percent amid declining profitability, big exposure to the housing market and rising credit card delinquencies.

Adding Merrill makes the bank's brokerage, credit card, investment banking, mortgage and wealth management operations, plus its deposit base, the nation's largest or close to it.

"We are now uniquely positioned to win market share and expand our leadership position in markets around the world," Lewis said in a statement on Thursday.

While Bank of America and Merrill raised $25 billion of capital from the Treasury program, many analysts have said they may need more. Bank of America in October halved its dividend, and some analysts have said another cut may be needed.

John Thain, who was Merrill's chief executive, agreed to run Bank of America's global banking, securities and wealth management businesses.


In buying Wachovia, Wells Fargo trumped a lower bid by Citigroup, and more than doubled its size. Wells Fargo now has the nation's largest branch network, with more than 6,600 offices, and one of its largest deposit bases and brokerages.

Chief Executive John Stumpf is betting that San Francisco-based Wells Fargo properly assessed the risks in Wachovia's $482.4 billion loan portfolio, including a troubled $118.7 billion book of "option" adjustable-rate mortgages.

"We're being very thoughtful and deliberate in our three-year merger integration," Stumpf said in a statement.

On December 10, Wells Fargo said it expected to write down $71.4 billion of Wachovia's overall loan portfolio. The same day, Stumpf said at a conference that the housing slump was not over but that there were "early signs" a bottom might be near.

Wells Fargo is the nation's second-largest mortgage lender. It remained profitable by avoiding many of the risky loans that plagued Wachovia and caused Washington Mutual Inc to fail. Wells Fargo shares fell just 2.4 percent in 2008.

Merrill's common shareholders received 0.8595 of a Bank of America share for each of their shares. Wachovia shareholders got 0.1991 of a Wells Fargo share for each of their shares.

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Russia Flexes Muscle, Cuts Off Gas Supply to Ukraine

- via VOA News

Russia has stopped delivery of natural gas to Ukraine after the failure of last minute talks to reach agreement on a price for 2009. Both sides offer assurances that gas will continue to transit from Russia through pipelines in Ukraine to consumers in Western Europe.

Ukraine’s Naftohaz gas company confirms the volume of fuel on its end of the pipeline from Russia has been reduced. Gazprom, the Russian state gas monopoly, reduced the flow at 10:00 AM Moscow time at a compressor station in Kursk near the Ukrainian border. Gazprom spokesman Sergei Kupriyanov says talks aimed at signing a delivery contract for the New Year ended late Wednesday without success.

Kupriyanov says the main problem is not the inability to agree on the price of gas, but rather that the Naftohaz delegation at the talks did not have a mandate to sign a new contract.

A press spokesman for Ukrainian President Viktor Yushchenko did not have an immediate comment on the ongoing dispute. However, a statement on the Ukrainian presidential Web site signed by Mr. Yushchenko and Prime Minister Yulia Tymoshenko indicates price remains an issue.

According to the statement, a Russian offer of $250 per 1,000 cubic meter factors in the global drop in oil prices and would give Ukraine a Central European price for natural gas. But the statement claims Russia is seeking to keep a pipeline transit price of $1.70 per 1,000 cubic meters for every 100 kilometers, which would be more than two times lower than the Central European average, and would make adequate pipeline maintenance virtually impossible. Ukraine is proposing a transit fee of no less than $2, and seeks a price of $201 per 1,000 cubic meters. Its price last year was $179.

The official statement says Ukraine has adequate reserves to guarantee that no family will go without heat. Ukrainian leaders also guarantee that transport of Russian gas to Western Europe via Ukrainian pipelines will continue without disruption.

Sergei Kupriyanov says that while the volume of gas has been reduced for Ukrainian consumers by 110 million cubic meters, it has been increased for Western Europe.

The spokesman says export delivery of gas through Ukraine has been increased by about 20 million cubic meters to 326 million every 24 hours.

Kupriyanov told an early afternoon news conference in Moscow that Russia is prepared to sign a new contract with Ukraine at any time. Soon after he spoke, a spokesman for the Ukrainian president said members of the administration were in a meeting to discuss the gas issue.

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Google tells users to drop IE6

By Christian Zibreg

Chicago (IL) - Taking a page out of Apple’s book, Google is now urging Gmail users to drop Internet Explorer 6 (IE6) in favor of Firefox or Chrome that, according to the company, run the popular web-based email service "twice as fast." Google also labels IE6 as an unsupported browser, meaning it fails to run some Gmail features.

Following recent release of Chrome 1.0, Google is increasing the visibility of the browser. In addition to a direct download link on, YouTube and within the Adsense advertising program, the company is now advising Gmail users who access the service with IE6 to ditch the browser and upgrade to Firefox 3 or Chrome. Google claims the two browsers run the popular webmail service "twice as fast".

IE6 users are greeted with a new "Get faster Gmail" message in the menu bar of the web interface. The link leads to a page that promotes Chrome and Firefox 3. "Browsers are getting faster and better at running web applications like Google Mail that use browser technology to its limits," the page reads. "In order to get the best experience possible and make Google Mail run an average of twice as fast, we suggest that you upgrade your browser to one of the fastest Google Mail supported browsers that work on Windows." The page offers direct download links for Firefox 3 and Chrome. IE7 and Apple's Safari are listed as supported Gmail browsers.

