Friday, September 24, 2010

Smart Grid's $200 Billion Investment Lures Cisco, ABB

Technology companies and established power-systems suppliers are vying for a share of the global electricity-management market

Finance

Technology companies from Cisco Systems Inc. (CSCO) to ABB Ltd. (ABB) are angling for pieces of the smart grid, the next-generation electricity-delivery network designed to monitor consumption better at households and businesses.

San Jose (Calif.)-based Cisco, the largest maker of computer-networking equipment and a producer of energy-monitoring devices, has partnered with meter-maker Itron Inc. (ITRI) for contracts. Zurich-based ABB, the biggest builder of electricity networks, is developing automation devices for power lines.

With $200 billion in global smart-grid investment expected in 2008 to 2015 by the Pike Research group, with almost $53 billion just in the U.S., technology companies have joined established power-systems suppliers as contestants in the power-management market.

Rather than employing a single technology, the smart grid comprises a network of networks that makes possible real-time two-way communication between power providers and users, omnipresent sensing control, and distributed automation throughout the electrical generation network.

The key difference between the current and future grids: decentralized management of electric power. That's essential when demand for electricity surges as a result of increased consumption.

Smart-grid technology will be a key driver of the $750 billion in incremental spending that Goldman Sachs Group Inc. (GS) foresees for the global transmission and distribution market over the next 30 years, according to a Sept. 15 research note.

Stimulus Grants

In the U.S., development of the smart grid is near a critical point. Utilities face a Sept. 30 deadline to report their plans, budgets, and choice of vendors and technology for approved smart-grid projects to the U.S. Energy Dept. in order to qualify for $3.4 billion in federal stimulus grants.

Just how much of the money that utilities plan to spend on substation and transformer upgrades can be classified as smart-grid investments is open to debate since utilities' long-term capital budgets include upgrades anyway, says Andy Roehr, head of Smart Energy Services at Capgemini, a consulting firm to the utilities and other tech-oriented industries.

While a piece of the smart-grid pie will go to traditional suppliers of power-line equipment such as ABB and General Electric Co. (GE), the communication network that needs to be built is entirely new and is attracting Cisco, privately held Silver Spring Networks, and eventually some telecommunications providers.

$15 Billion Opportunity

Cisco expects $15 billion to $20 billion in global opportunities to join electrical infrastructure with information technology over the next seven years.

"It's not going to happen overnight. A lot of regulatory issues have to be worked out," says Jennifer Gresson, a company spokeswoman.

Last year, Cisco began to sell a building mediator that tells facilities managers how much power elevators, heating and cooling systems, and other equipment are using and centralizes the information flow so they can monitor multiple business locations at once.

Cisco says one customer, NetApp Inc. (NTAP), a storage and data management provider, reported $2 million in savings in less than one year from using the building mediator. In 2011, Cisco plans to roll out a home energy controller that performs the same service for consumers

Variable Power Prices

Investment right now in the smart grid primarily means advanced metering infrastructure, one goal of which is to move billing from flat rates to variable rates based on time-of-use and letting consumers adjust their use accordingly.

Utilities have already contracted with meter vendors for one-third of the roughly 147 million total customer endpoints in the U.S. and another 40 million to 50 million will be contracted over the next two to three years, says Howard Scott, a managing partner at Cognyst Advisors, a consulting firm to the power industry.

illion in the first quarter, according to Scott's August report on deployment of automated meters in North America. Total shipments for 2010 are projected at 15.8 million, up from 10.9 million in 2009.

To be sure, utilities are finding it hard to convince state public utility commissions of the financial benefits of these projects, as reported in Bloomberg Businessweek's Sept. 20 issue.

Higher Electricity Rates?

Utilities need state regulators' approval to make capital investments that are ultimately recouped by charging ratepayers more for electricity. And fiscal constraints due to the recession and slow recovery have hampered smart-grid investment among municipal-owned utilities.

In the end, the smart grid may prove to be less about lowering ratepayers' bills than better managing increasing power loads. Experts are watching one thing in particular: electric vehicles. The number of plug-in cars and trucks is expected to reach 841,000 in the U.S. by the end of 2015, according to Pike Research.

Itron's advanced meter shipments, which include electric, gas, and water meters, have been far ahead of its competitors in each of the past five years and its projected volume in 2010 is roughly equivalent to the combined volume of its two closest rivals, Sensus USA Inc. and Silver Spring Networks.

Itron, the only publicly traded pure-play meter provider, saw its revenue jump 38 percent from a year earlier to $569 million in the second quarter, while North American revenue of $303 million more than doubled.

Meter Contracts

The Liberty Lake (Wash.)-based company has 14 million meters currently contracted and has delivered more than 3 million of those. Virtually all of its deliveries have been to its biggest customers: Southern California Edison Co., San Diego Gas & Electric, CenterPoint Energy Inc. (CNP) in Texas, and Detroit Edison Co.

Itron announced a strategic alliance with Cisco on Sept. 1 that aims to create a definitive Internet Protocol-based communications platform for the smart-grid market. By standardizing the communications platform and having a leading network provider as a partner, "we think we can really accelerate adoption" in the industry, says Philip Mezey, chief operating officer of Itron North America.

Some industry experts say reliance on any one communication protocol or vendor may be a hindrance, given the need for communication between many different grid-linked devices in the future. This could help give San Jose-based Echelon Corp. (ELON) a market advantage.

Echelon, Duke Energy

Echelon's new control system software platform, ECoS, is designed to be flexible enough to connect to multiple communications mediums such as Wi-Fi, 3G, and 900-megaherz radio frequency.

Duke Energy Corp. (DUK), which serves 4 million customers in five states, signed up on Sept. 3 to be the first user, with a $14.5 million order. Duke could eventually contract for well over 1 million units, Wedbush Equity Research said in a Sept. 9 research note.

Ultimately, semiconductor manufacturers may be the biggest beneficiaries as the smart grid is built. Embedded intelligence distributed throughout the grid will require more microprocessors to analyze information at transformers, substations, and the in-home energy management devices that will control home appliances.

Smart Power

Bazmi Husain, head of the smart grid for ABB Worldwide, a division of ABB Ltd., expects more significant cost savings to come from greater automation to manage power lines, reducing the need for manual work. Husain sees grid modernization and the convergence of power and automation as major sources of future growth. ABB's network-management systems enable the utility to monitor conditions for each of its devices on distribution lines and control them if something goes wrong.

ABB is also making equity investments in smart-grid infrastructure companies such as California-based Trilliant and developing grid-scale energy storage systems, including the world's largest in Fairbanks, Alaska. In May, it acquired Ventyx Inc., which provides software to help utilities better manage equipment and employees.

Capgemini's Roehr says a more realistic goal than saving ratepayers money is handling additional energy demand, with electric vehicles likely the most disruptive factor. With a transformer for every three or four houses, "if two or three of them plug in their electric vehicles at 5:30, they'll kill the transformer and kill the circuit," he says.

The hope is that building out the smart grid won't add costs for consumers. "That will be a challenge," Roehr says.

