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Wednesday, July 4, 2012

A war against corruption!

Much like transformation itself, rooting out corruption is a marathon rather than sprint

WHEN we talk about corruption, we are not talking about a fight against corruption or a battle against corruption. We are talking about a war against corruption fought on a broad front with many battles, some lost and some won, over a period of years before eventual victory.

No country has done it overnight and for many it is an ongoing war that must be waged relentlessly. Hong Kong took 10 years. It is endemic in countries around the world and it is in the most advanced and structured of societies that the war against corruption has been most telling.

But here in Malaysia, many of us expect that it can be crushed and eradicated in a short period of time and all it takes is political will. Yes, political will is necessary but it is not the only condition. Many things need to be put in place and real results will take time.

This is one aspect of transformation where we have to constantly battle against unrealistic expectations – people want results yesterday but we can’t give it to them immediately. Not today, not tomorrow, not even in the next month, because the war against corruption is one of the most difficult and, beyond time, it takes a considerable amount of effort, by many, many parties.

This is further complicated by a problem of measurement. The prevalence of corruption is not easily measurable. When we take action against corruption, the number of people brought to book will be higher but this does not necessarily mean that corruption has decreased.

For better or worse, we have to rely on perceptions of how corrupt we are, both from our own public and how foreigners see us. Sometimes, there are situations which skew the final results against us as we shall see shortly.

There is absolutely no doubt that we need to step up the war against corruption especially since the two most common indicators, Transparency International’s Corruption Perceptions Index (CPI) and the Global Corruption Barometer survey, show no significant change over the last two years – 2010 and 2011. But still we have made some progress when we take a closer look at the figures.

In 2010, Malaysia’s CPI score was 4.4 as the average score of nine surveys. Then, in 2011, Malaysia’s CPI score was 4.3 as the average score of 12 surveys. This means that three additional surveys were added. Our ranking slid to 4.3 from 4.4. (No country obtained 10 points – the highest. New Zealand topped with 9.5 while Singapore was fifth at 9.2.)

The movement in the CPI score (minus 0.1) was due to these additional three surveys, which had very low scores, thus bringing the average down. If these three surveys were not added, Malaysia’s CPI score would have moved up tremendously. One of the new surveys included was the Transparency International Bribe Payer’s Index.

This survey showed that Malaysians have a high tendency to pay bribes when they work or operate in other countries. I am certain that without that particular survey, our CPI would have increased. Because it is perceived that Malaysians working overseas bribe, it affects the CPI of the country itself.

Additionally, our ranking was 60 out of 183 countries in 2011 against 56 out of 178 countries in 2010. In Asean, we were placed at the third spot after Singapore and Brunei.

In terms of the barometer survey in 2011 conducted by Transparency International in 2011, 49% of the Malaysian public felt that the Malaysian Government’s fight against corruption is effective or extremely effective, a marginal improvement from 48% in 2010. This, however, is a vast improvement from 2009 when only 29% Malaysians thought that the Government’s effort on corruption was effective.

Overall, the two surveys show that we have made some progress in terms of the perception of corruption in the country and the number of people who have confidence that something is being done.

People like to say we must go for the big fish first. But it is not as simple as that. The process of gathering evidence is not easy and the very presence of corruption can make this process more difficult and even impossible in practice.

But what we need to do first is to put building blocks in place, a more bottom up approach which seeks to put in place a framework for good practices and a mechanism to report and root-out any corruption that takes place. It may look like we are starting small, but we are not. We need to put the right foundations in place.

Here are some examples of building blocks we have put in place:

Whistle blower provisions: Implementation guidelines were issued in March last year. Agencies are already processing complaints of improper conduct under the Whistleblower Protection Act 2010. To-date, there are 28 cases;

Integrity pact: The Mass Rapid Transit (MRT) project was to be the first large-scale project to implement the full Integrity Pact including monitoring and oversight elements. An oversight body was established involving the Malaysian Anti-Corruption Commission (MACC). An independent external monitoring system headed by the Auditor-General, with external party involvement, was formed to ensure adherence to the terms of the Integrity Pact. Full implementation of the Integrity Pact is only carried out on big projects with a high monetary value, so as to justify the cost of implementation;

Faster prosecution: To hasten prosecution, 14 special corruption courts were set up since February last year and more than 250 cases have been processed;

Naming and shaming website: The MACC has set up a website to list those who have been successfully prosecuted for corruption offences. This offers a ready database for interested parties and acts as a further deterrence to corruption. There are 710 listings to date (2010: 284; 2011: 96; and 2012: 13);

Open, competitive tenders: Wherever possible we have open competitive tenders with set procedures for government procurement. For increased transparency, there is the MyProcurement Portal which lists 5,157 government contracts online in 2011; and

Reduction of red tape in business licence applications: We are reducing the number of licences required from 780 to 375 and saving RM730mil in compliance costs. Such reduction of red tape reduces opportunities for corruption.

These are just a sampling of the measures being implemented. Over time we aim to build a wall against corruption by putting in place measures to stop its occurrence in the first place. This is as important as prosecution. Indications are some of the measures taken have directly helped government revenue. For instance, following MACC’s investigations into the Malaysian Customs Department, customs tax collection rose to a high of RM30.4bil last year. The highest previously recorded was RM28.6bil in 2008. This year, Customs expects to collect RM32bil.

In addition, the changes and reforms that we have put in place are also slowly showing results with foreign investors. According to a survey by the American Chamber of Commerce (AmCham) in Singapore, perception of corruption in the region, a long-standing issue, has greatly improved, with only 35% of respondents reporting dissatisfaction in 2011 compared with a high of 63% in 2010.