Google recently dumped Firefox in the Google Pack application bundle and replaced it with Chrome. Last month, the company added a direct download link for Chrome on Google and YouTube. Google's decision to list IE6 as an unsupported Gmail browser does not affect just consumers: Tens of thousands of small- and mid-sized businesses that run Google Apps hosted services may dump IE6 as well in order to get full Gmail-based features while accessing business email accounts via a web browser.

According to Net Applications, roughly one in five online users accessed the web with IE6 during November. Most of them are believed to be corporate users who rely on IE6 as the certified browser for their business environment. IE6’s market share is notably higher during the week than on weeks, we previously reported. However, there is a trend that shows a slowly, but steadily declining market share of IE6, which suggests that more businesses are switching to newer browsers. What makes Google’s Chrome promotion especially interesting is the fact that Mozilla is picking up two out of three browser users that Microsoft surrenders.

Fast JavaScript engines and greater compatibility with web standards have become Chrome's and Firefox's biggest selling points over IE this year. In the corporate world, these benefits could turn into decisive reasons for companies to ditch IE. Some business software vendors have begun tweaking their web applications for Chrome's speedy V8 engine, resulting in a dramatic speed gains. For example, a Chrome-optimized version of the Recruiting CRM software delivers a 300% performance increase in complex queries.

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Is the Euro the New Dollar?

By Leo Cendrowicz

Europe's single currency has come of age early. The euro turns 10 on Jan. 1, a milestone for one of the most powerful symbols of European identity. It has already endured a rite of passage over the past few months, as the global financial crisis battered European markets yet failed to fluster the euro. And, like any debutante, it has its suitors: a string of countries lining up to dump their national currencies and join the euro zone.

It's a remarkable achievement for a currency whose only global rival is the U.S. dollar. The greenback has more than two centuries of history behind it. But it wasn't until Jan. 1, 1999 that 11 E.U. countries locked their national currencies together into a fixed exchange rate. Three years later, physical coins and notes became available, replacing national cash in a massive changeover operation. (See the top 10 business deals of 2008.)

The euro zone is now 15 members large and has a combined population of about 320 million. However, many more people are directly affected by the currency, from would-be members whose money is already pegged to it, to countries like Montenegro and Kosovo, whose effective national currency is the euro. France's former African colonies also peg their common currency to Europe's. That means about 500 million people rely on the euro or euro-pegged currencies.

European Commission president José Manuel Barroso credits the euro for delivering lower inflation, lower interest rates and greater price stability, and helping to create 16 million jobs. More immediately, the euro is shielding member states in this time of economic turmoil, preventing a currency crisis in addition to the credit crunch. "The euro is sheltering businesses from the exchange rate volatility, which has battered them in previous downturns," Barroso said on Monday. "To put it simply, the euro works."

Before the euro, a financial crisis in Europe went hand in hand with currency woes: a run on weaker currencies, heavy intervention by central banks and finally a collapse of the parity system. "I've lived through currency devaluations, and they are fraught with anxieties," says Hans Martens, chief executive of the European Policy Centre. "But the way the euro coped with the financial crisis was absolutely great. You have a big island of stability, with small nations protected when the big waves became rough."

The euro's 10th anniversary will see the euro zone take on a 16th member, Slovakia. Eight other central and East European countries have set the goal of joining within the next six years, including Poland, whose political establishment dropped its longtime opposition after a recent run on the Polish zloty. The euro has found some other unexpected converts too, thanks to the financial crisis. The Danes voted against joining the euro zone in 2000, but they are set to hold another referendum in March. Iceland — not even an E.U. member — is pondering "unilateral euroization" after seeing its krona plunge nearly 80% against the euro in September and October.

And the biggest prize of all, Britain, is said to be warming to the euro. Barroso recently claimed that London is "closer than ever before" to euro-zone entry and that "the people who matter in Britain" think it should join. That may be overstating things a bit, but a report by research group Chatham House warns that as the euro zone grows, the U.K. risks being excluded from "deeper intra-E.U. economic consultation and coordination, including in areas of significant national interest, such as financial market regulation." (See pictures of the financial crisis in London.)

It doesn't help that the pound is wilting. Two years ago, one euro was worth just £0.65. Now, humbled by bank crashes, government bailouts and a collapsing housing market that has forced massive interest rate cuts, Europe's currency is within a pence or two of parity with the pound. "The debate has changed from a total fantasy in the U.K.," says Jean Pisani-Ferry, director of Brussels-based think tank Bruegel. "The political obstacles still remain strong, but it has changed the perception of the U.K. as the perfect system."

Pisani-Ferry says the financial crisis has been a defining moment for the euro, but he cautions against too much praise. The euro is still some way from dethroning the dollar as a global currency; just 27% of global foreign exchange reserves are held in euros compared with 62% in dollars.

