Shell Under Investigation in U.S. Bribery Probe

Royal Dutch Shell has announced it is under investigation by the Securities and Exchange Commission for possible violations of bribery rules governing overseas territories.

In the company’s 2008 annual report, it stated, “Shell is currently under investigation by the United States Securities and Exchange Commission and the United States Department of Justice for violations of the US Foreign Corrupt Practices Act.”

Just last year, Shell announced that one of its U.S. subsidiaries had been contacted by the Department of Justice regarding possible violations of the Foreign Corrupt Practices Act.

Also in Shell’s 2008 annual report, Chief Executive Jeroen van der Veer stated plans to step down in mid-2009, handing over his title to Peter Voser, current Chief Financial Officer of Shell. It was not clear exactly when van der Veer plans to step down.

Shell could not immediately be reached for comment.

A copy of the report is available on the company's Web site.

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Grassley to AIG Execs: Resign or Kill Yourselves

NEW YORK--A prominent U.S. senator has intimated that executives of the troubled insurer American International Group Inc (AIG)might consider suicide, adopting what he called a Japanese approach to taking responsibility for their actions.

Senator Charles Grassley, the top Republican on the Senate Finance Committee, made his comments on the Cedar Rapids, Iowa, radio station WMT on Monday.

"The first thing that would make me feel a little bit better toward them (is) if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide," Grassley said.

"And in the case of the Japanese," he added, "they usually commit suicide before they make any apology."

President Barack Obama on Monday expressed "outrage" about some $165 million of bonuses paid to AIG employees, including some who worked in the unit primarily responsible for the company's troubles.

New York Attorney General Andrew Cuomo has said he will subpoena AIG for more information about the bonuses, including the names of the recipients.

Grassley's office did not immediately return a request for comment. A spokesman, Casey Mills, told the Associated Press that the senator "doesn't want U.S. executives" to commit suicide, but that executives who "make a mess of their companies should apologize, as Japanese executives do."


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Expert 'Pans' Gold as 'Investment'

Is the current economic slowdown keeping you up at night? Worried that all the debt the federal government’s piling on will sink the value of the dollar? Afraid the only thing that’s going to be “stimulated” is inflation?

You’re not alone. During periods of economic uncertainty, gold has historically been the financial haven of choice. This time last year, as the extent of the sub-prime mortgage mess began to become apparent and Bear Sterns teetered on collapse, gold crossed the $1,000/ounce barrier. After retreating to around $710/ounce last November, it began climbing again, nearly hitting the $1,000 mark again in mid-February. Last week it closed at $930/ounce -- a gain of 31% in the past four months.

So it’s a bit surprising that gold expert and coin dealer Scott Travers would emphatically assert, “I don’t think anyone should be investing in gold bullion or gold coins.”

Turns out, what he means is that gold is not a financial instrument like a stock. That is, you shouldn’t be buying it with the expectation that it’s going to go up in value. Instead, he maintains, “You should be buying it strictly as an insurance policy, in case something horrible happens to the rest of your portfolio.”

In the event of a global financial meltdown, it might be impossible to cash in your shares of that exchanged-traded fund (GLD) you bought. If the markets seize up, you may not be able to sell your stock in gold mining companies. Gold futures are worthless unless the person on the other end of the contract comes through. And if your bank fails…

If things ever get that awful, you won’t be able to purchase food by waving your trade confirmation or stock certificate in the check-out line at the supermarket. What you want is a tangible asset that can be used as currency.

“Gold is a panic asset,” says Travers author of The Coin Collector’s Survival Manual . “Gold bullion and coins are the very antithesis of the financial markets because there’s complete transparency. You have it in your hand. You know exactly what you have.”

Essentially, this leaves you two options: buy gold ingots (bullion) or buy gold coins. Travers, who believes gold should make up 5% to 10%, but “no more than 15% of your total net worth excluding your primary residence,” to gold, says collectible gold coins make the most sense for individual investors: the gold content will give you a hedge against inflation while the rare nature of the coins will “buffer any decrease” in the price of the metal.