Bogoslaw is a reporter for Bloomberg Businessweek's Finance channel.

Newscribe : get free news in real time

Finance

Tuesday, September 21, 2010

The Angry Rich

When it comes to defending the interests of the rich, it seems, normal rules of civilized discourse no longer apply

By PAUL KRUGMAN

Anger is sweeping America. True, this white-hot rage is a minority phenomenon, not something that characterizes most of our fellow citizens. But the angry minority is angry indeed, consisting of people who feel that things to which they are entitled are being taken away. And they’re out for revenge.

Fred R. Conrad/The New York Times ,Paul Krugman

No, I’m not talking about the Tea Partiers. I’m talking about the rich.

These are terrible times for many people in this country. Poverty, especially acute poverty, has soared in the economic slump; millions of people have lost their homes. Young people can’t find jobs; laid-off 50-somethings fear that they’ll never work again.

Yet if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won’t find it among these suffering Americans. You’ll find it instead among the very privileged, people who don’t have to worry about losing their jobs, their homes, or their health insurance, but who are outraged, outraged, at the thought of paying modestly higher taxes.

The rage of the rich has been building ever since Mr. Obama took office. At first, however, it was largely confined to Wall Street. Thus when New York magazine published an article titled “The Wail Of the 1%,” it was talking about financial wheeler-dealers whose firms had been bailed out with taxpayer funds, but were furious at suggestions that the price of these bailouts should include temporary limits on bonuses.

When the billionaire Stephen Schwarzman compared an Obama proposal to the Nazi invasion of Poland, the proposal in question would have closed a tax loophole that specifically benefits fund managers like him.

Now, however, as decision time looms for the fate of the Bush tax cuts — will top tax rates go back to Clinton-era levels? — the rage of the rich has broadened, and also in some ways changed its character.

For one thing, craziness has gone mainstream. It’s one thing when a billionaire rants at a dinner event. It’s another when Forbes magazine runs a cover story alleging that the president of the United States is deliberately trying to bring America down as part of his Kenyan, “anticolonialist” agenda, that “the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s.” When it comes to defending the interests of the rich, it seems, the normal rules of civilized (and rational) discourse no longer apply.

At the same time, self-pity among the privileged has become acceptable, even fashionable.
Tax-cut advocates used to pretend that they were mainly concerned about helping typical American families. Even tax breaks for the rich were justified in terms of trickle-down economics, the claim that lower taxes at the top would make the economy stronger for everyone.

These days, however, tax-cutters are hardly even trying to make the trickle-down case. Yes, Republicans are pushing the line that raising taxes at the top would hurt small businesses, but their hearts don’t really seem in it. Instead, it has become common to hear vehement denials that people making $400,000 or $500,000 a year are rich. I mean, look at the expenses of people in that income class — the property taxes they have to pay on their expensive houses, the cost of sending their kids to elite private schools, and so on. Why, they can barely make ends meet.

And among the undeniably rich, a belligerent sense of entitlement has taken hold: it’s their money, and they have the right to keep it. “Taxes are what we pay for civilized society,” said Oliver Wendell Holmes — but that was a long time ago.

The spectacle of high-income Americans, the world’s luckiest people, wallowing in self-pity and self-righteousness would be funny, except for one thing: they may well get their way. Never mind the $700 billion price tag for extending the high-end tax breaks: virtually all Republicans and some Democrats are rushing to the aid of the oppressed affluent.

You see, the rich are different from you and me: they have more influence. It’s partly a matter of campaign contributions, but it’s also a matter of social pressure, since politicians spend a lot of time hanging out with the wealthy. So when the rich face the prospect of paying an extra 3 or 4 percent of their income in taxes, politicians feel their pain — feel it much more acutely, it’s clear, than they feel the pain of families who are losing their jobs, their houses, and their hopes.

And when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they’ll say; we all have to be willing to make sacrifices.

But when they say “we,” they mean “you.” Sacrifice is for the little people.

Cost of bank bailout keeps rising for UK

Cameron Vexed by Bailout’s $5 Billion Interest Costs

The Annual interest payment is about 3.2 billion Pounds.

"They should have lent money to these banks, not bought shares in them"

By Andrew MacAskill and Jon Menon

Sept. 20 (Bloomberg) -- The U.K. pledged more money rescuing banks during the credit crunch than on any project in British history outside of world wars. And the cost keeps rising as the government looks for ways to get its money back.

While U.S., French and Swiss banks repaid bailouts, the U.K. hasn’t received any return on its 66 billion pound ($103.2 billion) rescue of Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc. The annual interest payment on the debt incurred acquiring controlling stakes in the banks is about 3.2 billion pounds, according to a JPMorgan Chase & Co. estimate.

That’s about what British taxpayers spent on military operations in Afghanistan last year and exceeds the forecast of 2 billion pounds from a proposed levy on banks. While the government would like to sell the bank stakes, it can’t because the shares are fluctuating below the level the state paid for them. In addition, a government commission isn’t scheduled to decide for another year whether to split the retail and investment-banking businesses of Britain’s largest lenders.

“They should have lent money to these banks, not bought shares in them,” said Conservative lawmaker John Redwood, 59, who advised former Prime Minister Margaret Thatcher on privatizations in the 1980s. “If the government succeeds in getting all the taxpayers’ money back with proper reward, then that’s a good achievement. But it’s not guaranteed.”

Selling Stakes

Analysts and investors are divided over how long it will take the government to sell its stakes, with estimates in a Bloomberg survey of five analysts ranging from three to eight years. Stephen Hester, 49, chief executive officer of Edinburgh- based RBS, said last month that he’s ready for the government to start selling its holdings immediately, as the bank posted a half-year profit for the first time since 2007.

That’s not likely to happen, at least not until the commission reports its conclusions, because the findings may affect the value of the banks, according to government officials who declined to be identified because the talks are private. The commission, chaired by John Vickers, a former chief economist of the Bank of England, starts collecting evidence on Sept. 24.

“The government investigation into separating the banks rules out any sale in the short term,” said Jeremy Scott, the global financial services chairman at PricewaterhouseCoopers LLP, who wrote a report saying it may take up to seven years to sell the stakes. “The markets are not favorable at the moment, even if you wanted a sale.”

Gold Reserves

Prime Minister David Cameron could use the money from a share sale. His Conservative-led coalition is under pressure to tackle a deficit that hit a postwar high of 11 percent of gross domestic product in the year through March. The government unveiled an emergency budget on June 22 with plans to cut spending by a quarter on average in all departments except health and international aid. The Treasury’s fiscal monitor forecasts 490,000 public-sector jobs will be lost by April 2015.

The timing of the share sales may prove as controversial as former Prime Minister Gordon Brown’s decision to dispose of all of Britain’s gold reserves a decade ago. Brown sold 400 tons of gold, a stack almost as big as two London taxis, in a two-and-a- half year period ending in March 2002.