And, he says, the euro's first decade has been characterized by budget rows and debates about the European Central Bank's monetary policy, when the focus should be on correcting big macroeconomic divergences, like Spain's and Ireland's recent (and ultimately doomed) property bubbles. "The euro zone needs more ability to act in times of real crises, or to prevent them," Pisani-Ferry says. "It is a slow process." But one that has come a long way in 10 years.

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Top Dell execs leave as PC maker restructures


By Jim Finkle

BOSTON (Reuters) - Two top Dell Inc executives recruited to help turn around the No. 2 PC maker are leaving as part of the second major staff shake-up in the two years since founder Michael Dell returned as CEO.

The company, once the top PC maker, has slashed jobs and struggled to regain market share it lost to Hewlett-Packard Co and its stock has dived more than 60 percent this year.

The revamp calls for all sales to businesses to be managed centrally, rather than from three regional headquarters around the globe.

The company's president of global operations, Mike Cannon, will be succeeded by 21-year company veteran Jeff Clarke. Marketing chief Mark Jarvis will also leave the company.

The two executives are departing less than two years after Michael Dell wooed them with sign-on bonuses of $2 million for Cannon and $250,000 for Jarvis.

"It's a big shake-up," said Tim Ghriskey, chief investment officer for Solaris Asset Management. "Will it succeed over the long term? Who knows? But I think a shake-up is positive."

Dell's larger rival HP has cut costs and boosted market share since it named Marc Hurd chief executive in September 2006. Michael Dell returned as CEO of his company four months later, shortly after HP wrested the top spot in the global PC market.

Dell has cut more than 8,000 jobs this year, and asked employees to voluntarily take up to five days of unpaid vacation to further lower costs.

Analyst Shannon Cross of Cross Research expects Dell to announce another round of layoffs next year as it struggles to bring costs in line with falling sales.

"My guess is that they will find some cost savings, that they will shrink their organization to match lower demand," Cross said. "We're going to see this play out in the next couple of quarters."

Michael Dell has failed to turn around market share losses since his return in January 2007. Dell's market share slipped to 13.6 percent of global unit PC sales in the third quarter of this year, from 16.1 percent in the third quarter of 2006, according to market researcher Gartner.

Meanwhile, HP's third-quarter share climbed to 18.4 percent from 16.3 percent two years earlier.

During the same period Acer Inc more than doubled its share to 12.5 percent, making it the No. 3 PC maker. Lenovo Group Ltd's share has dropped to 7.3 percent from 7.5 percent, putting it in fourth place.


Dell will centralize a far-flung global organization responsible for sales of its business products, which include personal computers, servers and storage equipment.

The three new segments will supervise Dell's business with large corporations, government agencies, and small to mid-sized companies.

Dell's consumer business is already centralized under unit president Ron Garriques.

Dell shares were up 8 cents at $10.31 in midday Nasdaq trading. They hit a 52-week low of $8.72 on November 21 and a high of $26.04 on August 2008.

Jarvis, the marketing chief, will be replaced by Erin Nelson, formerly vice president of marketing for the Europe, Middle East and Africa region.

The company's new large enterprise division will be headed by Steve Schuckenbrock, who is currently president of global services and chief information officer.

The public division will focus on technology work in areas such as government, education, health care and the environment, and will be overseen by Paul Bell, currently president, Dell Americas.

Lastly, Steve Felice, currently president of Dell Asia-Pacific and Japan, will head the small and medium business division.

The company plans to align its financial reporting with the new structure during the first half of Dell's fiscal-year 2010. That starts in February.

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KBR Sued Again, This Time for Male-on-Male Sexual Harassment

kbr1.jpgA new lawsuit adds an unusual dimension to all the claims of sexual deviance at Kellogg, Brown & Root.

Gregory Thomas, a former KBR employee, is suing because he says that another male employee sexually harassed him in the office while working in Iraq, and that he was fired after complaining about the abuse.

"On at least one occasion, [the male employee] rubbed his groin on [Thomas's] desk, and said, 'You know what I'm doing, I'm rubbing myself on your desk,'" claims the lawsuit, filed yesterday in Houston federal court.

Other alleged incidents include "sticky surprises" in Thomas's work area and pictures of another man's testicles on Thomas's digital camera. The employee also used a black marker to write that he "Fucking Rules" on the camera's memory stick, according to the lawsuit.

Those incidents are far from typical office high jinks, but the situation really got serious when, according to the lawsuit, the employee spread rumors among co-workers that Thomas was a sexual predator and "liked little boys."

After Thomas told his supervisors about this, they did nothing but implied it was his own fault, the lawsuit says. KBR management fired Thomas in September of 2005, after he continued to report the harassment.

Trang Q. Tran, Thomas's attorney, was not immediately available for comment, and Hair Balls sent an e-mail to a KBR spokeswoman, but we haven't received a response.

-- Paul Knight

UPDATE: Thomas's attorney contacted Hair Balls and said that he plans to file an amended lawsuit, with more details and additional claims of sexual harassment, as soon as all the facts are checked. "If this guy could get away with doing sexual gyrations on my client's desk, then other people can do whatever they like, because they see that there are no parameters."