Consulting firm A.T. Kearney has also recognised Malaysia as among the top 10 countries in the Foreign Direct Investment Confidence Index for 2012.

We are taking serious efforts to fight corruption and we know the payback will be large. We are starting with the building blocks and then we will do more. Much like transformation, it is a marathon rather than a sprint. We need time.

You can do your own part by simply refusing to be part of any corrupt practices and, of course, reporting it when you come across it. That will help tremendously.

Datuk Seri Idris Jala is CEO of Pemandu, the Performance Management and Delivery Unit. He also Minister in the Prime Minister’s Department. Reasonable comments related to this column are welcome.

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Fake USM degrees on sale online for RM4,888 each

 Tuesday July 3, 2012

NIBONG TEBAL: Twenty people paid RM4,888 each to a syndicate that sold fake Universiti Sains Malaysia (USM) degrees, police investigations revealed.

Penang acting chief SAC II Datuk Abdul Rahim Jaffar said they banked in the money into eight different accounts under the name of a 26-year-old man, one of the three suspects arrested.

He said the syndicate promised to upload the names of the buyers onto a USM database using a special software but then did not even respond to any phone calls after the money had been banked in.

“Initial investigations determined there was no inside job,” he told reporters at the south Seberang Prai district police headquarters in Jawi, near here, yesterday.

Spot the difference: Prof Omar Osman showing the logo on a genuine USM certificate against an old one on his coat.
 
SAC II Abdul Rahim said the syndicate might have started its operations about four months ago, adding that the price of a “certificate” signified good luck.

The brains behind the syndicate is a 24-year-old woman, a former USM student.

A police source said that she had a Facebook account offering the fake scrolls which had garnered 516 “likes”.

Besides the former student, a 25-year-old woman and the male suspect were nabbed at a house in Kampar, Perak, on Saturday.
Police seized several computers and a soft copy of a USM scroll in one of the computers.

In GEORGE TOWN, USM vice-chancellor Prof Datuk Omar Osman said employers could verify with the university if they had doubts over the authenticity of certificates produced by their interviewees.

He advised employers to ask them to show their academic transcripts during the interviews. “Each bears a unique serial number of that undergraduate. This cannot be falsified.

“We also have the Gazetted Graduate Convocation Book, which is a physical database with the particulars of all the graduates.

“We have produced 120,000 graduates since our establishment,” he added.

He said other unique characteristics of a USM certificate included the university's watermark and seal.

Those who wish to verify the authenticity of USM certificates can contact 04-653 2193 or e-mail pro@usm.my.

By S. ARULLDAS and TAN SIN CHOW newsdesk@thestar.com.my
  
Ex-student behind fake degrees

Monday July 2, 2012

EORGE TOWN: The brains behind two online degree mills that allegedly churned out fake Universiti Sains Malaysia (USM) scrolls is a former student of the university.


A police source said the 24-year-old woman had a Facebook account offering such scrolls and this had garnered 516 ‘likes’.

She and two others – another woman, aged 25, and a man, 26 - were nabbed at a house in Kampar, Perak, on Saturday.

Several computers were seized in the raid. A soft copy of a USM scroll was found in one of the computers.

The source said a younger sibling of one of the suspects could be a USM student.

The university had lodged a police report on the matter, which is being investigated as cheating under Section 420 of the Penal Code.

Vice-chancellor Prof Datuk Omar Osman said the university conducted an internal investigation before lodging the reports with the police and the Malaysian Communications and Multimedia Commission on Friday.

The university has since improved the security measures of the university scrolls.

A check by The Star had revealed that a “full degree package” was priced at RM5,888 and was non-negotiable, with the document delivered within a week.

A downpayment of RM400 has to be deposited into a bank account online and a photocopy of the applicant’s MyKad e-mailed before “work” on the degree could begin.

Penang commercial crime investigations chief Asst Comm Roslee Chik said the police were investigating if there are other syndicates selling such university degrees.

Meanwhile, Higher Education Minister Datuk Seri Mohamed Khaled Nordin said those looking to get a university degree should earn the qualification.

“As far as I know, USM is the first university in Malaysia that has become the target of such a syndicate,” he said yesterday.

He told reporters at a function in Pasir Gudang that his ministry would study security methods used in other countries to stop syndicates from producing fake degree certificates and selling them to students.

Mohamed Khaled said it was currently difficult to determine if a degree certificate was genuine or not as there was no standard design for it.

By ZALINAH NOORDIN and DESIREE TRESA GASPER newsdesk@thestar.com.my 

Tuesday, July 3, 2012

Underage and on Facebook

Facebook is mulling over letting children below the age of 13 join its network, but with so many signed up already, what difference would it make? 

FACEBOOK'S minimum age should be 21. This argument mooted by CNN blogger John D. Sutter will no doubt get the support of many parents who worry about safety and privacy issues on the social media network. That is, those parents who have not secretly signed up, or helped to sign up, their children on Facebook.

Facebook (FB) already has an age limit 13 years old but the reality is that many “underaged” children already have their own profiles on the site, parents' consent notwithstanding.

In fact, it is estimated that some 7.5 million children below the age of 13 are currently on FB, out of its total 900 million plus users worldwide.

This shows that the minimum age requirement on FB is just a number. Facebook does little, if anything, to enforce it, and one can simply lie about their birth date to circumvent the rule.

So why the charade?

