Libor Rate-Rigging: UBS Pays £940m Penalty

The Swiss bank UBS is to pay £940m, including £160m to regulators in Britain, to settle Libor rate-rigging investigations.

The fines, which amount to the second biggest penalty paid by a bank in the wake of the £1.2bn money laundering settlement announced by HSBC in the US last week, relate to manipulation of yen Libor and euroyen contracts.

The Financial Services Authority (FSA) said the case was "all the more serious" as UBS had attempted to manipulate Libor submissions at other banks, making corrupt payments to reward brokers for their efforts.

The FSA's report revealed incriminating conversations between UBS traders and brokers, saying they would "play the rules" and "return the favour".

One trader said: "I need you to keep it (the six-month Japanese Libor rate) as low as possible ... if you do that ... I'll pay you, you know, $50,000, $100,000 ... whatever you want ... I'm a man of my word."

The Libor scandal cost Bob Diamond the top job at Barclays

Bankers, the FSA said, also referred to each other in congratulatory terms, such as "the three muscateers (sic)", "Superman", and "Captain caos (sic)".

The £940m fine goes to regulators in the US, UK and Switzerland and the bank said it could not rule out further penalties in future.

The total comes to more than three times the $290m fine levied on Barclays in June for rigging the Libor benchmark rate used to price financial contracts around the globe from home loan rates to complex derivatives.

UBS said today that around 40 people have left or been asked to leave the bank as a result of the Libor investigation and it now expected to report a loss of up to £1.7bn for the fourth quarter as a result of the case.

Chief executive Sergio Ermotti added: "We deeply regret this inappropriate and unethical behaviour.

"No amount of profit is more important than the reputation of this firm, and we are committed to doing business with integrity."

In its statement, the FSA said UBS made "corrupt payments" of £15,000 per quarter to brokers for at least 18 months to reward them for helping the Swiss bank manipulate global interest rates.

It said that at least 45 individuals including traders, managers and senior managers were involved in, or aware of, the practice.

Kweku Adoboli lost UBS £1.4bn

The regulator recorded at least 2,000 requests for inappropriate submissions and said many more would have been made orally.

Tracey McDermott, FSA director of enforcement and financial crime, said: "They manipulated UBS's submissions in order to benefit their own positions and to protect UBS's reputation, showing a total disregard for the millions of market participants around the world who were also affected by Libor and Euribor."

The FSA had already fined UBS £29.7m for failings which allowed a rogue trader to rack up losses of £1.4bn in an unrelated case.

Kweku Adoboli was jailed for seven years in November after being found guilty of fraud.

The Libor scandal, which is expected to engulf other banks including RBS, has resulted in pledges to reform how the rates are set.

The British Banking Authority, which currently oversees Libor, has agreed to give up that responsibility as part of the changes.

A criminal investigation in the UK, led by the Serious Fraud Office, resulted in its first arrests last week,

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Nissan To Build Luxury Car Model At UK Plant

Car giant Nissan is to build a new luxury model in the UK, creating 1,000 jobs with a £250m investment.

The new global model will be manufactured at the Japanese firm's plant in Sunderland, which employs 6,000 workers.

The car, built under Nissan's Infiniti premium brand, is set to be produced from 2015.

It will be developed with help from Nissan's design centre in London and technical centre in Cranfield and then exported around the world, the firm said.

Around 280 of the new jobs will be in Sunderland, with the rest in other sites across the country.

Because of capacity limitations at Sunderland, securing the new Infiniti will mean that a C-segment hatchback previously announced for the plant in April will be manufactured elsewhere, said the company.

The North East plant will build more than half a million cars this year, the first UK manufacturer to achieve this milestone.

The new model will be made at the Nissan factory in Sunderland

Colin Dodge, Nissan's executive vice-president and chief performance officer, said: "This milestone, our first premium product to be manufactured at Sunderland, reconfirms our commitment to UK manufacturing and the ongoing success of the plant which is moving up the value chain.

"Just as important, the new Infiniti, which will be exported around the world, is being developed with help from our London design centre and our European Technical Centre."

Business Secretary Vince Cable, who will attend a ceremony in Sunderland to mark the announcement, said: "Sunderland will be the only place in the world to make this new premium compact car.

"Nissan in the UK goes from strength to strength. Not only will the new car be made here and exported all over the world, the UK has already contributed to its design and development.

"Today's news is a strong endorsement of the quality of Britain's car industry which is creating jobs, taking on apprentices and contributing to building a stronger economy.

"The auto sector is living up to being one of the great success stories of our industrial strategy and a testimony to government and private sector working together in close partnership."

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G4S Close To Olympics Security Settlement

By Mark Kleinman, City Editor

The company at the centre of the summer's Olympics security fiasco is close to a deal with the Games organisers that would involve it incurring a smaller loss than the City had feared.