KBR spokeswoman Heather Browne also got back with Hair Balls, issuing a no comment.

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'Safest' seat remarks get Muslim family kicked off plane

By Mike M. Ahlers

WASHINGTON (CNN) -- A Muslim family removed from an airliner Thursday after passengers became concerned about their conversation say AirTran officials refused to rebook them, even after FBI investigators cleared them of wrongdoing.

A Muslim family was removed from an AirTran flight after a conversation about the safest place to sit.

A Muslim family was removed from an AirTran flight after a conversation about the safest place to sit.

Atif Irfan said federal authorities removed eight members of his extended family and a friend after passengers heard them discussing the safest place to sit and misconstrued the nature of the conversation.

Irfan, a U.S. citizen and tax attorney, said he was "impressed with the professionalism" of the FBI agents who questioned him, but said he felt mistreated when the airline refused to book the family for a later flight.

AirTran Airways late Thursday said they acted properly and that the family was offered full refunds and can fly with AirTran again.

"AirTran Airways complied with all TSA, law enforcement and Homeland Security directives and had no discretion in the matter," the company said in a prepared statement.

Family members said FBI agents tried to work it out with the airline, but to no avail. Share your story

"The FBI agents actually cleared our names," said Inayet Sahin, Irfan's sister-in-law. "They went on our behalf and spoke to the airlines and said, 'There is no suspicious activity here. They are clear. Please let them get on a flight so they can go on their vacation,' and they still refused."

"The airline told us that we can't fly their airline," Irfan said.

The dispute occurred about 1 p.m. Thursday as AirTran flight 175 was preparing for takeoff from Reagan National Airport outside of Washington, D.C., on a flight destined for Orlando, Florida.

Atif Irfan, his brother, their wives, a sister and three children were headed to Orlando to meet with family and attend a religious conference.

"The conversation, as we were walking through the plane trying to find our seats, was just about where the safest place in an airplane is," Sahin said. "We were (discussing whether it was safest to sit near) the wing, or the engine or the back or the front, but that's it. We didn't say anything else that would raise any suspicion."

The conversation did not contain the words "bomb," "explosion," "terror" or other words that might have aroused suspicion, Irfan said.

"When we were talking, when we turned around, I noticed a couple of girls kind of snapped their heads," said Sobia Ijaz, Irfan's wife. "I kind of thought to myself, 'Oh, you know, maybe they're going to say something.' It didn't occur to me that they were going to make it such a big issue."

Some time later, while the plane was still at the gate, an FBI agent boarded the plane and asked Irfan and his wife to leave the plane. The rest of the family was removed 15 or 20 minutes later, along with a family friend, Abdul Aziz, a Library of Congress attorney and family friend who was coincidentally taking the same flight and had been seen talking to the family.

After the FBI interviewed family members, it released them, Irfan said.

AirTran spokesman Tad Hutcheson said the incident began when some passengers reported hearing suspicious remarks by a woman and alerted flight attendants. Two federal air marshals, who were on board the flight, notified law enforcement about the security-related issue, AirTran said.

After the family and Aziz were taken for questioning, the remaining 95 passengers were taken off of the plane and rescreened, along with the crew and the baggage, AirTran said.

Irfan said he believes his family is owed an apology.

"Really, at the end of the day, we're not out here looking for money. I'm an attorney. I know how the court system works. We're basically looking for someone to say... 'We're apologizing for treating you as second-class citizens.'"

"We are proud Americans," Sahin said. "You know we decided to have our children and raise them here. We can very easily go anywhere we want in the world, but you know we love it here and we're not going to go away, no matter what."

Aziz said there is a "very strong possibility" he will pursue a civil rights lawsuit.

"I guess it's just a situation of guilt by association," Aziz said. "They see one Muslim talking to another Muslim and they automatically assume something wrong is going on."

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Bribes Corrode Afghans’ Trust in Government


KABUL, Afghanistan — When it comes to governing this violent, fractious land, everything, it seems, has its price.

Danfung Dennis for The New York Times

A man pulls a cart loaded with fire wood past a mansion owned by high-ranking government officials in the Sherpur neighborhood of Kabul.

Danfung Dennis for The New York Times

The mansions of Afghan officials in the Sherpur neighborhood of Kabul are a curiosity not only for their size, but also because government salaries are not very big.

Want to be a provincial police chief? It will cost you $100,000.

Want to drive a convoy of trucks loaded with fuel across the country? Be prepared to pay $6,000 per truck, so the police will not tip off the Taliban.

Need to settle a lawsuit over the ownership of your house? About $25,000, depending on the judge.

“It is very shameful, but probably I will pay the bribe,” Mohammed Naim, a young English teacher, said as he stood in front of the Secondary Courthouse in Kabul. His brother had been arrested a week before, and the police were demanding $4,000 for his release. “Everything is possible in this country now. Everything.”

Kept afloat by billions of dollars in American and other foreign aid, the government of Afghanistan is shot through with corruption and graft. From the lowliest traffic policeman to the family of President Hamid Karzai himself, the state built on the ruins of the Taliban government seven years ago now often seems to exist for little more than the enrichment of those who run it.