As suggested by the Wall Street Journal, which first broke the news of the social media giant's plans to open up to tweens and even younger kids, Facebook was feeling the heat from the American authorities in relation to the Children's Online Privacy Protection Act (COPPA).

The Act stipulates that online services catering to children below 13 would need to obtain the consent of their parents before collecting data from them. COPPA also requires that parents be given the ability to review, revise and delete their children's data.

Hence, with the number of pre-teen children registering on the site growing by day, Facebook knows it can no longer turn a blind eye to its minefield. Coming clean is perhaps its only option in defending itself from any potential legal action.

As it acknowledged in a statement: “Enforcing age restriction on the Internet is a difficult issue, especially when many reports have shown that parents want their children to access online content and services.”

Facebook founder Mark Zuckerberg himself had earlier said he would like to see kids under 13 use FB “more honestly and in compliance with the law”.

“My philosophy is that for education you need to start at a really, really young age... Because of the restrictions, we haven't even begun this learning process... If they're lifted then we'd start to learn what works. We'd take a lot of precautions to make sure that they (younger kids) are safe...,” he was quoted.

The conspiracy theorists of course say freeing the shackles is one way for Facebook to recoup its losses after a disappointing debut at the share market. Widening its user base will certainly broaden its revenue-raising opportunities, especially in the mobile apps and ad sector, and add to its market value.

Then there is the brand loyalty factor getting them young is the best way to get users hooked for the future, and guard against any possible defection to “cooler” social media networks to come.

Whatever the motive, the reality remains stark there is a high number of active FB tweens and they can no longer be ignored.

Choy: Many parents of children who are being bullied online feel they can’t do anything about it.

Time to Like

As he sees it, officially opening up to the under-13s can be a positive move, says CyberSecurity Malaysia chief executive officer Lt Col (R) Prof Datuk Husin Jazri.

“By officially allowing children to sign up, Facebook can keep tabs on how many Facebookers below 13 there are,” he opines.

In Malaysia, for instance, it is no secret that many tweens have their own FB accounts, with most having signed up either with the consent and help from their parents, siblings or close relatives; or by “cheating” Facebook, that is, changing their birth date to make the computer system accept them as above 13.

It is not clear how many Malaysian children are now online but with some 12.5 million Malaysian FB users recorded this year, it is safe to say that there are many.

In fact, global social media and digital analytics company Socialbakers estimated that some 2.2% of Malaysian Facebookers were aged 13 and below last August (around 248, 528). That is a rough estimate at best; with our below-18 population totalling up to 11.2 million (approximately 2.87 million children are in primary school), it is difficult to pinpoint how many FB minors are signed up on a fake age.

Malaysian Communications and Multimedia Commission (MCMC) chairman Datuk Mohamed Sharil Tarmizi agrees that removing the token age restriction is perhaps the most effective way to protect our children on Facebook.

This will create openness among the tweens and their parents, says Sharil.

“Children will not need to hide that they have FB accounts any more and would be encouraged to share their online experiences with their parents. If they do not bypass the protection measures (as kids nowadays are very IT savvy), the children should get the age appropriate online protection they need against the adult world' of Facebook,” he adds.

However, both agree that this will only be effective if Facebook fulfils its commitment to introduce a new suite of tools for parents to keep their children safe when they register a FB account and interact on the social networking site.

Sharil, who is also vice-chairman of the International Telecommunications Union (ITU) Council Working Group on Child Online Protection (COP), a specialised organ of the United Nations based in Geneva, Switzerland, reminds parents that children are minors first and foremost.

“Children under 13 are typically in the primary school group and need extra supervision, guidance and care,” he stresses.

Husin proposes that specific accounts for those below 13 be created with suitable contents and safeguards to enable parents and guardians to continually provide assistance as well as monitor the online activities of these young Facebookers.

Sharil: ‘Children need guidance and supervision. Online tools and technologies can never replace the care and guidance that parents can give’
“Facebook for those below 13 should be categorised as a special account, different from the adult Facebook accounts. They should introduce some kind of system to ensure that the children obtain parental consent before they get accepted to sign up, and whenever a child requests for or accepts a new Facebook friend, parents should be alerted,” he adds.

Dangerous playground

Still, as many parents would be deigned to admit, no matter how vigilant you are, it is still a big bad Web out there.

“Parents can only guide and monitor their children, they cannot really change the environment,” says a father-of-three who only wants to be known as Arshavin.

You will still need the help of the policy makers and service providers, among others, to make the Internet, and specifically Facebook, safe for children, he adds.

“No matter how well-trained or educated your children are, some places are just off limits, even if you go there with them.

“I read this one comment that I think captures it well will you let your elementary school child attend a college or adult party?'. You won't, right?” he poses, warning that some parents might be lulled by a false sense of security for their children on Facebook if the new ruling is implemented.

Social media specialist Jasmin Choy agrees, highlighting cyber-bullying as one danger for young children on FB. The problem is intensified as many parents are not equipped to deal with it, she says.

“Many parents of children who are being bullied online feel they can't do anything about it. Then there are those who just don't know what is happening to their kids in cyberspace, or those who are not giving enough guidance to their kids and are becoming bullies online,” she says.

Opposing the social media network's plans to open up their membership for children under 13, the mother of two relates a recent cyber-bullying case close to her heart.

“It happened to a friend's child who is sensitive and fragile. She was already being subtly bullied online when the girls ganged up on her and made her feel like she was stupid. The problem was, the mother didn't know what to do about it. If she intervened, the daughter would be very embarrassed. On the other hand, if the mum didn't intervene, these girls would go on bullying her daughter.”