I have learned that G4S, which was widely-ridiculed over its handling of the most prestigious contract in its history, has made substantial progress on reaching a financial settlement with Locog, the organising committee, in recent days.

People close to the talks said it was conceivable that an agreement between the two sides could be announced before Christmas, although they cautioned that it was more likely that the negotiations would drag on into the new year.

The deal between G4S and Locog is expected to see the security company making a loss from the contract of between £55m and £70m, according to insiders. The final number is not yet nailed down and will depend on the progress of further talks in the coming days.

Nick Buckles, G4S's chief executive, said in August that the company expected to incur a £50m loss from its involvement with the Olympics.

"The talks are focused on a deal that will mean G4S makes a larger loss than it has publicly acknowledged so far, but it will not be on the scale originally feared," one insider said.

A settlement on these or similar terms would be regarded as a positive outcome for G4S. Chairman, John Connolly, has stepped in in recent days to take charge of the discussions with Locog, according to insiders.

G4S failed to supply more than 10,000 security staff to help police the Olympics and Paralympics, resulting in thousands of military personnel stepping in to make up the shortfall.

News of the impending settlement comes weeks after Sky News revealed that the Home Secretary could be asked to intervene to help resolve an impasse between them.

The security contractor has hired Herbert Smith and Linklaters, the City law firms, to help thrash out a deal, while Locog is being advised by Freshfields Bruckhaus Deringer.

The negotiations between the two sides follow the departure of three senior G4S executives who were involved in managing the Olympics contract.

Yesterday, Mr Connolly appointed three new board directors, including Adam Crozier, the boss of ITV, to accelerate the overhaul of the company's boardroom.

G4S declined to comment. A Locog spokeswoman said it was "continuing to seek resolution with G4S".

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HMRC Missed Calls Cost Taxpayer £136m A Year

Delays in answering phone calls to HM Revenue and Customs hotlines cost the taxpayer £136m in the last year.

According to a National Audit Office (NAO) report, delays cost customers £33m in call charges while they waited for HMRC to answer the phone and the estimated value of customer time while they waited was £103m.

The NAO said 20 million calls to HMRC hotlines - many of which are 0845 numbers - were not picked up at all last year.

People who did get through were also waiting longer to speak to an adviser - an average of 282 seconds compared with 107 seconds in 2009/10.

In the first quarter of this year, some 6.5 million people were left holding on for longer than 10 minutes.

"Depending on the tariff they pay their phone company, customers are charged once their call is connected even if they are held in a queue," the report said.

"We estimate that if HMRC improved performance to answer 90% of calls and reduced waiting times, it could save customers around £52m a year.

"HMRC currently plans to spend £34m to achieve this level of performance."

The NAO found there had been some progress since thousands more staff were drafted in, with the 74% pick-up rate significantly higher than the 48% recorded in 2010/11.

However, the report warned that the figures probably underestimated the issue, as calls are counted as answered even if they do not reach an adviser.

Public Accounts Committee chairman Margaret Hodge said: "When people have no choice but to contact the Revenue to discuss their tax affairs, I find it totally unacceptable that HMRC uses costly 0845 numbers and charges people for the privilege of waiting for the department to pick up."

TaxPayers' Alliance chief executive Matthew Sinclair said: "This report exposes a shameful level of service at HMRC.

"Taxpayers will be outraged that HMRC could let 20 million phone calls go unanswered and yet still claim that it is outperforming some arbitrary target."

An HMRC spokesman said: "In 2010/11 we answered 48% of all call attempts, rising to 74% in 2011/12.

"By late 2012 we were answering over 90% of calls to our contact centres. We are well aware that in the past we have not delivered the standard of service to which we are committed.

"We are determined to build on this progress and we have invested £34m so we can deliver on our improvement targets earlier than planned."

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Investigation Launched Into Comet Collapse

The Department for Business, Innovation and Skills has launched an investigation into the purchase and administration of troubled electrical chain Comet.

The Insolvency Service has been tasked with scrutinising the process following a number of complaints from MPs.

The business was bought for £2 by Hailey Acquisitions, an investment vehicle put together by Henry Jackson of OpCapita, in November 2011.

They were given a £50m dowry from previous owner Kesa Electricals, now known as Darty, to run the retailer, which collapsed just a year later.

Seven weeks after they were appointed administrators, Deloitte failed to find a buyer for the 235-store chain, and closed its remaining 49 outlets.

The collapse of the company, which was founded in Hull in 1933 and employed around 6,895 people, is one of the biggest high street failures since the demise of Woolworths in 2008.

Deloitte said on Monday that it remained in talks with a small number of parties over the sale of internet operations and the brand.

