ABC Learning proves the rule. Michael West yesterday produced a cracking piece in the Fairfax papers yesterday noting that litigation funders, IMF, are preparing a legal action in relation to a scheme which artificially boosted ABC’s profits (IMF are calling for class action participants amongst anyone who purchased ABC shares between August 2007 and April 2008). Read it here.
It sounds like Eddie Groves has been taking accounting lessons from Enron. Jeff Skilling and Andy Fastow would have been proud of the round robin which involved ABC receiving payments up-front from a related party, booking what should be an expense as an asset (as well as recording the transaction as revenue) and dealing with the problem another day, two or three years later.
As this column has noted in the past, ABC’s woes didn’t originate from short-sellers – they stem from Eddie Groves’ vastly unprofitable business model. Dodgy deals with his brother-in-law and paying $26 million to an investment bank which Groves partially owned certainly didn’t help either. Virtually no one has been able to make any money from childcare – for a few years, it looked like Groves was the exception. As it turns out, he was very much the rule. – Adam Schwab
Gunns is back in the money. European banks and equity providers are embracing the Gunns Tasmanian pulp mill project. Rumours of new backers for the project have been circulating in Europe and the company confirmed to Business Spectator yesterday that a new deal is close to completion.
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Europe and the rest of the world are now desperate for eucalypt pulp and the prices have been rising rapidly. But what makes the Gunns plant especially attractive to the Europeans is that it does not require the use of native timber – the freehold land plantations in Tasmanian and South Australian can supply the plant, which is designed to make both hardwood and softwood pulp. And, of course, the environmental constraints on emissions are world class. – Robert Gottliebsen, Business Spectator
Food and oil price rises take toll in Asia. While prices are rising in the United States and Europe, the biggest increases are being felt in Asia, with double-digit inflation already a problem in India and Vietnam and with other countries facing the same risk.
Sharp rises in global food and oil prices are now spilling over into wages and broader measures of inflation across Asia, as the Asian Development Bank noted in a report released Tuesday. Workers are demanding higher wages to cover their rising living costs, and companies are imposing higher prices for a wide range of goods to cover accelerating production costs. “The epicenter of the inflationary storm is really in Asia,” said Cyd Tuano-Amador, the managing director of monetary policy at the Philippines Central Bank. – International Herald Tribune
Busting Trust. It took more time than the Long March and the Great Leap Forward combined, but after 14 years of wrangling China will introduce a comprehensive antitrust law on August 1st. It could prove to be hugely important: it has been called China’s “economic constitution”. The law would give China’s economy a further big push from central planning and state ownership towards markets, says Lester Ross of the Beijing office of WilmerHale, a law firm.
On the face of it, the law is desperately needed: energy, telecoms, transport, steel and many other industries lack competition, with a handful of dominant firms controlling prices not only for consumers, but for other companies too. Even fragmented industries, such as rice flour and instant noodles, where competition ought to abound, were recently reported to have seen price-fixing and collusion organised through the trade groups that are a legacy of the state-controlled economy. – The Economist
When Mascot don’t work. China has launched an extensive merchandising push for the mascots — dubbed the Fuwa, Chinese for “good-luck dolls” — that includes animated television shows and a cornucopia of T-shirts and trinkets sold at about 6,300 Olympics shops and sales counters. All over China, life-size plush Fuwa dolls now inhabit office lobbies, bus stations and tourist attractions.
But while the Fuwa are ubiquitous, that doesn’t mean they’re universally liked. A nationwide survey taken by Nielsen Co. in late June found that 60% of Chinese liked the characters, while 40% were indifferent or disliked them — a high negative response in a society that prizes consensus. After a string of natural disasters, some Chinese have lately taken to calling them Wuwa, Chinese for “witch dolls,” and online Fuwa criticism frequently has been censored…
Critics also have complained it isn’t clear whether the Fuwa are animals, children, or aliens. (The characters are officially referred to as children who “also embody the natural characteristics of four of China’s most popular animals.”) When they were unveiled to American audiences during the halftime show at a 2006 NFL Game, Joe Bryant, a blogger at Footballguys.com wasn’t impressed. “Why do the Olympic mascots have to look like some mutant Pokemon/ Telletubbie thing,” he wrote. “What’s wrong with a bull dog or a cougar or a sweat shop worker for a mascot?”– Wall Street Journal