Another red flag for children, she warns, is online porn and sexual predators.

“Many parents have no idea how much porn is being served up to the kids online. They think they have some idea but are often shocked when they discover how accessible porn is to their six- to13-year-olds.”

As Choy highlights, one only needs to go to some of the game apps on FB to receive porn advertisements.

“Many pop up even on innocent-looking Facebook games. Besides, curious kids are going to share images and if there's FB and Twitter they will see it,” she says, advising parents to “prepare” their children by educating them about the birds and the bees at an early age.

“We can't be prudish about it. They are going to see it anyway, so why not explain to them before trouble brews.”

The main danger she foresees, however, is the breach of privacy.

“Think about all the times we chatted with a young kid on FB. We must have at least mentioned the child's name, asked them how their day was... things like that. We tend to forget the dangers when we are having fun online. Bad people can easily glean information from the chats the adults have with young kids on FB posts,” she says.

Choy also strongly believes that pre-teens are particularly vulnerable because most do not have the maturity to handle problems related to FB or be aware of the dangers.

“Even if they are aware of the dangers, they can't often see the danger in front of them. Even adults don't react fast enough to FB risks, what more children of that age,” she says.

Along with the threat of paedophiles, there is also worry that young children will be subjected to unscrupulous advertisers and marketers on Facebook, or have their personal data sold to advertisers.

Not surprisingly, Zuckerberg has already been lobbied by a coalition of consumer, privacy and child advocacy groups to keep children's data confidential and the site ad-free for the below-13s in the United States.

For bank officer Aslina, addiction is her big worry.

“Just like adults, kids tend to spend way too much time on Facebook and can get addicted to it. Instead of studying or socialising with friends and playing games or sports, they will be logged on FB.”

And, cautions teacher Mary K, parents might not be able to withstand another pressure should FB open its doors to pre-teens peer pressure.

“Now they will be pressured to join because all their friends are on it. It will be a difficult time for parents, “ she says.

Arshavin agrees.

“I asked my 16-year-old daughter why she is on FB, and she said it was to watch what her friends are up to. But when I asked her to log off, she just whined about what she would be missing,” he says.

Calling FB a “different beast altogether”, Choy who is a proponent of the Internet as a study tool vows to keep her children away from it as long as she can.

“I really believe all young kids should have access to the Internet. My six-year-old can Google search for any information related to his hobbies or studies at any time with the tablet. YouTube has given him access to various documentaries he can watch and learn from. And why not? Technology and the Internet have made learning exciting. It has allowed my children to think out of the box. I just don't think they should have an FB account at an early age,” she says.

If parents do decide to let the child open a FB account, she adds, they would need to constantly talk to them about the hazards and teach them good cyber habits.

“Explain over and over again why they should not reveal sensitive information like their names, location of the moment and place of residence. And check, check, check their FB settings,” she stresses.

And constantly but silently read their children's postings to check for trouble, she adds.

This is something Alina does diligently with her two pre-teen children who are registered on FB.

“In the beginning, I was worried that I was making the wrong decision to let them get their own profiles on FB. But I read up on it and made sure that I know what is in store for them. Then I went through all the safety and security features available on FB with them before we registered.”

Most importantly, she adds, she always reminds them to be as cautious online as they would be in the real world.

Sharil agrees children should be taught as early as possible that rules and regulations exist online just as they do offline, and that there are dangerous areas online just as there are dangerous areas or things in the real world.

It is parents' responsibility to cultivate security awareness in their children and educate them on safe Internet usage, says Husin.

“Parents must be alert of any unusual activities of their children on the Net and take the appropriate action to rectify if their child gets caught in any undesirable activities online.”

Sharil, however, reiterates that parents are the best judge of whether their child is ready for Facebook themselves.

“It all goes back to the basic skills of parenting and instilling good moral values in their children. Children need guidance and supervision. Only parents can do this effectively. Teachers, NGOs and the broader community can help but they can never replace the parent,” he notes.

Crucially, parents are at the frontlines of their children's defence, says Sharil.

“Parents should continue to monitor their children's online activities while encouraging appropriate online behaviour. They should not totally depend on Facebook's parenting' facilities. Online tools and technologies can never replace the care and guidance that parents can give.”

Ultimately, he adds, it is extremely important for parents and guardians to become good role models for their children when they are online.

By HARIATI AZIZAN sunday@thestar.com.my

Malaysian law firms urged to embrace technology


GESTURE OF APPRECIATION: Liew (left) accepting a souvenier from Ng
at the Legal Technology Exhibition and Forum 2012.


KUALA LUMPUR: Malaysian law firms must adopt technology solutions to better manage and serve their clients, or risk being left out.

"It is timely for local firms to tap into the benefits technology can offer the legal profession," said Datuk Liew Vui Keong, Deputy Minister in the Prime Minister's Department.

"While it would be a costly exercise initially, it will certainly be worth it in the long run," he said.

Liew was speaking at the launch of LegalTech Forum 2012, a two-day conference and exhibition on the use of technology in legal processes and proceedings, hosted at the Putra World Trade Centre.

The case for technology upgrades has become particularly pressing with the recent passing of the Legal Profession (Amendment) Bill 2012 by the Dewan Rakyat, which aims to liberalise the legal profession and build Malaysia into an international Islamic financial hub.

This means foreign law firms will soon be allowed to open offices here and foreign lawyers can practice in the country, increasing the level of competition for Malaysian lawyers and law firms.