Gold prices have risen about 270 percent since then, leading to criticism that Brown’s decision to sell the reserves at a 20-year low cost the country about 7 billion pounds. Chancellor of the Exchequer George Osborne said this year that it was “one of the worst economic judgments ever made by a chancellor.”

850 Billion Pounds

“The timing is going to be a difficult decision,” said Paul Mumford, who helps manage about $1 billion at Cavendish Asset Management Ltd. in London, which owns RBS and Lloyds shares. “Undoubtedly people may draw a comparison with Gordon Brown selling the gold if the government sells the bank shares and the price shoots up.”

The government invested, loaned and pledged more than 850 billion pounds rescuing stricken banks during the financial crisis that started in 2007, the National Audit Office, the U.K. public-spending watchdog, said in a December report describing the outlay as unprecedented. It’s equivalent to each U.K. household having about 3,000 pounds of stock in RBS and Lloyds.

Next month marks the second anniversary of the Oct. 7, 2008, bailout amid concern by then-Chancellor of the Exchequer Alistair Darling that RBS, the nation’s second-largest bank, and Britain’s biggest mortgage lender HBOS Plc didn’t have enough money to open their doors the next day.

Defeating Hitler

The government took an 83 percent stake in RBS and bought 41 percent of Lloyds, which acquired HBOS. It also took over all of Northern Rock Plc and parts of Bradford & Bingley Plc after bailing out the banks, and agreed to insure 280 billion pounds of RBS’s riskiest assets for an annual fee. The U.K. provided a further 450 billion pounds in guarantees to increase liquidity.

The annual interest cost on the 66 billion pounds of bonds the government had to sell to finance the rescue of RBS and Lloyds isn’t included in official estimates of the outlay for the bailout, meaning the actual bill may be as much as 19.7 billion pounds more, or 30 percent higher, JPMorgan’s analysis shows. That assumes the government can’t sell its stakes until 2014, six years after it used taxpayer money to save the banks.

Aside from World War I and World War II, the bank rescue was the costliest undertaking in British history. The U.K. spent 300 billion pounds defeating Adolf Hitler’s Germany in World War II, according to the Penguin Atlas of World History, about 3.5 trillion pounds on an inflation-adjusted basis today.

‘Devise and Execute’

U.K. Financial Investments Ltd., which manages the government’s bank holdings, declined to comment on the cost of the bailout or when share sales might begin. The Treasury, which declined to comment on interest costs, said in a statement that the UKFI will “devise and execute a strategy for disposing of the government’s investments in an orderly and active way.”

In a budget submitted to Parliament in March, the Treasury scaled back its estimate for the eventual cost of bailing out the U.K. financial industry to 6 billion pounds. It lowered its estimate from 50 billion pounds because of a recovery in financial markets and after Lloyds raised capital rather than paying the government to insure toxic assets.

The U.K. currently has a 3.35 billion pound paper profit on its stake in London-based Lloyds, after the shares gained 49 percent this year, and a 1.87 billion pound loss on RBS, even after its shares rose 64 percent. RBS and Lloyds are among the best-performing bank stocks in Europe and the U.S. this year after returning to profit earlier than analysts expected.

Breakeven Price

The calculations are based on the average price the government paid for shares in the banks after injecting capital in 2008 and 2009. The so-called breakeven price is 49.9 pence for RBS and 63.2 pence for Lloyds, according to UKFI. When working out the price, UKFI subtracted fees paid by the banks for setting up the bailout and 2.5 billion pounds paid by Lloyds for exiting the government’s insurance program.

RBS closed at 49.02 pence today in London trading and Lloyds at 77.41 pence. Since the start of the financial crisis in August 2007, RBS has plunged 90 percent, making it the second-worst performing bank stock in Europe after Bank of Ireland Plc. Lloyds has fallen 73 percent. The bank’s CEO, Eric Daniels, said today he will step down in the next 12 months, and the lender said it will form a committee to find his successor.

RBS, which on average lost 36 million pounds a day in 2008 and 2009, posted net income of 9 million pounds in the first half of the year. Lloyds, still reliant on 132 billion pounds of government and central bank funding, reported half-year net income of 596 million pounds, its first profit since the rescue.

‘Popular Capitalism’

Hester says RBS’s biggest problem is retaining staff at its investment bank, where restraints on pay, including deferrals and clawbacks imposed after the bailout, are driving some employees away. About 1,000 investment bank employees left last year over bonuses, which cost the lender 1 billion pounds in lost profit, Hester said in February.

As part of the terms of the bailout, RBS and Lloyds halted dividend payments in 2008, and the lenders won’t resume paying them until at least 2012, which has suppressed the share prices.

UKFI will recommend that the Treasury start selling its bank stakes when the lenders are free of state funding and when a sale offers the best return for taxpayers, according to government officials. UKFI only has a mandate to recommend selling to achieve value, which depends on market conditions, not to ensure stakes are sold at a profit, the officials said.

The government said in June that it plans a discount sale of bank shares to the public to foster what Cameron termed “popular capitalism.” It is also considering selling shares to institutional investors and using convertible bonds to dispose of the stakes, UKFI said in its annual report last year.

‘Reaping Bigger Profits’

“The government has a fighting chance of making some sort of profit on the holdings, and it will be politically damaging not to do so,” said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Plc, a London-based asset manager and retail stockbroker. “The biggest problem is the technical aspect of finding a way to sell the two massive holdings in RBS and Lloyds.”

Disposing of so many shares runs the risk of depressing the stocks’ prices, he said.

While the U.K.’s decision to take direct stakes in banks may force it to hold them longer than it would like, the government stands to benefit from rising share prices, according to Charles Davis, an economist at the Centre for Economics and Business Research in London.

France, U.S.

“Holding the banks for longer gives the government a better chance of reaping bigger profits,” said Davis, whose firm estimates that British taxpayers stand to make about 19 billion pounds from the rescue. “Banks are getting their balance sheets in order and should become increasingly profitable over the next few years.”

If Davis’s forecast is correct, the U.K. government may make more money from rescuing its banks than Switzerland, France or the U.S.

Switzerland made a profit of about 1.2 billion francs ($1.18 billion) from bailing out UBS AG after spending 6 billion francs buying mandatory convertible notes in 2008. The French government made about 2 billion euros ($2.62 billion) from its rescue of banks, including BNP Paribas and Societe Generale SA, after injecting emergency capital the same year. The U.S. government has received about $16 billion in dividends and interest payments on its investment in banks, insurance companies and automakers through the Troubled Asset Relief Program, according to the Treasury.

Sweden’s Lesson

Britain’s bank rescue also exposes taxpayers to more risk, Davis said. And the cost of financing the bailout continues to climb -- already more than 6 billion pounds, according to JPMorgan’s estimate.

The lesson from Sweden, which nationalized two big banks in the 1990s, is that it will take longer than expected to sell the stakes, said Bo Lundgren, Sweden’s minister for fiscal and financial affairs in the 1990s.

The government still owns 19.9 percent of Nordea AB almost two decades after taking over its predecessor, Nordbanken, which went on to merge with Gotabank, which also had been nationalized.

