NEW YORK (Reuters) - Maurice "Hank" Greenberg, the former chief executive of American International Group Inc , believes he no longer faces possible criminal charges over a sham transaction involving the insurer and a unit of Warren Buffett's Berkshire Hathaway Inc.
As a result, Greenberg said he is now prepared to testify about the matter.
In a March 2 affidavit filed with the New York State Supreme Court in Manhattan, Greenberg said the statute of limitations to prosecute him over the 2000 transaction between AIG and Berkshire's General Re Corp unit expired on Feb 21.
Federal prosecutors have already obtained five convictions and two guilty pleas of former General Re and AIG officials over the transaction, which boosted AIG's loss reserves by $500 million without transferring risk. Among those convicted was onetime General Re Chief Executive Ronald Ferguson.
Greenberg said that in October 2008, he invoked his constitutional right against self-incrimination about the transaction, as he was giving testimony in a civil fraud lawsuit originally filed in 2005 against him and former AIG Chief Financial Officer Howard Smith.
But in his March 2 affidavit, Greenberg said he is ready to talk. "I am prepared to testify regarding the Gen Re transaction and to be heard on the issues concerning the Gen Re transaction. I, therefore, withdraw my earlier invocation of my Fifth Amendment rights," he said.
Eliot Spitzer, then New York's attorney general, filed the civil fraud lawsuit against Greenberg and Smith in 2005. The case is now overseen by Andrew Cuomo, Spitzer's successor.
A Cuomo spokeswoman had no immediate comment. Laura Sweeney, a spokeswoman for the U.S. Department of Justice, declined to comment.
The General Re transaction surfaced just before Greenberg's forced March 2005 departure from AIG after nearly four decades at the New York-based insurer's helm.
Lifting any threat of criminal charges would lighten the legal burdens that the 84-year-old Greenberg might still face.
Last August, he agreed to pay $15 million to settle U.S. Securities and Exchange Commission charges that he altered AIG's records to inflate results between 2000 and 2005. Smith agreed to pay $1.5 million.
Three months later, Greenberg and AIG resolved years of litigation that followed his exit. AIG agreed to reimburse him and others for as much as $150 million of legal expenses.
FIFTH AMENDMENT NOT NEEDED
In a separate filing, Greenberg's lawyer, Nicholas Gravante, said the longest potential criminal statute of limitation covering the transaction expires after five years.
He said this period began to run no later than Feb. 21, 2005, when the market learned of matters concerning the General Re transaction.
"Counsel for Mr. Greenberg is now confident that all potential criminal statues of limitation relating to the Gen Re transaction have expired," wrote Gravante, a partner at Boies, Schiller & Flexner LLP in New York.
"Limited use of the Fifth Amendment is no longer necessary to exercise prudence in protecting Mr. Greenberg's innocence," he added.
New York State Supreme Court Justice Charles Ramos is overseeing the civil fraud lawsuit. He has set a March 8 hearing on Greenberg's request to reopen his deposition.
The federal government has said Greenberg was an unindicted co-conspirator in their case. Greenberg has consistently denied wrongdoing. Buffett was questioned by investigators about the transaction but was never accused of wrongdoing.
Greenberg was ousted as AIG's chief executive in March 2005. The General Re transaction is not related to the government's roughly $180 billion of bailouts of the company, which left it holding a nearly 80 percent stake.
My Visitors
Sunday, March 7, 2010
US House panel: Toyota shows no proof yet of study
WASHINGTON (Reuters) - Toyota Motor Corp has failed to support statements of top executives that the automaker has rigorously evaluated electronic throttles in its vehicles, Democratic leaders of a congressional committee said Friday.
The assertion by Henry Waxman and Bart Stupak, chairmen of the House of Representatives Energy and Commerce Committee and its investigative subcommittee, respectively, added to the fallout from Toyota's safety and recall crisis that has shaken the automaker's reputation for quality.
Toyota has recalled more than 6 million cars and trucks in the United States since October for equipment and mechanical problems related to unintended acceleration.
But questions about possible glitches in throttle software and whether that is behind at least some cases of unwanted acceleration in Toyota and Lexus vehicles are central to ongoing congressional and regulatory investigations.
Those questions were magnified this week by regulators, who said they were investigating more than 60 complaints from motorists alleging that recall fixes had not solved their problems with unintended acceleration.
Edolphus Towns, chairman of the House Oversight and Government Reform Committee, late on Friday asked the National Highway Traffic Safety Administration for monthly reports on post-recall complaints and what the agency and Toyota are doing to resolve the matter.