Liew pointed out that when international law firms start setting up offices here, they will bring not just their expertise, but technology as well. "This is why local firms must ensure that they are able to collaborate and compete with these new players," he said.

He said the courts here have already moved to adopt technology solutions, giving the implementation of the court e-filing system in March 2011 as an example.

Change is in the air
 
The overall environment of the legal industry and mindset of its practitioners is one of comfort, some pundits believe.

"For too long the legal industry has been comfortable in doing things the same way, (so much so) that many don't see the need to innovate," said Joycelyn Ng, managing director of event organiser JFPS Group Malaysia.

But the tide is changing, she said, as demonstrated by the bulk of queries about the LegalTech Forum coming from local firms and practitioners.

"Many of our exhibitors, including Konica Minolta and ServTouch, were delighted at the opportunity to showcase their solutions, specifically to legal practitioners, because there has been no platform for them to do so previously," Ng said.

She shared that the field of data management has been of particular significance. "This technology is especially important for the smaller law firms, which are less familiar with such systems and rely heavily on staff hired solely for maintaining a manual system for storing and tracking documents," she said.

"The need to retain such staff with knowledge on how your company's entire data management system works can turn out to be a costlier exercise than digitising the whole process," she added.

According to her, the inaugural LegalTech event has had much positive response, with global vendors and regional buyers expected to complete transactions worth more than US$20mil (RM60mil) on the premises before it ends on June 15.

Thirty-two exhibitors are showcasing their solutions at the event, and so far some 2,500 visitors have passed through its doors.

By GABEY GOH  bytz@thestar.com.my

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Monday, July 2, 2012

After Barclays, the golden age of finance is dead

Retribution and regulation are sure to follow the Barclays scandal, but if the City is shackled, Britain as a whole will suffer

Everyone's a loser: punishing the City is inevitable following the Barclays scandal, but the whole of Britain could suffer Photo:

Just when you thought bankers could sink no lower in public regard, they’ve done it. News that Barclays has been found guilty of repeatedly falsifying the interbank rate – sometimes for the personal gain of traders, sometimes to make the bank itself seem more creditworthy than it really was – tops off another calamitous week in the seemingly never-ending litany of banking misdemeanours.

Coming hard on the heels of the chaos surrounding an IT breakdown at Royal Bank of Scotland, it is as if bankers are actively out to confirm their reputation for recklessness, incompetence and self-enriching disregard for the interests of customers and the wider economy.

At a time when the political and regulatory backlash against finance is already at fever pitch, much of it ill-thought out, counterproductive and economically harmful, there could scarcely have been a more spectacular own goal. And it doesn’t end there. Banking faces a whole new raft of separate regulatory strictures over the mis-selling of interest rate swaps to business customers.

A year ago, Bob Diamond, chief executive of Barclays, told a committee of MPs that it was time to put the crisis behind us, move on and stop apologising for the failings of the past. He should be so lucky. Not since the Thirties has finance been so much in the dock. On and on the combination of retribution and regulatory crackdown will go until banking is once again thought sufficiently imprisoned to be safe. European policymakers will delight in the ammunition they have been given to rein in the Anglo-Saxon bankers and make them subject to the rule of Brussels and Frankfurt.

Many have already said it, but it is one of those observations that bears constant repetition: in all my years as a financial journalist, it’s hard to recall a case quite as shameful as this – and I’ve certainly seen a few.

There is no industry in all commerce that relies as much on public trust and reputation for probity as banking. We have seen what happens when trust is lost: we get the legion of banking runs that lie at the heart of the financial crisis; people run for the hills and the economy grinds to a halt.

To have American regulators accuse Barclays of lies, deception and manipulation is an appalling indictment of one of the oldest and most respected names in British banking. It is like discovering that your local branch manager has routinely raided your hard-earned savings to finance his champagne lifestyle.

Entrusted with the public’s money, bankers have to be seen as whiter than white, pillars of their community and morally beyond reproach. All these old-fashioned virtues seem to have been lost in pursuit of the easy rewards of international finance. “My word is my bond” – once one of the sacred principles of City finance – has become reduced to a laughable parody of itself.

Now, it may well be unfair to single out Barclays. We already know that at least 20 other banks are under investigation for alleged manipulation of interbank interest rates, including most of the other UK high street banks. It could be that others are equally at fault. We know about Barclays only because in a practice that City lawyers sometimes call “rowing for the shore”, it has decided to abandon the flotilla of co-defendants and settle with regulators.

Downside of plea bargain

In so doing, it may have succeeded in winning both a lower fine and immunity from criminal prosecution, as a corporate entity at least, though the individuals involved may not escape. The downside of such plea bargains is that they involve admission of guilt. The regulator gets free rein to be as critical as it likes, while the mitigation of any defence there might have been is lost.

That these practices appear to have been endemic, not just at Barclays, but across a wide range of international banks, neither excuses nor explains what happened.

It’s interesting that when the fines were first announced on Wednesday, there was barely a flicker of recognition in the Barclays share price. The investigation has been known about for some time, the misdeeds complained of date back three or more years and are therefore water under the bridge, and many in the City judged Barclays to have got off relatively lightly.

But as the night wore on, the seriousness of the situation began to sink in. Bob Diamond, the Barclays chief executive, long despised by regulators found himself politically friendless, too.

