Archive for June, 2010

BP spill costs up to $2.65B; denies CEO resigning (AP)

Monday, June 28th, 2010 | Finance News

NEW ORLEANS – BP's mounting costs for capping and cleaning up the Gulf of Mexico spill have reached $2.65 billion, the oil giant said Monday, but the company denied reports out of Russia that CEO Tony Hayward is resigning.

The company's expenses climbed $100 million per day over the weekend, according to an SEC filing Monday, as engineers eyed a tropical storm heading toward Mexico that was expected to miss the oil spill area but could still generate disruptive waves and winds.

It was a rocky start to the week after BP PLC stock fall 6 percent Friday in New York to a 14-year low. BP has lost more than $100 billion in market value since the deep-water drilling platform it was operating blew up April 20, killing 11 workers and starting the massive leak that has fouled the coastline in four states.

BP shares gave up some ground in London after the Hayward report emerged from Russia. But they were still up a fraction at 306.75 pence ($4.62) . BP's U.S. shares gained about 2 percent in premarket trading.

British-based BP rushed to deny the report by Russia's state RIA Novosti news agency that a senior Russian Cabinet official had said Hayward was expected to resign as chief executive.

It quoted Deputy Prime Minister Igor Sechin, who was set to meet Hayward on Monday, as saying that Hayward would introduce his successor.

"Hayward is leaving his post, he will introduce his successor," Sechin was quoted as saying by RIA Novosti.

BP spokeswoman Carolyn Copland in London said the report "is definitely not correct." Sheila Williams, also in London, said, "Tony Hayward remains chief executive."

"They are mistaken," U.S.-based BP spokesman Mark Proegler said of the Russian report.

Hayward was to assure Russian officials of BP's viability and discuss issues related to Russian joint venture TNK-BP, which accounts for about a quarter of BP's reserves and production.

Moscow-based oil analyst Konstantin Cherepanov from the Swiss investment bank UBS said he gave little credence to reports of Hayward's resignation.

"I'm sure there has been a misunderstanding. Hayward's resignation at this time and in this place lacks logic," he said.

"It would make sense that Hayward would finish his job tackling with the oil spill and step down afterwards so that the new CEO wouldn't have his burden on his shoulders."

In a filing Monday to U.S. securities regulators, BP said the cost of its response to the Gulf of Mexico oil spill had reached about $2.65 billion, up from $2.35 billion as of Friday. The costs include spill response, containment, relief well drilling, grants to Gulf states, claims paid, and federal costs.

BP said it had received more than 80,000 claims and made almost 41,000 payments, totaling more than $128 million.

BP says the figure does not include a $20 billion fund for Gulf damages it created this month.

In the Gulf, Tropical Storm Alex was forecast to strengthen and possibly become a hurricane Monday or Tuesday as its center crossed open water from Yucatan to Mexico's northeastern coast.

That track is far from the area of the oil spill off Louisiana's coast. But the first tropical storm of what is expected to be an active Atlantic hurricane season will still generate waves up to 15 feet high and winds of 20 to 30 mph on its outer edges that could pound the oil spill area, said Stacy Stewart, senior hurricane specialist at the National Hurricane Center in Miami.

"That could exacerbate the problem there in terms of pushing oil further inland and also perhaps hindering operations," Stewart said.

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Isachenkov and Nataliya Vasilyeva reported from Moscow. Associated Press Writers Harry Weber in Houston and Sofia Mannos in Washington also contributed to this report.

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BIS: World economy still fragile (AP)

Monday, June 28th, 2010 | Finance News

GENEVA – An organization bringing together the world's major central banks warned Monday that the global economy risks a replay of the 2008-2009 financial crisis, with massive public debt in Europe and the United States replacing the private debt that fueled the credit crunch two years ago.

A report by the Bank for International Settlements concluded that policy makers must ensure growth is sustainable and not just fueled by the untenably low interest rates in place in much of the developed world.

"A shock of virtually any size risks a replay of the events we saw in late 2008 and early 2009," the Basel, Switzerland-based organization said in its 206-page annual report.

"Although private sector debt has started to decline, public debt has taken its place, with sovereign fiscal positions already on an unsustainable path in a number of countries," the report said — a reference to the severe public funding gap in European countries such as Greece and Spain.

In a stark warning to governments to clean up their finances, the central bankers noted that "macroeconomic policy is in a vastly worse position than it was three years ago, with little capacity to combat a new crisis."

The report recommended winding down stimulus packages, raising interest rates in the long term and forcing through reforms of the financial system to prevent sudden shocks from causing market-wide collapse as they did two years ago.

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Method Man pleads guilty to NYC tax-evasion charge (AP)

Monday, June 28th, 2010 | Finance News

NEW YORK – Hip-hop star Method Man pleaded guilty to a tax-evasion charge Monday, writing a check on the spot for the final $40,000 restitution payment after owing about $106,000.

The former Wu-Tang Clan member was arrested Oct. 9 on charges he failed to pay state and personal income taxes. He pleaded guilty to a charge of attempted failure to pay tax.

He was sentenced to a conditional discharge, which means the arrest will be purged from his record if he stays out of trouble.

"When he found out about the tax issue he hired someone and immediately corrected it," defense attorney Peter Frankel said. "He took care of it quickly like the good member of our community he is."

The musician, actor and artist, who lives on Staten Island and whose real name is Clifford Smith, failed to file tax returns for 2004 through 2007, prosecutors said. The most he owed for one year was $32,799.

Prosecutors said when people cheat on their taxes, other New Yorkers have to foot the cost.

"In these days of massive budget shortfalls and service cuts, tax evasion is a crime against all New Yorkers," Richmond County District Attorney Daniel Donovan said. "Whether you are a celebrity or an average Joe, you will be investigated, arrested and prosecuted."

In 2007, Method Man was arrested on a minor drug charge and was ordered to visit 15 city high schools to warn students about the dangers of drugs.

"He's not your typical rapper," Frankel said. "He's not a troublemaker."

Method Man won a Grammy in 1995 for best rap performance by a group or duo with Mary J. Blige for "I'll Be There For You/You're All That I Need." He also had a recurring role on the critically-acclaimed HBO series "The Wire" and wrote a self-titled graphic novel.

But he's best known as member of the Wu-Tang Clan, whose 1993 album "Enter the Wu-Tang (36 Chambers)" is considered one of the greatest hip-hop albums recorded.

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