Archive for January, 2011

Tax-evading Irish lawmaker loses defamation case

Monday, January 31st, 2011 | Finance News

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DUBLIN – A lawmaker at the heart of Ireland's first major corruption scandal lost a defamation claim Monday against the journalist who broke the story of his illicit gifts, a revelation that has inspired mammoth state probes into the scale of under-the-table lobbying in Irish politics.

A Dublin Circuit Court judge ruled that journalist Sam Smyth had reasonable grounds of evidence to describe lawmaker Michael Lowry as both a liar and a tax dodger.

Lowry's lawyers had sought a judgment that Smyth, one of Ireland's most prominent journalists, had no reasonable defense for his claims and had defamed Lowry as "a thief." They cited Smyth's appearance on an Irish current-affairs show in 2010 during which he described Lowry as the first of many politicians to be caught with his "hand in the till," or cash register.

But Judge Margaret Heneghan said Smyth had provided ample affidavits — including of Lowry's initial 1996 denials of any impropriety in parliament, followed by his later exposure as a tax evader — to suggest his descriptions were based on well-documented evidence.

During his testimony last month, Smyth said the evidence compiled by state fact-finding probes into Lowry "leads inevitably to the conclusion that he is indeed corrupt, dishonest, untrustworthy and both unfit and unsuitable to be a minister and a (lawmaker)."

Smyth and Lowry both declined comment. Lowry's lawyers said they might pursue a fuller hearing of their complaint in a higher court.

In 1996, Smyth revealed in the Irish Independent newspaper that supermarket baron Ben Dunne had provided secret gifts to Lowry and former Prime Minister Charles Haughey. Lowry, a Cabinet minister in the mid-1990s, also owned a commercial refrigeration company that had contracts with Dunnes Stores, Ireland's biggest supermarket chain.

Lowry denies a growing list of allegations from a series of judicial probes since 1997 that he traded favors with businessmen in exchange for secret gifts and investment privileges.

But two taxpayer-financed probes into Lowry's business dealings and personal investments have determined that Dunne did pay, as Smyth reported, for construction of a new euro500,000 ($700,000) wing on Lowry's family home. Lowry and his company in 2007 paid euro1.4 million ($1.9 million) in unpaid tax and penalties linked to that undeclared gift as well as two offshore bank accounts.

Lowry denies providing any political favors for Dunne, who admits he also gave Haughey — Ireland's prime minister in 1979-82 and 1987-92 — at least euro1.65 million ($2.25 million).

Lowry is continuing to fight a 13-year investigation into his alleged dealings involving Irish telecoms tycoon Denis O'Brien and multimillion property purchases in Ireland and Britain.

Secret gifts to politicians were not explicitly illegal under Ireland's ill-drafted corruption laws until 1997, when the government drafted new rules and restrictions in response to public uproar over Haughey's gross profiteering while in office. Haughey died in 2006 after paying euro6.5 million ($9 million) in overdue tax and penalties on his 1980s and 1990s gifts from businessmen.

Lowry was forced out of Ireland's Fine Gael party in 1997. But voters in his North Tipperary district have re-elected him to parliament as an independent for the past three elections.

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Online:

Current corruption probe, http://bit.ly/dWAuQz

Lowry's political site, http://www.michaellowry.ie/

(This version CORRECTS Adds full quote from journalist's testimony. Corrects that case involved alleged defamation, not libel; the name of court; and the judge's title. Rewrites headlines. This story is part of AP's general news and financial services.)

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VW to start sales of 2012 Passats in third quarter

Monday, January 31st, 2011 | Finance News

CHATTANOOGA, Tenn. – The 2012 Volkswagen Passat to be built at the automaker's new assembly plant in Chattanooga will go on sale sometime after July 1, with a base price of $20,000.

VW-Chattanooga chief executive Frank Fischer said Monday that the plant's new work force will start in March assembling the mid-size sedans that will be delivered to showrooms for sale starting in the third quarter of 2011.

Volkswagen executives have said the car will have a base price of $20,000.

Fischer said about 1,400 of the planned 2,000 jobs at the $1 billion plant have been filled.

VW managers are already driving test versions of the new Passat near the plant.

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Treasury lowers borrowing estimate to $237B for Q1

Monday, January 31st, 2011 | Finance News

WASHINGTON – The Treasury Department says it will need to borrow $237 billion in the current January-March quarter, reducing an earlier estimate to avoid hitting the nation's debt ceiling.

In November, Treasury estimated needing $431 billion. But last week, Treasury officials decided to decrease by $195 billion a special borrowing program it conducts with the Federal Reserve. That was done to buy time before the government hits the $14.3 trillion debt ceiling.

The revised estimate puts investors on notice about how much in new Treasury debt will be available to purchase over the coming quarter.

Treasury Secretary Timothy Geithner earlier this month informed Congress that the current debt ceiling would be reached sometime between March 31 and May 16. That estimate included various maneuvers Treasury can take to stretch out the time, including last week's announcement to reduce the joint borrowing program with the Federal Reserve.

Republicans are demanding cuts in spending before they will agree to raising the debt limit. But House Speaker John Boehner said Sunday on Fox News that a failure to raise the debt ceiling "would be a financial disaster not only for our country, but for the worldwide economy."

Without an increase, the government would not be able to meet its current debt payments, resulting in an unprecedented debt default. Economists believe that would rattle investors and drive up interest rates on government debt and on loans to businesses and consumers.

Treasury said that in addition to the $237 billion in borrowing in the January-March quarter, it estimates another $299 billion in borrowing will be needed in the April-June quarter. Those represent the third-largest borrowing amounts for those two quarters in history, exceeded only by borrowing for the same periods in 2009 and 2010.

The government is having to borrow unprecedented amounts to cover record budget deficits. The deficit hit an all-time high of $1.42 trillion in budget year 2009 and $1.29 trillion in the 2010 budget year.

Last week, the Congressional Budget Office projected this year's deficit will hit $1.5 trillion without changes in policy. The CBO boosted its forecast after Congress passed a broad tax-cut package that President Barack Obama signed into law month.

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