As calls for his head mounted, the share price began to plunge. The key concern about Barclays has always been that it is a “black box” operation that only Bob himself properly understands. At a time of growing financial chaos, Barclays could be left leaderless, with the investment banking brains behind much of its recent profitability and successful navigation of the banking crisis thrown to the wolves.

“Bob is mistrusted in the City,” says one seasoned fund manager, “but he’s the glue that holds the whole thing together. Without him it might well disintegrate.”

What went wrong?
 
So what really went wrong here? The London Interbank Offered Rate, or Libor, and its companion, Euribor, are two of the most important benchmarks in finance. Essentially, they are an aggregate of the rates at which banks lend to one another. They are also used to help price a vast array of lending decisions and derivative products, including mortgages.

Yet even in financial markets, it is not widely understood how these benchmarks are arrived at. Unbeknown to senior managers at Barclays, some traders, starting in around 2005 and stretching through to 2009, began persuading those responsible for compiling Barclays’ input to distort the rate in a manner that made their own derivative positions more profitable, hence the excruciating series of incriminating emails cited by regulators.

This was bad enough, but if it had stopped there, the damage would probably have been containable. Even the best of internal controls cannot prevent the determined rotten apple. What has transformed this case into something much more serious is that at the height of the banking crisis “senior managers” themselves – it is still not clear exactly who – ordered that the Barclays submission be manipulated so as to make it look as if the bank was receiving more favourable funding terms than it was. Deceitful behaviour seemed to have become endemic, stretching from top to bottom.

To the extent that there is a defence for such blatant deceits, it runs something like this; everyone else was doing the same thing. Rival banks that were plainly in even worse shape than Barclays were making Libor submissions that appeared to show they were enjoying more favourable wholesale funding rates than Barclays was. On the “if you cannot beat them” principle, Barclays determined to join them.

If this version of events is correct, the whole escapade doesn’t look as bad as it first appears. It is hard to identify who exactly lost out as a result of these fictions. Since there was no interbank funding to speak of at the height of the crisis, it may not in any case have mattered very much.

Even so, it’s quite damning enough. There appears to be nothing bankers will stop at in order to feather their own nests. With tempers already at boiling point over egregious levels of pay and aggressive tax avoidance, the whole affair has now taken on a life of its own.

When the history books are written, this may be seen as a defining moment, the point at which public anger with the banks bubbled over into something much more seismic in its consequences than the general atmosphere of bank bashing we have seen to date. Despite the crisis, there has been a sense of back to business as normal for the City these past three years.

There have been few signs of behavioural change. But this may be the straw that breaks the camel’s back.

Market and regulatory pressures are already laying waste to great tracts of previously highly lucrative banking activity. A major cull of investment banking jobs is expected over the next year, with once bumper bonuses and earnings much reduced on top. Retribution and punishingly restrictive levels of regulation won’t be far behind.

Those who believe that Britain has become too dependent on finance for its own good will no doubt welcome this humbling of an apparently out-of-control City, but they should be careful what they wish for.

Finance’s golden age may be drawing to a close; with no new industry or manufacturing renaissance coming up in the wings, it is not entirely clear what’s going to take its place as a source of British wealth, jobs and tax revenues. It is not just finance for which hard times lie ahead. - Telegraph

China set to launch bigger space programme


Enlarge

This photo of the giant screen at the Jiuquan Space Centre shows the Shenzhou-9 spacecraft preparing to link with the Tiangong-1 module on June 24. China will deploy bigger spacecraft for longer missions following the success of its Shenzhou-9 voyage, allowing it to build a manned space station and potentially put a man on the moon, experts said.

China will deploy bigger spacecraft for longer missions following the success of its Shenzhou-9 voyage, allowing it to build a manned space station and potentially put a man on the moon, experts said.

The 13-day voyage of Shenzhou-9, which returned to Earth on Friday, was China's longest-ever and included the nation's first woman astronaut among its three crew members.

In another first for China's 20-year programme, which has cost more than $6 billion, the crew also achieved the country's first-ever manual docking with an , the Tiangong-1, a high-speed and high-risk .

In the next mission that will occur at the end of this year or in 2013, Shenzhou-10's astronauts will link up with Tiangong-1 in a similar flight, said Morris Jones, an Australian space expert focusing on China's programme.

The mission will be the last docking with the Tiangong-1, which was put into orbit in September last year.
Morris said no more would go on Tiangong-1 after the next mission. Then, in a few years, China will launch a more sophisticated version, the Tiangong-2.

When that comes into play, the dimensions of China's space programme will grow significantly, said Isabelle Sourbes-Verger, a specialist on China's space programme at France's National Centre for Scientific Research.

She said future vehicles would allow for larger space modules, longer missions and more powerful launch vehicles,

The 13-day voyage of Shenzhou-9 was China's longest-ever space mission and included the nation's first woman astronaut
Enlarge


This photo of the giant screen at the Jiuquan Space Centre shows Chinese astronauts Liu Wang (C), Jing Haipeng (L) and Liu Yang in the Shenzhou-9 spacecraft as it prepares to link with the Tiangong-1 module on June 24. The crew achieved the country's first-ever manual docking with an orbital module, the Tiangong-1, a high-speed and high-risk manoeuvre.

"Longer periods in space -- one to three months -- cannot take place unless there is a vehicle bigger than the 8.5 tonne Tiangong-1, which also did not appear to have a resupply system," she told AFP.

"Tiangong-1... will be followed by two other versions with more powerful 'life support' systems... and will possibly be capable of docking with a second vehicle."