“What you need to do is try to privatize them as soon as possible, though not when the markets are bad,” Lundgren said. “Governments are not very good owners in the long run.”

--With assistance from Gavin Finch and Scott Hamilton in London, Niklas Magnusson in Stockholm and Fabio Benedetti-Valentini in Paris. Editors: Steve Bailey, Robert Friedman

To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.net; Jon Menon in London at jmenon1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

Monday, September 20, 2010

Jho Low to bring Hollywood in

By ANN TAN
anntan@thestar.com.my

GEORGE TOWN: Malaysians can expect a major Hollywood movie to be filmed in the country within the next 12 months, said businessman Jho Low.

He said celebrities like Jamie Foxx and Bruce Willis are also looking to come here to promote the country as a choice tourist destination.

Low also said he would be bringing a Hollywood celebrity friend to Malaysia next month.

Jho Low (in stripe shirt) leaving the entertainment outlet with his friend.

“Not Paris Hilton. It’s a male. You will know when he is here,” he said in an interview.

Low has caught the media’s attention for his flamboyant lifestyle and rich and famous friends, including Hilton.
On investments, Low said he was currently in the process of setting up another fund.

“I have three funds – one for entertainment, movies and fashion, another for real estate and hospitality and the third for general investment.

“I will be introducing foreigners to invest in Malaysia’s property and heavy industries,” he said.
As a Penangite, Low pledged to help promote the state and country as an investment destination.

Jho Low (second from left) leaving the entertainment outlet at Upper Penang Road yesterday.

“This is the right timing for my investors from Kuwait, Abu Dhabi, Saudi Arabia and others to look at Penang and Malaysia.

“Malaysia needs to have a strategic long term FDI (foreign direct investment) plan. I believe the younger generation will agree with my view that Malaysia needs to move forward with a merit-based policy,” Low added.

Having completed his studies abroad, the 28-year-old worked overseas first.

“Malaysia has many opportunities and needs a new generation of people that are hardworking and well-educated.

“The 1Malaysia concept is the right way to go. With the merit–based policy, one will be recognised and achieve success, regardless of your race or age, so long as you are capable and hardworking,” he said.

See earliest posts:
Jho Low, love him or hate him
No ordinary Jho Low

Millionaire ‘gold digger’,new twist, new drama, evidence,‘movie plot’

Reports by WANI MUTHIAH, LOH FOON FONG, STEVEN DANIEL, FARIK ZOLKEPLI, M. SIVANANTHA SHARMA and TAN SIN CHOW

KLANG: A full-fledged catfight is threatening to explode between missing Indian millionaire A. Muthuraja’s two wives with both accusing each other of only wanting their husband’s assets.

His first wife, teacher M. Ramalakshmi accused his other wife S. Usharani of having married Muthuraja for his money.

“She’s always talking about money and property when interviewed by the media,” said Ramalakshmi.

[youtube=http://www.youtube.com/watch?v=o-A0HElWMMw]

thestaronline

The murder of cosmetics queen Datuk Sosilawati Lawiyah has taken another twist with drama unfolding in India.

[youtube=http://www.youtube.com/watch?v=o-A0HElWMMw]

Usharani, meanwhile, criticised Ramalakshmi for only speaking up now instead of when their husband first disappeared.

Muthuraja went missing after meeting the two lawyer brothers who are the main suspects in the murder of Datuk Sosilawati Lawiya and three others.

“Where was she all this while?” Usharani said, adding that she was feeling lost without Muthuraja.
However, Ramalakshmi said she only knew her husband was missing and had another wife recently.

“No one told me anything,’’ said Ramalakshmi, adding that she was estranged from her husband because his family believed she had brought him bad luck.

Both Ramalakshmi and Usharani, who spoke in a telephone interview from Tirunelveli and Chennai, Tamil Nadu, respectively also said that they were prepared to come to Malaysia to look for Muthuraja.

“I am looking for a safe place for my daughter to live in before coming to Malaysia to talk to the police,” said Usharani.

She added that she would also be seeing Kapar MP S. Manikavasagam who has promised to help her.
Ramalakshmi said she would be willing to come to Malaysia, too.

“I am a simple village girl and may not be able to face the challenges alone,” she added.

When contacted, Manikavasagam confirmed he would be meeting Usharani when she comes to Malaysia.
“I’ll be speaking with her to see how we can help her,” he said.

Related Stories:
Man wanted to end ties with lawyer brothers
Cops to probe connection of another death
Sosilawati remembered as a charitable person

New twist in Sosilawati murder case

By wani muthiah Sunday September 19, 2010 wani@thestar.com.my

KLANG: The murder of cosmetics queen Datuk Sosilawati Lawiyah has taken another twist with drama unfolding in India.

Besides S. Usharani – the woman who spoke to the press appealing for information on her missing husband, businessman A. Muthuraja – another woman in India has claimed to be the man’s lawfully-wedded wife.

S. Ramalakshmi, 36, said although she was estranged from Muthuraja, they had planned to get back together.
She also claimed that Usharani, 24, was not legally married to Muthuraja.

Muthuraja disappeared after meeting the two lawyer brothers who are the main suspects in the murders of Sosilawati and three others.

In other developments:

>       Muthuraja’s father believes that his son is not dead but is only being held captive;

>       Two men, one picked up on Friday and the other yesterday, have been remanded for a week in connection with the disappearance of the Indian businessman; and

>       Three others, including the brothers, had their remand order extended for another week.

New drama in missing man’s case

Sosilawati murder: Suspects remand extended till Sept25

Banting folks shocked by heinous crime in their town

KLANG: The disappearance of Indian businessman A. Muthuraja has the makings of a television soap opera — the latest twist being a 36-year-old school teacher in India claiming to be his lawfully-wedded wife.

Ramalakshmi

S. Ramalakshmi from Tirunelveli, Tamil Nadu, said the 24-year-old woman who came to Malaysia to report that Muthuraja had gone missing on Sept 8, was not legally his wife.

In the report, S. Usharani had said that Muthuraja was her husband.
Muthuraja, believed to be a multi-millionaire, disappeared after coming to Malaysia to meet the two lawyer brothers who were arrested in connection with the murder of cosmetics tycoon Datuk Sosilawati Lawiya and three others.

Ramalakshmi does not have any children with Muthuraja, 37.
According to Ramalakshmi, who spoke from Tirunelveli, hers was an arranged marriage.

“Muthuraja and I married in 2001 in a grand ceremony in Chennai which was attended by many dignitaries and politicians,” the elementary school teacher said when contacted in India yesterday.

Ramalakshmi said although she and her husband had been estranged for the past three years, there was a possibility of a reconciliation.

Ramalakshmi from Tirunelveli, Tamil Nadu, claims that she is the wife of Muthuraja, and not Usharani (above). The girl at right is Usharani’s daughter.

“My father-in-law told me that things between us would be sorted out after his return from Malaysia,” she said.

Ramalakshmi said she had not seen her husband for three years until about a week before his trip to Malaysia in January.

“I was walking to school and he passed by in his car while on the way to his estate, which is not very far from where I teach.