Comet launched a sale following its collapse at the beginning of November

But the firm also confirmed the taxpayer will have to pick up a £49.4m bill for unpaid redundancy and tax payments.

With insufficient funds raised from the winding down of the chain, the Government's Redundancy Payments Service will be required to meet the £23.2m of outstanding redundancy and accrued holiday pay and pay in lieu of notice.

The scale of the problems at Comet were also highlighted in the report, with the chain racking up losses of £95m in the year to April after also seeing revenues slump by £200m compared to a year earlier.

This was followed by a further £31m loss in the subsequent five months as credit insurers lost confidence and withdrew support for the business.

Hailey Acquisitions is expected to get payments of just under £50m as a secured creditor - a shortfall of £95m on the amount owed.

But it has been reported that unsecured creditors, including HM Revenue and Customs which is owed £26.2m, will receive nothing.

Comet was hit by weak high street trading conditions, competition from online rivals and being unable to secure the trade credit insurance needed to safeguard suppliers.

In particular, it was knocked by the lack of first-time home buyers who were key customers for Comet.

Holders of £4.7m of unclaimed Comet gift cards and vouchers are also on the list of unsecured creditors.

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Higher Food Costs Add To Inflation Woes

The main rate of inflation remained unchanged in November as falling petrol prices failed to offset rises in many basic foodstuffs and home energy costs.

The Office for National Statistics calculated that the CPI measure remained at an annual rate of 2.7% in November.

Many economists had expected the figure to fall back slightly ahead of further increases in the rate next month as many rises in household energy bills filter into the statistics.

The ONS said the first increase in bills to take effect, by supplier SSE, was included in November's figures.

But with hikes by the other five main energy providers set to come into force, analysts think CPI inflation will peak at 3.5% by mid-2013.

Upward pressure from gas and electricity prices pushed housing and household services inflation up by 0.6%, the ONS said, while increases in the price of fruit, bread and cereals also added pressure to the CPI rate.

But a fall in the cost of transport was the biggest factor which kept the rate steady as petrol prices fell by 3p to £1.35 per litre on average while diesel dropped 1.5p to £1.42.

The RPI measure of inflation, which includes housing costs, fell to 3% in November from 3.2% in October as transport costs and mortgage interest payments fell.

In its quarterly forecasts revealed last month, the Bank of England expected inflation to remain significantly higher over the next 18 months that it had previously expected.

It was that factor which is thought to have prevented the bank adding to its bond purchase programme, known as quantitative easing, to boost money supply in the UK economy despite evidence of continuing sluggish growth.

Commenting on the figures, the TUC general secretary Brendan Barber said: "The stubbornness of inflation, combined with poor wage growth, is putting real pressure on people's finances in the run up to Christmas.

"With the Office for Budget Responsibility not expecting real wage growth until 2014 and further cuts to in-work benefits due this April, 2013 looks like being another tough a year for working families.

"Today's figures are also another reminder of how painful the forthcoming benefits uprating cap will be for low-income families."

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Taxpayer Faces £50m Bill For Comet Collapse

The taxpayer is facing a £50m bill for the collapse of electrical retailer Comet, a report from the administrator is set to reveal.

The report from Deloitte is likely to indicate that insufficient funds have been raised from the winding down of the chain to pay up to £24m in redundancy payments to 6,000 staff.

This means the Government will probably have to step in and ensure workers receive their payments.

The statement is expected to be published today and will also disclose that unsecured creditors - including HM Revenue and Customs - will receive nothing.

The Tax Office is due some £26.1m by the firm.

Secured creditors, such as the backers of Comet's parent company Hailey Acquisitions, will get payments of just under £50m.

But according to the Sunday Telegraph, this represented a shortfall of £95m on the amount owed at the time of the collapse of the 236 store chain in early November.

The troubled Comet chain reportedly racking up losses of £95m in the year to April, followed by a further £31m in the subsequent five months as credit insurers lost confidence and withdrew support for the business.

Hailey Acquisitions was the investment vehicle put together by Henry Jackson of OpCapita, who raised the funding from unnamed investors for Comet's takeover from French retail group Darty.

Deloitte has said the last 50 stores will close for the final time tomorrow, amid speculation that the brand will be sold to an online retailer and around 20 shops picked up by rivals.

Unsecured creditors also included ITV and Google, which are owed £1.2m and £602,000 respectively for unpaid advertising bills, the newspaper said.

Meanwhile, holders of £4.7m of unclaimed Comet gift cards and vouchers are also on the list of unsecured creditors.

However, an estimated £40m of payments will be made to suppliers and £2.1m of holiday and back pay owed to staff will be paid in full.