China is also developing the Long March 5, a next-generation that will be needed if the nation hopes to place a bigger space station in orbit, said Joan Johnson-Freese, a professor at the US Naval War College.

"Launching that space station... depends on the successful development of a new heavy launch vehicle, the Long March 5," she told AFP.

"I would expect to see this large space station in within the next 10 years -- which could make it the de facto replacement for the now orbiting International Space Station (ISS)," said Johnson-Freese.

She was referring to the life expectancy of the ISS -- run by the American, Russian, Japanese, European and Canadian space agencies -- which is likely to function only to around 2020.

China has never been invited to join the ISS.

Sourbes-Verger said further advances in China's space station programme would "guarantee" that the country plays a major role should any eventual cooperation with the ISS take place.

To realise its ambitions beyond 2020, which may include sending a man to the moon, China has also been advancing its "Chang'e" exploration programme. This entails satellite launches to explore the lunar surface.

"Likely within the next five to eight years China will also make a decision as to whether to pursue a human lunar mission," Johnson-Freese said.

Meanwhile the United States, after retiring its space shuttle fleet, is also developing a new rocket and technologies to place a man on an asteroid or on Mars, she said.

"Both countries are moving forward, but not in a competitive path," she said.

China's space programme remains far behind the Americans. This was highlighted by the fact that the manual space docking trumpeted by the Chinese on the Shenzhou-9 mission was done by the Americans in the 1960s.

"If there is a space race going on, I think it is in Asia," Johnson-Freese said, pointing out that India had also set ambitious goals.

July 1, 2012 by Boris Cambreleng
(c) 2012 AFP_PHYS.ORG

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Killer dog's owner fined and charged again

Elaine Soon Sien Ling outside the court, while her dog Beacon is at the Selangor Veterinary Services Department pound. Pic by Syarafiq Abd Samad

PETALING JAYA: THE owner of the dog which killed an elderly jogger last month escaped custodial sentence after the court heard that the victim's family had forgiven her for being negligent in the incident.

Elaine Soon Sien Ling, 28, an accountant, heaved a sigh of relief as she could have been sentenced to a maximum of six months' jail under Section 289 of the Penal Code for being negligent with her pet.

Magistrate Mohd Nazri Omran, however, imposed the maximum fine of RM2,000.

In sentencing her, Nazri said he took into account that the victim's family had forgiven her and had retracted the police report on the incident.

Soon pleaded guilty when the charge was read to her.

According to the facts of the case, the victim, Yip Sun Wah, 74 was jogging in SS19 Subang Jaya on May 8 when the dog, a cross between a miniature bull terrier and an American Staffordshire terrier, escaped from Soon's house and pounced on Yip.

The dog, which answers to the name, "Beacon", only let go of the the victim when neighbours hit it with an umbrella and a cane.

A neighbour, who identified himself as a doctor at the scene of the incident, said Yip died at the scene.

In mitigating for a light sentence, Soon, who was unrepresented, told the court that she had gotten the dog as security measure for her retired mother who was alone at home. She said that their home had been burgled before and that when she got her dog, she had taken it to the veterinarian and it was certified as healthy.

Soon added that on the morning of the incident, she had let her dog loose in the compound but locked the gate and had shut the garbage disposal gate.

She also tendered a letter from the victim's family, who stated they had forgiven her over the incident and that they had also retracted the police report.

Deputy public prosecutor, Siti Fatimah Yahya pressed for a sentence that would serve as a lesson to the public.

Soon's father and fiancee were present in court. The accused paid the fine.

Meanwhile, the fate of Beacon, lies in the decision of the court.

State Veterinary Services Department deputy director Dr Fadzilah A'ini Abd Kadir said the dog was still in their care.

"We have not received any instructions regarding the dog," she said, adding that Beacon was healthy and free of rabies.

Dr Fadzilah said said normally, in such cases, there are three options -- put the dog to sleep, send it to the police for training, or return it to the owner.

New Straits Times Friday, Jun 29, 2012

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Nightmarish hunt for a home ?

Property consultants forecast the property market to remain slow for the rest of the year. Will the average middle-income earner be able to afford the house of their dream now?
 
COMMUNICATIONS executive Michelle (not her real name) has been house-hunting for a while now but has yet to find a property that suits her budget.

Having been in the workforce for nine years, Michelle, 33, feels it is time to buy her own house. But with the prices of residential properties in Malaysia skyrocketing over the last two years, her prospect of getting her dream home looks bleak.

“Back in 2009, my friends were telling me to buy my own place but at that time, my priority was to travel. Around last year, when I was finally ready to commit to getting a house, prices weren't what they used to be any more.

“A decent 1,000sq ft (93 sq m) apartment that used to cost around RM200,000 to RM300,000 is now RM500,000 to RM600,000. That is far beyond what I can afford,” she laments.

Soaring interest: Prospective house buyers at a property launch. — Filepic
 
From early 2010 up to the end of last year, residential properties in good locations within the Klang Valley have seen a sharp spike of between 20% and 40% in price, a trend which has caused grave concern for potential house-buyers.

But how is the scenario looking in 2012?

According to KGV International Property Consultants executive director Anthony Chua, the first half of the year has been generally quiet.

“There seems to be a breather in the residential market. It's definitely not as busy compared with the same period last year. (The number of) inquiries with us have also lessened significantly,” Chua says.

He explains that inquiries in 2012 with KGV on high-end properties (above RM2mil) have gone down by about 30% compared with the first half of last year. Inquiries on other segments (between RM1mil and RM2mil, and below RM1mil) have also gone down but not as drastically.