A raft of investigations has concluded that people at the highest levels of the Karzai administration, including President Karzai’s own brother, Ahmed Wali Karzai, are cooperating in the country’s opium trade, now the world’s largest. In the streets and government offices, hardly a public transaction seems to unfold here that does not carry with it the requirement of a bribe, a gift, or, in case you are a beggar, “harchee” — whatever you have in your pocket.

The corruption, publicly acknowledged by President Karzai, is contributing to the collapse of public confidence in his government and to the resurgence of the Taliban, whose fighters have moved to the outskirts of Kabul, the capital.

“All the politicians in this country have acquired everything — money, lots of money,” President Karzai said in a speech at a rural development conference here in November. “God knows, it is beyond the limit. The banks of the world are full of the money of our statesmen.”

The decay of the Afghan government presents President-elect Barack Obama with perhaps his most underappreciated challenge as he tries to reverse the course of the war here. Mr. Obama may be required to save the Afghan government not only from the Taliban insurgency — committing thousands of additional American soldiers to do so — but also from itself.

“This government has lost the capacity to govern because a shadow government has taken over,” said Ashraf Ghani, a former Afghan finance minister. He quit that job in 2004, he said, because the state had been taken over by drug traffickers. “The narco-mafia state is now completely consolidated,” he said.

On the streets here, tales of corruption are as easy to find as kebab stands. Everything seems to be for sale: public offices, access to government services, even a person’s freedom. The examples mentioned above — $25,000 to settle a lawsuit, $6,000 to bribe the police, $100,000 to secure a job as a provincial police chief — were offered by people who experienced them directly or witnessed the transaction.

People pay bribes for large things, and for small things, too: to get electricity for their homes, to get out of jail, even to enter the airport.

Governments in developing countries are often riddled with corruption. But Afghans say the corruption they see now has no precedent, in either its brazenness or in its scale. Transparency International, a German organization that gauges honesty in government, ranked Afghanistan 117 out of 180 countries in 2005. This year, it fell to 176.

“Every man in the government is his own king,” said Abdul Ghafar, a truck driver. Mr. Ghafar said he routinely paid bribes to the police who threatened to hinder his passage through Kabul, sometimes several in a day.

Nowhere is the scent of corruption so strong as in the Kabul neighborhood of Sherpur. Before 2001, it was a vacant patch of hillside that overlooked the stately neighborhood of Wazir Akbar Khan. Today it is the wealthiest enclave in the country, with gaudy, grandiose mansions that cost hundreds of thousands of dollars.

Afghans refer to them as “poppy houses.” Sherpur itself is often jokingly referred to as “Char-pur,” which literally means “City of Loot.”

Yet what is perhaps most remarkable about Sherpur is that many of the homeowners are government officials, whose annual salaries would not otherwise enable them to live here for more than a few days.

One of the mansions — three stories, several bedrooms, sweeping balconies — is owned by Abdul Jabbar Sabit, a former attorney general who made a name for himself by declaring a “jihad” against corruption.

Danfung Dennis for The New York Times

Farooq Farani has been trying to resolve a property dispute. An Afghan judge wants $25,000, but Mr. Farani has refused.

After he was fired earlier this year by President Karzai, a video began circulating around town showing Mr. Sabit dancing giddily around a room and slurring his words, apparently drunk. Mr. Sabit now lives in Canada, but his house is available to rent for $5,000 a month.

An even grander mansion — ornate faux Greek columns, a towering fountain — is owned by Kabul’s police chief, Mohammed Ayob Salangi. It can be had for $11,000 a month. Mr. Salangi’s salary is unknown; that of Mr. Karzai, the president, is about $600 a month.

Mr. Ghani, the former finance minister, said the plots of land on which the mansions of Sherpur stand were doled out early in the Karzai administration for prices that were a tiny fraction of what they were worth. (Mr. Ghani said he was offered a plot, too, and refused to accept it.)

“The money for these houses was illegal, I think,” said Mohammed Yosin Usmani, director general of a newly created anticorruption unit.

Often, the corruption here is blatant. On any morning, you can stand on the steps of the Secondary Courthouse in downtown Kabul and listen to the Afghans as they step outside.

One of them was Farooq Farani, who has been coming to the court for seven years, trying to resolve a property dispute. His predicament is a common one here: He fled the country in 1990, as the civil war began, and returned after the fall of the Taliban, only to find a stranger occupying his home.

Yet seven years later, the title to Mr. Farani’s house is still up for grabs. Mr. Farani said he had refused to pay the bribes demanded by the judge in the case, who in turn had refused to settle his case.

“You are approached indirectly, by intermediaries — this is how it works,” said Mr. Farani, who spent his exile in Wiesbaden, Germany. “My house is worth about $50,000, and I’ve been told that I can have the title if I pay $25,000 — half the value of the home.”

Tales like Mr. Farani’s abound here, so much so that it makes one wonder if an honest man can ever make a difference.