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Treasury 'Could Make £1bn From MoD 4G Sale'

The Ministry of Defence (MoD) is planning to sell part of its mobile spectrum currently reserved for military purposes, according to a newspaper report.

The sale of the airwaves - used to support superfast 4G mobile broadband - could bring in around £1bn for the Treasury, The Financial Times (FT) said.

In his Autumn Statement, George Osborne said he planned to raise a total of £3.5bn from auctioning off other 4G spectrum.

But the Chancellor's decision to add the anticipated income to the nation's accounts was criticised for helping him avoid a rise in UK national debt.

Around half of the UK's 4G network is controlled by the Government, according to the newspaper, with large swathes of it run by the MoD.

The auction is expected to be completed by the summer of 2014, after the Government's planned auction of other spectrum at the beginning of next year.

The department will confirm the move on Monday, the FT said.

Last month, the telecoms regulator Ofcom set a reserve price of £1.3bn for the January sale, although the final figure could be much higher.

In 2000, the auction of 3G brought in more than £22bn for the Treasury, when the reserve price was £500m.

Then-Chancellor Gordon Brown also used the proceeds to pay down national debt.

To date, EE, which owns Orange and T-Mobile, is the only mobile network to launch 4G products in the UK.

Its network, which offers speeds up to five times faster than 3G, is now available in London, Bristol, Birmingham, Cardiff, Leeds, Sheffield, Edinburgh, Glasgow, Liverpool, Southampton and Manchester.

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Fuel Bills To Rise As Networks Get Upgraded

The energy watchdog has announced a major upgrade to Britain's gas and electricity networks that will be funded by a rise in consumer bills.

The £24.2bn investment in the UK's ageing infrastructure will see a rise in fuel bills of up to £15.10 a year on average, Ofgem said.

The total amount is more than the £22.7bn proposed by the regulator in July, but less than the £29.4bn originally requested by the industry.

Ofgem said this reduction was made to "ensure value for money for consumers".

National Grid's high voltage electricity network, high pressure gas networks and low pressure gas networks across Britain will benefit from a £15.5bn upgrade.

The company, which had accused the regulator of not going far enough to incentivise companies to carry out the necessary work, said it would take time to review the proposals before commenting on them by March.

Some 7,000 jobs will be created in the supply chain as a result of the work.

A further £7bn will be spent connecting 80,000 households to the gas network for the first time, and ensuring the connections to homes and businesses are safe and reliable. 

The cost of the projects - which also include laying undersea cables linking Scotland with England and Wales - will see tariffs rise by an average of £8.50 in 2013/14, £7.30 the following year, rising to £15.10 in 2020/21.

Ofgem's chairman Lord Mogg said the investment "provides a framework of strong incentives and penalties to stimulate the innovative and efficient operations of Britain's energy companies".

It comes amid warnings that a further 300,000 people could be pushed into fuel poverty by Christmas.

The latest round of energy price rises has increased the average annual energy bill by 7%, the Fuel Poverty Advisory Group said, adding that estimates have already shown over nine million households could be living in fuel poverty by 2016.

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Open University To Go Global With Online Courses

The Open University (OU) has launched a campaign to take distance learning global - as it attempts to catch up with online course offered by US colleges.

The OU has teamed up with 10 British universities in a venture called FutureLearn.

The plan is to give free virtual lectures that are supplemented by digital learning tools to help promote UK institutions.

OU vice-chancellor Martin Bean told Sky News: "You won't be able to get a degree through FutureLearn but you will be able to get free access to some of the best higher education content on the planet.

"In a world of higher fees where people are taking on more of that responsibility for themselves I think they're going to demand better teaching ... and I'm sure it will help these universities really develop new, innovative and experimental teaching practices."

The decision to go global comes after leading US colleges, including Harvard, MIT, Texas and Georgetown, launched various learning partnerships.

One partnership involving Stanford already has two million users around the world.

Professor Bean admitted: "There's no doubt the Americans have got a little out in front of us on this one."

But he insisted the move would benefit Britain's universities.  

"It strengthens brand and competitiveness, it allows them to experiment and develop new teaching strategies for their students on campus and online," he said.

"And it also creates some revenue opportunities in being able to compete for all of those transnational students that are often in developing parts of the world."

The OU has been running courses since 1971, initially using late night television programmes to supplement course notes.

Supporters see FutureLearn as an important way to put students on a path that may lead to traditional tertiary education - a lucrative sector for colleges.

But there are doubts whether any money can be made from massive open online courses (Moocs), even though one in the US has 160,000 users.

Moocs do not carry degree credits and concerns have been raised about plagiarism and the manpower needed to check the work of tens of thousands of students that may be on a single course.

Money-making concepts have included offering free courses but charging for exams, certificates and tutoring.

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