“We did not speak but he smiled at me,” said a sobbing Ramalakshmi.

First marriage?: An i nvitation card said to have been used to announce Muthuraja’s marriage to Ramalakshmi.

She said Muthuraja would go on long trips to Russia and Malaysia from the time they were married to tend to his businesses there.

“He would always come back and I was used to not having him around all the time even before we became estranged,” she said.

She also said Muthuraja had brought the two lawyer brothers to her father’s house in Tirunelveli for a meal about five years ago.

Asked what she thought about the turn of events, Ramalakshmi said: “There is a strong possibility that my husband was involved in questionable activities.

“He doesn’t even have to come back to me or acknowledge me. I only want my husband to be alive.”

Missing man’s wife plays recording of demand for RM1m ransom

KLANG: S. Usharani, the second wife of Indian millionaire A. Muthuraja, has vowed to bring to justice those responsible for his death by producing a recorded telephone conversation which she had with a man who demanded a RM1mil ransom from her.

The recording of the conversation between herself and the man identified as “ASP Suresh” from Bukit Aman was played to the press yesterday.

She lodged a police report at Kuala Langat and will hand over the evidence to the Inspector-General of Police today.

Hear it for yourself: Usharani playing the phone recording of her conversations with a suspect in Datuk Sosilawati Lawiya’s murder case and a man claiming to be a policeman. She will turn over the phone to the police today. — SIA HONG KIAU / The Star

Other developments:

> Muthuraja’s mother claims her son wanted to “escape” from Usharani, who was pressuring him with suicide threats;

> His younger brother also accused Usharani of giving authorities wrong information and claims she is being “instigated” by another businessman;

> The remand for five suspects, believed to be involved in the murder, has been extended for a week.

Related Stories:
Call from man asking RM1mil for Muthu’s release to be given to cops
Businessman’s disappearance is hot news in India
Muthuraja ‘movie plot’ unravels
Oh brother! Usharani’s version is now disputed
Police to hold Sosilawati case suspects a week more
Suspect claims abuse by cops

Muthuraja ‘movie plot’ unravels

THIRUNELVELI: The case of missing Indian businessman A. Muthuraja is playing like a drama - with the mystery of his disappearance, a search that spans two nations and a very nasty family feud.

His mother A. Ramalakshmi has made it known that her son was not on good terms with his wife S. Usharani.
She claimed her son wanted to “escape” from Usharani because she was always putting him under pressure.

Happier times: (From left) Muthuraja and Ramalakshmi, and Usharani and Muthuraja.

“They quarrelled all the time and Usharani had threatened to commit suicide,” she added.

“He has asked me many times to take care of his three-year-old daughter Lakshmi Shree so he could walk away from the destructive relationship,” she said at her ancestral home in Thenkasi near here.

According to Ramalakshmi, Muthuraja spent most of his time in his estate in Mekarai, about 20km from Thenkasi.

She added that Muthuraja had built a house on the estate, which also had a waterfall and spent a lot of time there with his family and friends.

Home sweet home: Muthuraja’s mother’s house in Shencottai, Madurai, India.

Muthuraja’s family members said his relationship with Usharani was a “mistake” after he became estranged from his first wife S. Ramalakshmi.

They claimed Usharani was a widow with one child when she met Muthuraja.

Muthuraja’s younger brother Dr Kasi Viswanathan said Usharani got married when she was only 15. Her wealthy husband later died and left her his assets.

Sources in Chennai said Muthuraja and Usharani had moved into an apartment only a day before he left for Malaysia on Jan 18.

“Judging from the amount of clothing he had packed, it looked like he was leaving,” the source said.

Related Stories:
Missing man’s wife plays recording of demand for RM1m ransom
Call from man asking RM1mil for Muthu’s release to be given to cops
Businessman’s disappearance is hot news in India
Oh brother! Usharani’s version is now disputed
Police to hold Sosilawati case suspects a week more
Suspect claims abuse by cops

Sunday, September 19, 2010

Matters we need to redress: Murder of cosmetic millionaire Datuk Sosilawati Lawiya, Killer Lawyers for fortune ?

On The Beat by WONG CHUN WAI

The murder of cosmetic millionaire Datuk Sosilawati Lawiya has put the spotlight on a number of issues.

THE gruesome murder of cosmetic millionaire Datuk Sosilawati Lawiya is certainly the most followed story in the media today as a shocked nation tries to digest what has taken place in the sleepy town of Banting over the last one week.

Every freshly revealed piece of information has jolted Malaysians and now the case seems to have expanded to India as the police put the pieces together.

In Singapore, the media has also given prominent attention to the case, which could possibly be classified as mass murder as the police have collected over 300 bone fragments.

The numbers just keep getting higher. It was first thought that only four persons were killed. The number then shot up to eight and now the press is speculating that up to 20 people could have been killed, their bodies burnt and dumped into a river.

A huge amount of money has also been found in the bank accounts of the suspects. Hired killers, said to be thugs from Kuala Lumpur, are said to be the executioners.

More revelations of missing people have surfaced and in Penang, police have reopened their files on lawyers who died in mysterious circumstances.

The two suspects are lawyers and well-known personalities in a small town. Depending on who you talk to, they are either generous personalities who give donations to the poor and are defenders of exploited foreign labourers or just people of ill repute whom the locals avoid.

One of them was earlier reported to be a Datuk but it has now been found that he is not a titled person. Worse, there was someone more cunning than him – he reportedly paid RM180,000 to a person who promised him the Datuk title. He was also told he could use the honorific while he waited for the big day to receive it.

There is a lesson here. Malaysians are no longer surprised with reports of titled people who commit crimes or are suspected to be involved in questionable activities.

The perception is that the royal houses have been too generous in awarding titles and there are allegations and suspicions that these awards were bought or that not enough or no checks were done on the nominees.

As a result, the reputation of one or two states has been affected, if not tarnished, because of these shortcomings.

The point here, however, is that it would appear that anyone can call themselves a Datuk as the public are not able to verify the authenticity of the title.

There are states with constitutions that limit the number of such titles. There are even websites where the public can check, as in Selangor, which is known to be strict on such matters. So are Johor and Sarawak.

The suspect, being a professional, could have gotten away with the Datuk title if this case had not come out in the open. One can only speculate if there are many Malaysians like him who may just be egoistic figures with fake titles. In the case of phony doctorates, it’s another story.

The Banting police are also in the spotlight: Were they indifferent towards the reports of missing people in Banting?

Was the information provided to them insufficient and did not help in follow-up action? Were the reports of missing persons filed late, as in the case of an Indian national whose wife reported to police only eight months or more after her husband went missing?

Now the Banting police are forced to respond to queries from Bukit Aman, which has taken over the investigations in this high profile case.

It is important that the police take into account public perception. They should not be defensive or dismissive but explain and educate the public on the need for details and speed to help them. It also helps if the police also review the procedures and methods so that they can improve themselves.