Amin Farhang, the minister of commerce, was voted out of Mr. Karzai’s cabinet by Parliament earlier last month for failing to bring down the price of oil in Afghanistan as the price declined in international markets. In a long talk in the sitting room of his home, Mr. Farhang recounted a two-year struggle to fire the man in charge of giving out licenses for new businesses.

The man, Mr. Farhang said, would grant a license only in exchange for a hefty bribe. But Mr. Farhang found that he was unable to fire the man, who, he said, simply bribed other members of the government to reinstate him.

“In a job like this, a man can make 10 or 12 times his salary,” Mr. Farhang said. “People do anything to hang on to them.”

Many Afghans, including Mr. Ghani, the former finance minister, place responsibility for the collapse of the state on Mr. Karzai, who, they say, has failed repeatedly to confront the powerful figures who are behind much of the corruption. In his stint as finance minister, Mr. Ghani said, two moments crystallized his disgust and finally prompted him to quit.

The first, Mr. Ghani said, was his attempt to impose order on Kabul’s chaotic system of private property rights. The Afghan government had accumulated vast amounts of land during the period of Communist rule in the 1970s and 1980s. And since 2001, the government has given much of it away — often, Mr. Ghani said, to shady developers at extremely low prices.

Much of that land has been sold and developed, rendering much of Kabul’s property in the hands of unknown owners. Many of the developers who were given free land, Mr. Ghani said, were also involved in drug trafficking.

When he proposed drawing up a set of regulations to govern private property, Mr. Ghani said, he was told by President Karzai to stop.

“ ‘Just back off,” he told me,’ ” Mr. Ghani said. “He said that politically it wasn’t feasible.”

A similar effort to impose regulations at the Ministry of Aviation, which Mr. Ghani described as rife with corruption, was met with a similar response by President Karzai, he said.

“Morally the question was, am I becoming the fig leaf to legitimate a system that was deeply corrupt? Or was I there to serve the people?” Mr. Ghani said. “I resigned.”

Mr. Ghani, who then became chancellor of Kabul University, is today contemplating a run for the presidency.

Asked about Mr. Ghani’s account on Thursday, Humayun Hamidzada, a spokesman for Mr. Karzai, said he could not immediately comment.

The corruption may be endemic here, but if there is any hope in the future, it would seem to lie in the revulsion of average Afghans like Mr. Farani, who, after seven years, is still refusing to pay.

“I won’t do it,” Mr. Farani said outside the courthouse. “It’s a matter of principle. Never.”

“But,” he said, “I don’t have my house, either, and I don’t know that I ever will.”

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Why G.W. Bush should be frogmarched before the Hague

Bush War Criminal_5b232.JPG

A political scientist named Michael Haas has just published a book titled George W. Bush, War Criminal? The Bush Administration's Liability for 269 War Crimes:

Based on information supplied in autobiographical and press sources, the book matches events in Afghanistan, Guantánamo, Iraq , and various secret places of detention with provisions in the Geneva Conventions and other international agreements on war crimes. His compilation is the first to cite a comprehensive list of specific war crimes in four categories-illegality of the decision to go to war, misconduct during war, mistreatment of prisoners of war, and misgovernment in the American occupations of Afghanistan and Iraq.

Haas accuses President Bush of conduct bordering on treason because he reenacted several complaints stated in the Declaration of Independence against England, ignored the Constitution and federal laws, trampled on the American tradition of developing international law to bring order to world politics, and in effect made a Faustian pact with Osama Bin Laden that the intelligence community blames for an increase in world terrorism. Osama Bin Laden remains alive, he reports, because Bush preferred to go after oil-rich Iraq rather than tracking down Al Qaeda leaders, whose uncaptured presence was useful to him in justifying a "war on terror" pursued on a military rather than a criminal basis without restraint from constitutional checks and balances.

The worst war crime cited is the murder of at least 45 prisoners, some but not all by torture. Other heinous crimes include the brutal treatment of thousands of children, some 64 of whom have been detained at Guantánamo. Sources document the use of illegal weapons in the war from cluster bombs to daisy cutters, napalm, white phosphorus, and depleted uranium weapons, some of which have injured and killed American soldiers as well as thousands of innocent civilians. Children playing in areas of Iraq where depleted uranium weapons have been used, but not reported on request from the World Health Organization, have developed leukemia and other serious diseases.

"Bush's violations of the Constitution as well as domestic and international law have besmirched the reputation of the United States," Haas writes. "In so doing, they have accomplished a goal of which the Al Qaeda terrorists only dreamed-to transform the United States into a rogue nation feared by the rest of the world and loved by almost none."

I'll be reading this to assess how accurate it all is, but I frankly won't need a lot of convincing. After all, I was calling for an investigation of Bush on these grounds even before we invaded Iraq. The problem, obviously, has only mounted exponentially in the intervening months and years.

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Colorado's 'Make My Day' law eyed in home shooting

COLORADO SPRINGS, Colo. – Prosecutors are considering whether a Colorado law meant to protect homeowners against intruders applies in the case of a man killed outside a house he mistakenly thought was his.

The parents of 22-year-old Sean Kennedy said detectives have told them their son, who had been drinking, was shot Sunday night after breaking a window to try to get in through the back door of a house a block from where he lived.