That is, in contrast to a coin such as a Krugerand, the value of which fluctuates directly with the price of gold, collectible coins have intrinsic value , separate from the price of the metal. This gives you some downside protection.

Specifically, Travers recommends Saint Gaudens and Liberty Head double eagles. Each contains about an ounce of gold. Because of their “collectible” nature expect to pay a premium over the spot price of the metal. How much depends upon the condition of the coin. My brief search over the Internet turned up Saint Gaudens double eagles with asking prices ranging from $700.25 to $99,500!

As explained in The Coin Collector’s Survival Manual, coins are graded on a scale of 1-to-70. A coin graded “1” is so worn the design is nearly indistinguishable, while a “70” is in pristine, condition. According to Travers, you want “investment quality” coins, which carry a grade of 60-to-62. “If gold is selling for $1,000 an ounce, you will probably pay $1700 for one of these coins,” he says.

On the other hand, even if the price of gold plummets, he maintains “you’ll still be able to get close to what you paid [for your coins] because they’re collectibles.”

Next week: How to be sure you’re not buying “fool’s gold.


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NY Attorney General to Issue Subpoenas on AIG Bonuses

New York Attorney General Andrew Cuomo said on Monday afternoon that he will issue subpoenas to acquire information from American International Group (AIG) regarding $165 million in bonuses.

Cuomo set a deadline of 4 p.m. Eastern time for receipt of the information, and that deadline was not met. Items requested include a list of all employees receiving bonuses, as well as their job description and job performance information.

The $165 million in bonuses was sent to AIG’s financial products unit, which was held responsible for losses totaling billions of dollars.

“I believe in transparency and disclosure,” Mr. Cuomo said via a conference call on Monday regarding the situation. “We believe taxpayers have a right to know.”

AIG maintains that it was required to make the payments due to binding contracts with employees. And although those receiving the funds are employed by one of AIG’s losing divisions, the company’s hands are tied due to legally binding agreements, according to The Wall Street Journal , which cited government advisor Lawrence H. Summers of the National Economic Council.

On Monday, Cuomo echoed President Barack Obama when he said the Treasury Department would use “every single legal avenue” to prevent the bonuses from being distributed.

Cuomo also stated that contracts can be renegotiated, and said that the rules had changed following AIG’s acceptance of government money.

“You could argue that if taxpayers hadn’t bailed out AIG, the contracts wouldn’t be worth the paper they were signed on,” he said during the call.

Cuomo said that if AIG maintains the information is privileged and private, “We’ll go to court and have that discussion.”

AIG could not immediately be reached for comment.

Scroll down to read Attorney General Cuomo letter to AIG CEO regarding bonuses

Attorney General Cuomo Letter to AIG CEO Regarding Bonuses

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AIG to Hand Out Another $165M in Bonuses

Troubled insurer American International Group (AIG), which is 79.9%-owned by the federal government, will pay $165 million in retention bonuses on Sunday to those at the division that has drawn most of the heat for the company's near-collapse.

Also on Sunday, AIG released the names of the major financial institutions to which it paid at least $50 billion in recent months to settle contracts. AIG covered those companies against losses on mortgage-backed securities insured with credit default swaps. Last November, the Federal Reserve agreed to pay out more than $30 billion to buy collateralized debt obligations, or CDOs, from companies that had bought AIG's swaps on mortgage-backed securities.

READAIG's list of counterparties to certain types of lending transactions

The developments have drawn more negative attention to an insurance company that the Treasury Department and Federal Reserve have committed up to $170 billion to help stabilize itself after dangerously betting much of its future on a now-illiquid market.

Last year, the company disclosed it would pay $450 million in bonuses to keep employees at AIG Financial Products, the division that focused much of its business on credit default swaps. The bonuses range from $1,000 to $6.5 million, with seven employees making more than $3 million each.

READAIGFinancial Products' Employee Retention Plan

Through the criticism and outrage, AIG has said it recognizes the problems with these payments, but continued to stress the need for the bonuses.

"We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses which are now being operated on behalf of the American taxpayers," AIG chairman and CEO Edward Liddy said in a letter to Treasury Secretary Timothy Geithner on Saturday.