There are suggestions that the case has been given attention because it involves a millionaire and a Datuk. The media may have given it more attention because it involves a famous personality. But in all fairness, the police have also reacted quickly in many recent cases.

The murder of a religious school teacher in Seremban was quickly resolved and the person has been charged. So was a case in Penang involving a teenager who killed his school mate.

The police should in fact be commended for their speed and commitment in resolving the murder of Sosilawati. Many had to forego their Hari Raya holidays to focus on the investigations and at many scenes, including the river, the tasks were certainly not pleasant ones.

Let’s give credit when credit is due and not look for little faults. The police have wrapped up their investigations and it is now up to the Attorney-General’s Chambers to build a tight case against the suspects. There must be no loose ends and the police must provide enough evidence for the A-G to proceed.

They will be fighting a case against suspects who know the law well. They had better put up a good prosecution team, especially when there are high expectations from the public.

In the Teoh Beng Hock inquest, the team representing the Malaysian Anti Corruption Agency (MACC) has, to put it politely, been an embarrassment.

The A-G’s Chambers have decided to be transparent and accountable by putting up documents and video clips on their website. But they must also understand that their performance would also be open to public scrutiny and criticism. It is a double-edged decision.

Investigations on the Banting murder case may have ended but the court drama will begin soon. Like the Teoh case, there will be more to come and, certainly, there will be plenty of information that will keep Malaysians on the edge of their seats.

Two more nabbed over missing Indian businessman

Datuk Khalid Abu Bakar

KUALA LUMPUR (Sept 18, 2010) : Police have made further progress in multiple murder probe involving two lawyers, with the arrest of two more suspects.

The suspects who are allegedly linked to the two lawyers arrested over the killing of the cosmetic company millionaire Datuk Sosilawati Lawiya and her three associates on Aug 3, were picked up to assist in the probe of another case involving missing Indian businessman A.Muthuraja.

Selangor police chief DCP Datuk Khalid Abu Bakar said police arrested a 34-year-old man in Taman Wilayah, Selayang late yesterday evening.

In a follow up operation just after midnight today, a second suspect, aged 21, was arrested at Kampung Laksamana, Batu Caves.

He said investigators believe both men can shed light into the case of the missing Indian businessman.

Muthuraja who had come to Malaysia to meet the lawyers in January, had never been seen again.
His wife, S Usharani lodged a police report on Sept 8 after months of trying to locate her husband.
The latest arrests brings the total number of those detained to 10 suspects.

It is learnt that more arrests are expected to follow in the coming days.

The disappearance of Sosilawati, her lawyer Ahmad Kamil Abdul Karim, 32, bank officer Noorhisham Mohammad, 38, and driver Kamaruddin Shamsuddin, 44 on Aug 30 uncovered probably the country's most gruesome case of mass homicide last week.

A 41-year-old lawyer who claimed to be a Datuk, and is believed to be the mastermind behind the killings, and his brother who is also a lawyer, are the main suspects.

Police discovered the four victims were lured to the lawyer's farm near Taman Gadong, Morib and clubbed to death before their bodies were burnt and the ashes later thrown into a nearby river.

Police believe they have built a strong case against the suspects and expect to charge them for the murders next week.

Kuala Lumpur CID chief SAC Datuk Ku Chin Wah said remand orders for eight suspects arrested last week, have been extended a further week until Sept 25.

Link to Other Stories:

Datuk lawyer's 'killer fortune'

By Najiah on Wednesday, September 15th, 2010

Frankie D'Cruz

G. Prakash

Alfian Zohri Mohd Tahir

Wednesday, September 15th, 2010 12:12:00

BUZZ IN TOWN: The suspects in a police car heading out of Ladang Gadong yesterday — Pic: ARIF KARTONO

KUALA LUMPUR: The Datuk lawyer in the centre of the hideous quadruple slaughters in Banting has a personal wealth of more than RM100 million, it emerged today.

His younger brother who is also a suspect in the kill and burn atrocity could have amassed up to RM20 million, sources said.

The estimated fortunes of the brothers were based on their bank accounts that the authorities know of and the properties they owned.

The police’s anti-money laundering division have got an order from the Attorney-General’s Chambers to freeze the assets, including bank accounts, of the two lawyers.

Millions are reportedly in single accounts, said the source. Checks are underway to ascertain if they had parked money in offshore banks.

While it is known that they own several parcels of land in and around Banting, including the 1.6ha farm where the killings are thought to have occurred, the authorities believe there are more.

The brothers own several shophouses and a medical clinic in Banting besides lavish homes, notably their mansion where both of them live. They also have a fleet of high-end luxury cars.

The gained their wealth allegedly through money-laundering, obtaining properties illegally and land scams.

It is believed the brothers secured dozens of land grants as collateral in illegal money-lending deals. Caveats on properties were also their way of extorting money, said a source.

The source said the lawyers often asked for jewellery as security when giving loans.
Police yesterday seized files from his law firm in Banting town believed to contain vital information on dubious land deals and money-lending activities.

The seized files are also thought to contain land grants that have now put the owners in a fix as these documents would be crucial in investigations and perhaps later as court exhibits.
Financial institutions have extended full co-operation in the declaration of transactions undertaken by the brothers.

Investigations into their financial transactions could be time-consuming as it is believed there were numerous movements of money in and out of the country.

The brothers are among six suspects held in connection with the murders of cosmetics millionaire Datuk Sosilawati Lawiya, 47, 44, her financial adviser and CIMB bank officer Noorhisham Mohammad, 38, lawyer Ahmad Kamil Abdul Karim, 32 and her driver Kamarudin Shamsuddin who were reported missing on Aug 30.

The killings were believed to have occurred after Sosilawati had gone with the others to confront the lawyer regarding the transfer of a land title in a deal believed to be worth RM25mil.

Police have yet to establish if Sosilawati had actually brought RM4mil for their meeting with the Datuk as speculated.

The lawyer brothers’ known wealth

● THE 1.6ha poultry farm and land.
● Properties worth millions of ringgit.
● Semi-detached house in Banting.
● Bungalow house in Puchong where the Datuk lawyer’s wife and two sons live.
● Shophouse where their law firm is located in Banting town.
● Medical clinic run by their youngest sister.
● Nine high-end cars including seven Mercedes Benz.

Police are investigating how the brothers amassed such wealth and are looking at alleged involvement in money-laundering, obtaining properties illegally and land scams.

The police’s anti-money laundering division has applied to the Attorney-General’s Chambers for an order to freeze the assets, including bank accounts, of the two lawyers.

Investigations on the purchase of the farm land are underway and police are trying to contact the former owner.

Watch what you say online

Dr BAHMA SIVASUBRAMANIAM

It is a myth that cyberspace is a lawless wilderness. Conventional laws can and do apply to cyberspace activities.

CYBERSPACE is a beehive of activity: communications take place, transactions are completed and even wars are conducted!

It is therefore a myth that cyberspace is a lawless wilderness. Cyber users harbour a delusion that cyberspace accords them anonymity and therefore out of reach from the arms of the law.