"The detectives agreed from everything we told them and from the way things looked that was pretty much what happened," said Kennedy's mother, Lisa Kennedy, told the Colorado Springs Gazette.

Under Colorado's "Make My Day" law, people are allowed to use deadly force in self defense against intruders in their home.

The street numbers of the house where Kennedy was shot, 3212, are the same as the house where he lived. Kennedy's house has a wooden privacy fence in the backyard, while the home where he was shot has a chain-link fence. His friends said he was in no condition to notice the difference after an evening of drinking and watching the Denver Broncos game at a friend's house.

Two people were inside the house that Kennedy tried to enter, police said. Police declined to identify them.

Colorado Springs police spokesman Lt. David Whitlock declined to comment on the account given by Kennedy's parents but said the right to self defense will play a role in the district attorney's decision whether to file charges.

David Webster, a defense attorney and former prosecutor, said it's still unclear whether the "Make My Day" law will apply to this case.

"It gets murky if the door is broken but not open," he said. Prosecutors also must consider whether Kennedy was warned before being shot.

The occupants of the house called police to report that they believed a burglary was occurring. Police have not said how long after the call that shots were fired.

"The time frame will be key," Webster said. "It sounds like they were trying to do the right thing and get law enforcement there."

Kennedy was an assistant golf pro at a Colorado Springs golf course.

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Dubai cancels New Year's festivities for Gaza

DUBAI, United Arab Emirates: Dubai's ruler has ordered the cancellation of all New Year's celebrations in the freewheeling Gulf city state because of the violence in Gaza.

Emirates news agency WAM said Tuesday that Sheik Mohammed bin Rashid Al Maktoum called off "all forms of celebrations" but did not elaborate.

The order calls for Dubai instead to mark the new year "with a somber tone as a token of solidarity" with the Palestinian people and with the Gaza Strip in particular.

It was not immediately clear when the ban would take effect or whether it would apply to the scores of bars and restaurants planning pricey New Year's Eve events.

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New Norway law bans buying of sex

Prostitute working on an Oslo street, file pic
Norway says the new law targets the clients and not the prostitutes

A new law has come into force in Norway making the purchase of sex illegal.

Norwegian citizens caught paying for prostitutes at home or abroad could face a hefty fine or a six-month prison sentence, authorities say.

The prison sentence could be extended to three years in cases of child prostitution.

The Norwegian authorities say they want to stamp out sex tourism and street prostitution by targeting clients rather than prostitutes.

"We think buying sex is unacceptable because it favours human trafficking and forced prostitution," deputy Justice Minister Astri Aas-Hansen was quoted as saying by the AFP news agency.


The tough new measures go further than similar ones introduced by other Nordic countries such as Sweden and Finland.

Norwegian police have been authorised to use wire-tapping devices to gather evidence.

There has already been a visible decrease in women working on the streets of central Oslo, local media report.

Prostitutes will be offered access to free education and health treatment for those with alcohol or drugs problems.

The government had already launched a publicity campaign before the law came into force.

Critics of the new regulations say prostitution will simply be driven underground and will be more difficult to control.

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Arabs turn against 'megalomaniac' Hamas

ANALYSIS: Abraham Rabinovich

THE bitter Israel-Hamas conflict has touched off Arab-Arab conflicts almost as bitter.

Responsibility for the war in Gaza, and for the Palestinian fatalities there, was placed squarely on Hamas by Palestinian Authority President Mahmoud Abbas.

"We called the leaders of Hamas and told them, 'Please, do not end the truce'," he said. Hamas ended a six-month truce with Israel two weeks before the Israeli attack.

An Abbas aide, Nimr Hammad, termed the rocket fire into Israel reckless. "The one responsible for the massacre is Hamas," he said. "Hamas should not have given the Israelis a pretext."

Bassam Abu-Sumayyah, a columnist for the daily Al-Hayat Al-Jadida, accused Hamas of megalomania and said it had acted without even a little bit of political and security sense. It had behaved like a superpower.

"They thought they have a number of missiles and can therefore prevail in a war of such size," he wrote.

A columnist for the PA daily Al-Ayyam, Abdallah Awwad, said that Hamas had made a major mistake in trying to be both a government operating in the open and a resistance organisation that operated underground. "We are paying the price of stupidity and the maniacal

love of being rulers," he said.

Beyond intra-Palestinian disputes, the eruption in Gaza has widened the rift between Egypt, supported by other moderate Arab states, and the Hamas-Iran-Syria-Hezbollah alignment.

Cairo has long feared the radical influence of Hamas on its own Islamist parties. It regards Hamas as a proxy for Iran, which it sees attempting to wrest Muslim leadership in the Middle East from Egypt, even though Iran is not an Arab country.

However, Egypt attempted to broker a reconciliation between Hamas and the Palestinian Authority that would permit a leadership acceptable to all Palestinians to emerge in new elections. Hamas derailed the proposal, to Egypt's fury.

Egypt, in turn, refused to open the border crossing between Gaza and Egypt to Gaza residents, even during the Israeli attack when many Gazans were clamouring to get out. This infuriated Hamas and caused anti-Egyptian protests in much of the Arab world.