NHTSA and Toyota are investigating the complaints. Toyota said Thursday a partial review of reports found no evidence of problems with the fixes or the electronic throttle systems.
The automaker said it has fixed more than 1 million cars and trucks since recalling floormats that can jam the accelerator in October 2009 and gas pedals that do not spring back as designed in January.
The Energy and Commerce Committee, which will hold its second hearing on Toyota on March 11, said in a letter to Toyota U.S. sales chief Jim Lentz that thousands of documents turned over to the panel in the past month have not sufficiently supported statements by executives that exhaustive testing has found no throttle problems.
"Despite our repeated requests, the record before the committee is most notable for what is missing -- the absence of documents showing that Toyota has systematically investigated the possibility of electronic defects that could cause sudden acceleration," the Democratic lawmakers said.
The letter said some documents contain information that could be used in planning "a rigorous study." But "not one of them suggested that a rigorous study had taken place."
Toyota said in a statement on Friday that it is cooperating with the committee and is providing more information on an independent study of its throttle systems by outside consultant Exponent Inc as well as the results of its own testing.
Waxman and Stupak in their letter questioned the preliminary results of Exponent which found no problems with the carmaker's throttles.
NHTSA has also found no problems over the years. But committees in both houses of Congress have questioned whether the agency conducted thorough investigations and whether it has adequate resources to do the job now. Regulators have said they may seek outside help on the Toyota review.
The letter from Waxman and Stupak came as Toyota openly challenged a key committee witness, who testified on Feb. 23 that he found a possible throttle flaw during his own testing of the electronic circuitry in a Toyota Avalon.
David Gilbert, a professor of auto technology at Southern Illinois University Carbondale, has been retained by a safety advocate working with trial lawyers. Exponent said Gilbert's results were not representative of real world conditions because they could be achieved only in a laboratory setting.
"Toyota has offered to demonstrate the results of our further research would welcome committee representatives to observe those demonstrations," the company said in its statement.
Waxman and Stupak also requested details about Toyota's plans for providing brake override software for countering unintended acceleration in new and some existing vehicles, as well as efforts toward making information retrievable from its vehicle data recorders, or "black boxes."
The assertion by Henry Waxman and Bart Stupak, chairmen of the House of Representatives Energy and Commerce Committee and its investigative subcommittee, respectively, added to the fallout from Toyota's safety and recall crisis that has shaken the automaker's reputation for quality.
Toyota has recalled more than 6 million cars and trucks in the United States since October for equipment and mechanical problems related to unintended acceleration.
But questions about possible glitches in throttle software and whether that is behind at least some cases of unwanted acceleration in Toyota and Lexus vehicles are central to ongoing congressional and regulatory investigations.
Those questions were magnified this week by regulators, who said they were investigating more than 60 complaints from motorists alleging that recall fixes had not solved their problems with unintended acceleration.
Edolphus Towns, chairman of the House Oversight and Government Reform Committee, late on Friday asked the National Highway Traffic Safety Administration for monthly reports on post-recall complaints and what the agency and Toyota are doing to resolve the matter.
NHTSA and Toyota are investigating the complaints. Toyota said Thursday a partial review of reports found no evidence of problems with the fixes or the electronic throttle systems.
The automaker said it has fixed more than 1 million cars and trucks since recalling floormats that can jam the accelerator in October 2009 and gas pedals that do not spring back as designed in January.
The Energy and Commerce Committee, which will hold its second hearing on Toyota on March 11, said in a letter to Toyota U.S. sales chief Jim Lentz that thousands of documents turned over to the panel in the past month have not sufficiently supported statements by executives that exhaustive testing has found no throttle problems.
"Despite our repeated requests, the record before the committee is most notable for what is missing -- the absence of documents showing that Toyota has systematically investigated the possibility of electronic defects that could cause sudden acceleration," the Democratic lawmakers said.
The letter said some documents contain information that could be used in planning "a rigorous study." But "not one of them suggested that a rigorous study had taken place."
Toyota said in a statement on Friday that it is cooperating with the committee and is providing more information on an independent study of its throttle systems by outside consultant Exponent Inc as well as the results of its own testing.
Waxman and Stupak in their letter questioned the preliminary results of Exponent which found no problems with the carmaker's throttles.
NHTSA has also found no problems over the years. But committees in both houses of Congress have questioned whether the agency conducted thorough investigations and whether it has adequate resources to do the job now. Regulators have said they may seek outside help on the Toyota review.