READ the letter AIG CEOEdward Liddy sent to Treasury Secretary Geithner

When asked whether employees at AIG Financial Products should be held responsible, not rewarded with bonuses, a source close to the company said only about a dozen of the hundreds of employees at the division engineered the credit default swaps -- and added that division has the knowledge to unwind those bets.

The company doesn't see it as people getting rewarded for making bad decisions, said the source. But, the company can see why people feel that way, maintaining that the collapse resulted largely because the way AIG was regulated, it wasn't required to hold sufficient reserves for credit default swaps.

Liddy's letter said the company has a contract with these employees to pay their bonuses and added, legally, AIG's hands are tied -- but he said he would try to decrease those payouts. We believe that there will be considerably greater flexibility to reduce contractual payments in respect of 2009, and AIG intends to use its best efforts to do so, wrote Liddy in his letter to Secretary Geithner.

A company document shows AIG still owes more than $200 million to these employees this year. The CEO said he would try to reduce those payments by 30%.

A source close to the matter offered a more practical assessment when asked if 30% is a realistic goal.

"We're not promising to. We'll make out best effort," said the source.

Administration officials have called AIG's bonus structure both inappropriate and unacceptable, but an Obama Administration official added the White House conducted its own analysis of the bonus contracts and agreed that they are binding.

Treasury Secretary Tim Geithner called Liddy Wednesday to push the AIG CEO to renegotiate the bonuses.

"They were entered into before the government had anything to do with AIG," said another administration official. "We're going to be very involved, to make sure those kinds of things aren't happening [again] as long as they aren't contractual.

An administration official said AIG is working with the federal government to repay the Treasury Department for these bonuses that will be addressed in the company's new restructuring agreement.

The administration is also negotiating with AIG to alter executive bonuses that fall outside of the binding financial retention contracts. The company was to pay $9.6 million to about 50 senior partners today, according to an administration official. They will now get half of that in cash, a quarter more on July 15 and the rest two months later. The top seven of those 50 executives are not expected to participate in this bonus payout. An administration official said the government wants to renegotiate those payments, spread them out over time, and tie them to when AIG repays taxpayers.

In Liddy's letter to Geithner, the CEO said the top 25 executives at AIG Financial Products will accept $1 salaries for the remainder of this year. He also said anyone with a title of associate vice president or higher will receive at 10% pay cut for the rest of 2009.

The company has already paid about $121 million of its 2008 bonus program to 6,411 employees across the company.


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Obama to Announce More Aid for Small Businesses

Obama to Announce More Aid for Small Businesses

President Obama is expected to announce Monday additional government help for small businesses seeking loans in the tight credit market, an administration official said.

The official said the measures will mainly improve the Small Business Administration’s two biggest lending programs, under provisions included in the administration’s new stimulus plan: The SBA’s 7(a) program provides a government guarantee on loans of up to $2 million; the 504 program provides a guarantee on loans of up to $4 million for major small business economic development projects that can be crucial for job growth and community development.

The SBA typically guarantees about $20 billion in loans annually, but the official said SBA-backed loans are “trending” to less than $10 billion this year.

“The market for credit to small businesses is completely frozen in an already terrible credit crisis,” said Austan Goolsbee, a member of the president’s Council of Economic Advisors, on FOX News Sunday. “This has been one of the most devastating aspects for job growth -- is that small businesses which previous to this crisis had the funding they needed to grow jobs have completely lost that. And so we're trying to reignite through direct intervention the small business credit market so that they can... expand. That’s coupled with the pieces in his budget that are geared toward small business specifically.”

Among other steps, the Administration will:

--raise SBA guarantees in the 7(a) program to up to 90% of the loan, to reduce the risk lenders take when they make small business loans. The current guarantees are up to 85% for loans below $150,000 and up to 75% for larger loans.

--temporarily eliminate upfront 7(a) loan fees that lenders pass on to borrowers, to reduce the cost of capital for small businesses. The fees go up to 3.75% for larger loans.

--temporarily eliminate borrower and lender fees for 504 loans.

The changes are expected to be effective on Monday. The official did not provide an estimate of how much they will cost the government.


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