Nothing could be further from the truth. Illegal and unlawful activities can be detected and perpetrators can be identified and prosecuted or sued, as the case may be.

Conventional laws can and do apply to cyberspace activities. Where there are no adequate conventional laws that apply to such activities, special laws have been promulgated. In Malaysia, these include the Computer Crimes Act 1997 and the Communications and Multimedia Act 1998. The latest in this series of legislation is the Personal Data Protection Act 2010.

While there is no denying that a netizen cannot escape liability from legal action should there be any breach of law, it must be noted that the same “lifesavers” and defences are available to him as if he had committed the wrongs the conventional manner.

For example, in a conventional defamation action, the maker of the defamatory remarks would usually be asked to apologise before formal legal action is commenced against him. I do not see why the same should not be applicable to the cyber wrongdoer. Also, defences such as truth/justification and fair comment would be equally as available to him.

This brings me to the next point. The Internet Service Providers (“ISP”) have an important role to play in cyberspace for obvious reasons. It is after all the conduit, the means of access to the Internet.

However, due to the nature of its work and functions, it is sometimes unfair and indeed unrealistic to make the ISPs liable for wrongdoings in cyberspace. In the United States, liability of an ISP will depend on its role and its functions, especially in defamation suits – whether it is an information carrier or information controller.

Where the ISP’s role is the former, the court does not accord any liability for the ISP is perceived as a postman, merely carrying information from one point to another. The ISP would be, however, liable if it is an information controller as it exercises a degree of control over the posts made by subscribers of its accounts.

In Malaysia, there is no such distinction. An ISP is deemed to be responsible and/or liable for a commission of any wrongdoing in cyberspace. S. 211 and S. 233 of the Communications and Multimedia Act 1998 (CMA) make an author and its intermediary who knowingly enable the transmission of offensive, false, menacing material to be convicted of an offence under the Act.
Both sections carry penal sanctions.

Safe harbour

An interesting aspect to the position of the ISPs vis-à-vis the law is the unique shield called the “safe harbour” defence. The defence is statutorily provided for in the US under the Digital Millennium Copyright Act 1998 and other pieces of legislation. It simply gives the ISP and even a website owner an opportunity to rectify the wrongdoing complained of.

The defence is not available where the ISP had actual knowledge and/or awareness of the wrongdoing or it did not remove the offending material expeditiously once it had received knowledge or became aware of the wrongdoing.

Also, the ISP cannot rely on the safe harbour provision if it had the right to control the wrongdoing activity or if the ISP stood to gain a financial benefit from the wrongdoing. In other words, the ISP (or anyone who relies on that defence) must have acted in good faith.

The “safe harbour” defence is not a blanket defence. There are cases where parties’ attempt to rely on it have failed – the infamous Napster case being one of them.

Napster provided peer-to-peer networking facilities which allowed file-sharing. The software enabled music to be uploaded and downloaded freely and free of charge and, most importantly, without the consent of the copyright owner.

The courts held that even if Napster fulfilled the requirements of an ISP (which it did not as it was merely a facilitator of sharing of music files), it still could not rely on the safe harbour defence as it did not take appropriate action against infringers by terminating them.

It would be interesting to see a similar Napster-type case in Malaysia. There are no specific statutory provisions that actually set out the safe harbour defence here but the CMA and the statutory instruments created under it do provide a similar defence to an ISP who unknowingly transmitted prohibited content. This defence is called the “notice and take down” measure and is provided under the Content Code, which is an instrument created under S. 213 of the CMA.

A few words about the Content Code (the Code). The Content Code Forum, a statutory body created under S. 212 of the CMA, is empowered under S. 213 to create a code which will include model procedures for dealing with offensive or indecent content.

The Code covers a myriad of issues relating to the service of disseminating of content by the service providers in the communications and multimedia industry.

What is interesting about the Code and which is missing from the CMA is that the Code acknowledges the potential problems an ISP may face, especially where the commission of an online offence could take place without its knowledge.

Article 4 of Part 5 of the Code provides: It is recognised that it is impractical, difficult and ineffective to monitor or control a user’s access to Content available Online.

Article 2 of the same Part states anyone who provides access to any Content but have neither control over the composition of such Content nor any knowledge of such Content is deemed an innocent carrier for the purposes of this Code. It acknowledges also that an innocent carrier cannot be held responsible for the content provided or transmitted. This is akin to the role of the ISP as information carrier in the US. Articles 2 and 4, read together, provide the base for the “notice and take down” mechanism mentioned above.

The upshot of the Code is simply this. The ISP will be notified of the offending material by the Complaints Bureau of the Content Forum (the notice). The ISP then has two (2) working days from the date of notification to inform the subscriber of the offending content and request him to remove the content (take down).

If the subscriber refuses to do so, the ISP has the right to suspend his account: Article 7. If the ISP takes all these steps, then it can rely on this as a defence in any prosecution, action or proceeding of any nature, whether in court or otherwise since it had complied with the Code. This is not only set out in Article 6.3 of the Code but also is a statutory defence provided under S. 98 of the CMA.

I would venture to suggest that this defence should be equally available to anyone who has or had inadvertently posted indecent, false, menacing or offensive in character content even though the Act and the Code provide this defence to the ISP and others of its ilk only. However, this defence should not be seen as a carte blanche for would-be abusers of the Internet, for the law will not allow perpetrators of online abuses to easily escape liability, as demonstrated by many cases involving social networking websites such as Friends Reunited and Facebook.

The earliest reported case arising from an online wrong was a defamation suit filed in England. Reputed to be the first of its kind, this action arose out of a post made in the Friends Reunited website. A retired teacher, Jim Murray, brought an action in libel against a former student called Jonathan Spence. (He had initially considered suing the Service Provider but decided against it. Friends Reunited had promptly removed the offending material). Spence posted remarks alleging that his former teacher Murray was dismissed from school for “making rude remarks about a girl” and strangling a pupil. Murray disputed these claims and pointed out that he had retired and was not dismissed. The Lincoln County Court agreed with Murray and ordered Spence to pay damages. That was in 2002.

As recently as July 29, 2010, the High Court in England awarded £10,000 damages to Raymond Bryce, a law student who brought an action against a friend (now-ex) for defamatory remarks posted on his page in Facebook. Jeremiah Barber implied that Bryce was a paedophile and posted indecent photographs of children, superimposed with Bryce’s photograph. The Court was mindful of the fact that defamatory remarks published in an online medium could reach a wider circle of audience, unlike the traditional medium such as newspapers.

Interesting tests

In Malaysia, aside from the defamation suits that arose from blogging (the Jeff Ooi and Rocky Bru cases being two examples), two prosecutions of online postings provide interesting tests of the law. Both prosecutions are under the CMA. In the first case, Mohammad Tarysif Tajudin was charged in the Sessions Court in January this year under S. 233 of the CMA for making a post on Facebook.