Reasons for this could include tighter lending guidelines set by the banks and buyers taking a more cautious approach on their investments this year.

(Following Bank Negara's new lending guidelines, which came into effect on Jan 1, loans are now approved based on net income compared with gross income previously, in addition to the need for more documentation. The new guidelines are intended to help keep household debt in Malaysia to reasonable levels.)

Chua: ‘While interest in property purchase has waned, prices are still going strong for landed property.’
Chua adds that there was a lot of speculation in the property market in the past two years, and that the market is due for a correction.

“The economic scenario is not as rosy and people are expecting things to worsen, which could be why they are hesitant to invest. And to a lesser degree, it could also be the coming general election, which is causing some uncertainties,” Chua says.

Paul Khong, executive director of property consultancy CB Richard Ellis (M) Sdn Bhd, shares similar sentiments.

“The number of buyers (for properties above RM3mil) has dropped by about half with the stricter bank-lending guidelines, which has eliminated the speculative group (of buyers).

“For properties below RM2mil, the market is relatively active with more real transactions. With the new lending guidelines in place, many investors have disappeared from the radar,” Khong says, adding that those who want to purchase their third property now will need 30% in cash for downpayment.

“So, to buy a RM3mil property, they'll need RM1mil in cash if it is their third property. Previously, RM400,000 was enough,” Khong says.

Interestingly, Chua notes that while interest in property purchase has waned, prices are still going strong for landed property.

However, sellers are seen to be less aggressive this year.

“They seem to be less demanding and more willing to accommodate. Last year, they would have said this is my price', and would have refused to budge,” he says.

Property consultants forecast the property market to remain quite slow for the rest of the year.

Khong: ‘The number of buyers (for properties above RM3mil) have dropped by about half.’ >>

Even so, for average middle-income earners such as Michelle, the current prices of properties in various locations within the Klang Valley (refer to chart) leave her with few options.

“I don't even dare look at landed property any more. Even apartments at relatively good locations cost RM400,000 and up.

“For my budget, an apartment around RM200,000 to RM350,000 would still be quite comfortable,” says Michelle, who currently lives with her family in Petaling Jaya.

A mass communications graduate from the United States, Michelle draws a salary of about RM5,000 a month, which goes into paying for her car loan, household expenses, utilities, and credit card bills.

“Household expenditure doesn't just cover grocery shopping. I also have to pay for medical bills, car maintenance and repairs as well as give my parents some money too,” she says.

“As banks are now looking at net income, the loan amount I qualify for is unlikely to be enough for me to even afford an apartment in the Klang Valley.

“Sure, you can still get cheaper houses in places like Bukit Beruntung, but it's just too far away. My life is here. At the rate property prices are going, the thought has crossed my mind that I may never be able to afford a place of my own.”

It's not just within the Klang Valley that property prices have escalated.

Early last month, it was reported that residential property prices in Penang have shot up by more than 25% over the past five years.

Condominium units in Batu Ferringhi, Tanjung Bungah and Gurney Drive, with sea-front views, are being sold at astronomical prices, in some cases beginning with RM2mil for a 1,000 sq ft unit.

Houses which cost about RM500,000 in 2007 now cost RM800,000 an increase of about 30%.

Chang: ‘An entire generation of young adults could be locked out of property investments.’

Raine & Horne Malaysia director Michael Geh was reported as saying that the increase was among the steepest in the Pulau Tikus, Gurney Drive, Tanjung Tokong, and Tanjung Bungah residential neighbourhoods, which experienced a 25% increase in prices of condominium units.

Other areas where prices of condominium units and terrace and semi-detached houses have shot up by at least 25% are Bayan Baru, Sungai Ara, Minden Heights and Batu Maung.

Medium-range housing schemes in George Town neighbourhoods of Perak Road, MacCallum Street, Jelutong Road and Sungai Pinang have also not been spared an apartment located in such a neighbourhood cost RM180,000 in 2007 but is now RM250,000.

It is precisely with this concern in mind that the National House Buyers Association (HBA) has come up with a 10-point proposal to the Government, to find solutions which it claims will hopefully bring prices down.

Among the proposals are for the Government to unlock its land banks in various locations and give priority to affordable housing projects rather than high-end properties.

The HBA is urging the Government to take the lead in developing affordable homes and not leave it to property developers.

It has also proposed that those who buy homes under the affordable housing projects (with a proposed price range of RM150,000 to RM300,000) be barred from selling their property until after 10 years. Before the 10-year period is up, they should only be allowed to sell the house back to the Government.

The association has also proposed that the Government impose a higher stamp duty and real property gains tax as well as tighter mortgage rules for those buying a third and subsequent properties.

HBA secretary-general Chang Kim Loong notes that with the way prices are climbing, the majority of young working adults will not be able to afford to buy a home.


“I'm talking about young people from around the age of 25 to 35 years old, with an average income of about RM3,500 per month.

“The rule of thumb is that a third goes into paying for your home.

“But with RM1,000, many will still not be able to afford it. The consequence of this could be that an entire generation of young adults could be locked out of property investments,” he explains.

A question that needs to be asked, however, is whether HBA's proposal for “affordable housing scheme” by the Government will be able to meet the needs of the urban middle-income earners such as Michelle.

“There are several factors to consider. The location, for example,” Michelle says.

“If the design and quality is decent, then yes, I am willing to consider it. But this doesn't mean we have to settle for bad quality homes, with cheap construction materials.”

BY LISA GOH lisagoh@thestar.com.my

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