For Egypt, the most annoying criticism came from Sheik Hassan Nasrallah, the formidable leader of the Hezbollah in Lebanon. Addressing Egyptian citizens, particularly army officers, Nasrallah called on them to protest at Cairo's lack of response to the Israeli attack.

Egyptian Foreign Minister Ahmed Aboul Gheit said of Nasrallah's speech: "(He) practically declared war on us." As for Nasrallah's appeal to Egyptian officers, Mr Gheit said of Egypt's army: "They will also protect Egypt against people like you."

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World bids a relieved adieu to a rocky year

By KRISTEN GELINEAU, Associated Press Writer

US troops celebrate New Year in Kabul Play Video AP – US troops celebrate New Year in Kabul
Record Sydney crowd gets New Year party started AFP – The pre-midnight New Year's Eve fireworks based on the Aboriginal theme 'Creation Storm' …

SYDNEY, Australia – Fireworks exploded in a kaleidoscopic shower of light over Sydney's shimmering harbor Wednesday, as the world's first major city to ring in 2009 celebrated the end of a decidedly rocky year with cheers, beers and a sense of relief.

Spectator Randolph King, 63, of York, England, whose retirement fund was gutted in the global financial crisis, summed up the feeling of many across the world as 2008 came to a close: "I'm looking forward to 2009," he said. "Because it can't get much worse."

Facing the end of a year that saw global markets come crashing down — taking the world's morale with them — partygoers everywhere struggled to forget their troubles on what is typically a joyous night.

In the Philippines, President Gloria Macapagal Arroyo spoke of hope for better days to come, while in Hong Kong, some admitted they were too depressed over their monetary woes to join in the revelry. And in Malaysia, the government — mindful of the shaky economy — opted against sponsoring any celebration at all.

In Sydney, the midnight pyrotechnic extravaganza, which organizers hoped would give revelers a brief respite from the global gloom, drew a cheering crowd of more than a million people. Fireworks zigged and zagged against the backdrop of Sydney's famed Harbor Bridge and simulated rain, thunder and lightning built toward a booming "creation storm," in keeping with the evening's theme of new beginnings.

"It is about reflecting and looking at what's happened in the past and moving forward," the celebration's creative director, Rhoda Roberts, said of the night's "creation" theme, chosen in part to reflect the struggles of 2008. "It's a time for the community to gather, to reflect, and also to move on and to simply have a little bit of joy and celebration in their lives."

But in Hong Kong, where thousands were expected at popular Victoria Harbor for a midnight fireworks display, those who had investments linked to collapsed U.S. bank Lehman Brothers said there was little joy to be found.

"I don't think there's any reason for me to celebrate after knowing that my investment is worth nothing now," said electrical repairman Chan Hon-ming, who had purchased a $30,000 Lehman-backed investment.

In India, many were happy to see the end of 2008, during which the country was rocked by a series of terrorist attacks in several cities culminating in a three-day siege in Mumbai in which gunmen killed 164 people.

"The year 2008 can best be described as a year of crime, terrorist activities, bloodshed and accidents," said Tavishi Srivastava, 51, an office worker in the northern city of Lucknow. "I sincerely hope that 2009 will be a year of peace and progress."

The year was also tough on India's economy. Rising inflation and the global meltdown slowed the growth needed to lift hundreds of millions out of poverty, while stock exchanges plummeted, hitting the rich and middle class.

At midnight in Japan, temples rang their bells 108 times — representing the 108 evils being struck out — as worshippers threw coins as offererings and prayed. In Tokyo, dozens of volunteers stirred huge pots of New Year's rice-cake soup, pitched tents and doled out blankets and clothing to the needy.

The "New Year's Village for Temporary Workers" was set up for the first time this year to provide free meals and shelter in a park. About 100 people signed up to spend New Year's Eve at the village, which held a countdown ceremony and was slated to stay open through Jan. 5.

Japan has long boasted a system of lifetime employment at major companies, but that has unraveled this year amid the financial crisis.

"There's no work," muttered Mitsuo Kobayashi, 61, picking up a wool scarf, a coat and pants at the village, and stuffing them in his paper bag. "Who knows what next year will bring?"

In Thailand, after a year of near-daily protests — and six months in which demonstrations all but paralyzed the government — the country was finally calm on the last day of 2008 as loyalists of ousted ex-Prime Minister Thaksin Shinawatra took off for a five-day national holiday. Many of the protesters come from Thailand's rural northeast and have few opportunities to get home except for longer holidays like New Year's.

Celebrations were muted in China, where fireworks and feasting are reserved mainly for the Lunar New Year, which in 2009 begins on Jan. 26.

In Beijing, President Hu Jintao summed up the year's challenges and successes ranging from the devastating Sichuan earthquake — that left nearly 90,000 people dead or missing — to the Beijing Olympics, calling 2008 extraordinary and unusual.

In the Philippines, President Arroyo looked toward the future.

"I pray for greater peace and stability," Arroyo said. "I hope that we can all work together as a global community to weather these storms."

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