S. 233 caters for improper use of network facilities or network services and states that any person who knowingly makes, creates or solicits AND initiates the transmission of any comment, request, communication, etc, which is indecent, false, menacing with intent to annoy, abuse, threaten or harass commits an offence.
Mohammad Tarysif, allegedly under a pseudonym, is accused of posting offensive comments in his Facebook page, offering his “services” to throw petrol bombs at churches for a negotiable price.
The trial is yet to begin.

The second case of prosecution under the CMA is the case of Irwan Abdul Rahman, also known as Hassan Skoedeng. He was charged in the Sessions Court on Sept 2, 2010, over an allegedly tongue-in-cheek post called “TNB to sue WWF over Earth Hour”. The charge was also under S. 233. This case is not straightforward.

Is the “offending” article satirical or tongue-in-cheek? If it was, it is not an offence.

However, the Malaysian Communications and Multimedia Commission (MCMC), who is tasked with the prosecution of Irwan, must prove that the accused’s post was “obscene, indecent, false, menacing or offensive in character” and that he had the INTENTION “to annoy, abuse, threaten or harass any person at any number or electronic address”.

The proceedings are of interest not just to lawyers but also to anyone who writes in cyberspace. What is “annoying”? Should “annoying” under the CMA have a more complex interpretation and a higher degree of proof than “annoying” as a common parlance? Who decides what is abusive or threatening or harassing? What is the standard of proof? Interesting questions that demand firm and irrefutable answers.

The overall conclusion is simply this: your actions in cyberspace will not go unnoticed, particularly if those actions are illegal or unlawful. Article 3.5 of Part 5 of the Content Code states very aptly: The online environment is not a legal vacuum. In general, if something is illegal “offline”, it will also be illegal “online”. In this matter, the relevant existing laws apply.

Those of us who are avid users of the Internet should be mindful of this provision.

> Dr Bahma Sivasubramaniam is head of Law Unit, Faculty of Management, Multimedia University. He is also advocate and solicitor, High Court of Malaya.

BBC at a crossroads

Behind The Headlines by BUNN NAGARA

The world’s biggest broadcaster faces funding cuts again, and more challenges to its professional standards.

THE British Broadcasting Corporation’s greatest strength is also a prominent weakness, thus its most profound contradiction.

This relates to its most vital ingredient: government funding, through direct grants and household licence fees. Downing Street has successfully pressured the BBC to freeze the £145.50 (RM707) annual fee for the next two years, although the BBC is entitled to seek a rise.

Result – the broadcaster is short of £72mil (RM349mil) in its budgetary plans. This will further burden expenses for next year’s move of sports, children’s and live radio shows to spanking new studios in Greater Manchester.

Sometimes the BBC can be its own worst adversary. In 2008, the BBC Trust censured bbc.co.uk for overspending nearly 50% of its original £74.2mil (RM360mil) budget.

Last year, BBC director-general Mark Thompson announced £400mil (RM1.9bil) in budget cuts over three years. The decision to avoid seeking a licence fee hike was timely, particularly given Britain’s troubled economy.

The scale of funding and job cuts is nothing if not massive for the world’s largest broadcaster, shedding some 8,000 jobs in recent years. BBC News alone has a budget of £350mil (RM1.7bil) with 3,500 staff, 57% of them journalists.

Now the government wants deeper cuts in direct funding besides a freeze in the licence fee. This is feared to hobble further the BBC’s popular World Service in particular, which is funded directly by the government.

As the world’s oldest public broadcaster, the BBC (the “Beeb”, or “Auntie”) is no stranger to government budget cuts, particularly by Conservative governments. There were Margaret Thatcher’s crippling cuts in 1979, John Major’s heady cuts in 1996 and now Cameron’s sweeping cuts are on the way.

This has less to do with Labour governments’ affinity with public broadcasting, but Conservatives’ lack of understanding of national branding through creditable international media as a world presence. There had been cuts in 2007 under Labour, but times were better then.

Problems with the Blair government surfaced when the BBC attempted to question its rationale for invading Iraq, the “Beeb’s” supposed independence notwithstanding. Blair then reportedly threatened to pull the licence fee.

Thus an ironic contradiction: the BBC World Service is renowned internationally for professional impartiality, yet the BBC habitually canvasses the government for more funds by citing its service to vital British interests abroad. These interests can seem humanitarian – in racist Rhodesia as in today’s Myanmar, the World Service has provided an alternative source of reportage contrary to official rhetoric.

A result has been the BBC’s global reputation for truth, accuracy and integrity, even if that can be oversold. The strength of this reputation is ultimately relative, deriving less from the intrinsic qualities of BBC content as with the more questionable content of competitors.

Over many years, the World Service’s chief competitor is said to be the Voice of America (VoA). Given VoA’s Cold War purpose and CIA links, a solid reputation for the BBC should come by default.

Meanwhile, Anglophiles have helped maintain the World Service’s reputation. But retaining the younger generation’s faith requires continuing investment.

In recent years, CNN International (CNNI) and al-Jazeera English (AJE) have given the World Service’s BBC World a run for its money. And money is what the BBC is short of now.

Still, the Trust’s 2008 criticisms of “poor financial accountability” and “lack of management control” could still be pertinent in the meagre allocations for the BBC’s popular online services. Funding cuts also tend to hit more innovative output disproportionately.

Among the BBC’s strengths are its focus on the public interest as a public service broadcaster. But despite its reputation for relative impartiality, its broader character still reflects implicit Western interests as evident in placing priority on Arabic and Persian (for Iranians) languages.

With a preoccupation with the “petrodollars” and “petropolitics” of West Asia, the BBC started a commercially funded Arabic television station in 1994, closing it in 1996 over differences with its Saudi distributor. Staff then left to join al-Jazeera, yet emphasis in the World Service was still on West Asia.

By 2005, plans to expand in Russia, South America, South Asia and West Asia saw £35mil (RM168mil) for its Arabic and Persian services alone. There was nothing of the kind for East Asia, whose booming economies included two of the world’s biggest in Japan and China.

With CNNI’s routine coverage of West Asia and AJE’s specialisation there, the BBC persisted in focusing on the region at the expense of adequate coverage even in places with little competition over headline issues.

North Korea and Myanmar occasionally make waves in East Asia, but Iran, oil politics, Arab intrigue and Israel hold sway in news priorities. BBC Burma is a small and low-cost unit, and the current battle over funding centres symbolically on its future.

One result of cuts is outsourcing production to external parties, which can make for questionable material as the controversy over a feature on Nigeria showed last April. Outsourced programmes do not share production or oversight procedures with standard BBC fare.

In Britain, broadcasting careers often start at the BBC for expertise before moving to private networks for the money. Abroad, the BBC has contributed expertise not only to AJE but also to Brunei when head of news gathering Chris Cramer was seconded there in 1974, before he moved to CNN in 1996 eventually to head CNNI, taking some of his former BBC colleagues with him.

Last week, BBC chairman Sir Michael Lyons haggled with Downing Street for more money, advocating the World Service as a “cost-effective” way for Britain to influence world opinion. He is probably right.

But the BBC cannot have both its reputation for impartiality and the government money needed to propagate it. Meanwhile, the brain drain to rival networks could worsen.