The letter from Waxman and Stupak came as Toyota openly challenged a key committee witness, who testified on Feb. 23 that he found a possible throttle flaw during his own testing of the electronic circuitry in a Toyota Avalon.
David Gilbert, a professor of auto technology at Southern Illinois University Carbondale, has been retained by a safety advocate working with trial lawyers. Exponent said Gilbert's results were not representative of real world conditions because they could be achieved only in a laboratory setting.
"Toyota has offered to demonstrate the results of our further research would welcome committee representatives to observe those demonstrations," the company said in its statement.
Waxman and Stupak also requested details about Toyota's plans for providing brake override software for countering unintended acceleration in new and some existing vehicles, as well as efforts toward making information retrievable from its vehicle data recorders, or "black boxes."
Defendant to plead guilty in US arms sting case
WASHINGTON (Reuters) - U.S. prosecutors on Friday alleged that a former arms executive, who is expected to plead guilty to bribery charges, made illicit payments to defense ministry officials in Georgia.
Daniel Alvirez, a former president of an arms manufacturer in Bull Shoals, Arkansas, plans to enter a guilty plea in the next few weeks to charges under the U.S. Foreign Corrupt Practices Act, according to his attorney.
"I can confirm that," the attorney, Michael Volkov, said.
Volkov spoke after U.S. prosecutors filed a so-called superseding information against Alvirez that laid out in greater detail than before an alleged scheme to bribe foreign government officials, including payments to Georgian defense officials.
The Georgian bribes were allegedly paid to secure contracts for the sale of M855 ammunition and rations, according to the superseding information.
Officials at the Georgian embassy in Washington could not immediately be reached for comment.
Superseding informations, which replace previous criminal charges, are typically filed when a defendant has negotiated a plea agreement with the government.
Alvirez was one of 22 arms executives arrested in January -- 21 of them at a convention in Las Vegas -- in the largest prosecution of individuals brought by the U.S. Justice Department under the Foreign Corrupt Practices Act (FCPA).
The act makes it a crime to bribe foreign officials to obtain or retain business.
The 22, including a former senior salesman at Smith & Wesson , were charged in 16 separate indictments after a sting in which federal agents posed as arms-buying representatives of the defense minister of an African country.
The investigation marked the first time the U.S. government had employed an undercover operation to ensnare individuals under the FCPA.
The superseding information spells out additional details about the FCPA conspiracy charge brought against the defendants.
While the 22 appeared to have no ties to one another beyond being ensnared in the same sting, the document says that Alvirez and 16 other defendants attended a cocktail reception at Clyde's restaurant in Washington, D.C., to celebrate their respective deals in the sting operation.
The company Alvirez worked for is not identified in the superseding information, but he was formerly president of ALS Technologies Inc, which makes tear gas launchers, bullets and other ammunition
Daniel Alvirez, a former president of an arms manufacturer in Bull Shoals, Arkansas, plans to enter a guilty plea in the next few weeks to charges under the U.S. Foreign Corrupt Practices Act, according to his attorney.
"I can confirm that," the attorney, Michael Volkov, said.
Volkov spoke after U.S. prosecutors filed a so-called superseding information against Alvirez that laid out in greater detail than before an alleged scheme to bribe foreign government officials, including payments to Georgian defense officials.
The Georgian bribes were allegedly paid to secure contracts for the sale of M855 ammunition and rations, according to the superseding information.
Officials at the Georgian embassy in Washington could not immediately be reached for comment.
Superseding informations, which replace previous criminal charges, are typically filed when a defendant has negotiated a plea agreement with the government.
Alvirez was one of 22 arms executives arrested in January -- 21 of them at a convention in Las Vegas -- in the largest prosecution of individuals brought by the U.S. Justice Department under the Foreign Corrupt Practices Act (FCPA).
The act makes it a crime to bribe foreign officials to obtain or retain business.
The 22, including a former senior salesman at Smith & Wesson , were charged in 16 separate indictments after a sting in which federal agents posed as arms-buying representatives of the defense minister of an African country.
The investigation marked the first time the U.S. government had employed an undercover operation to ensnare individuals under the FCPA.
The superseding information spells out additional details about the FCPA conspiracy charge brought against the defendants.
While the 22 appeared to have no ties to one another beyond being ensnared in the same sting, the document says that Alvirez and 16 other defendants attended a cocktail reception at Clyde's restaurant in Washington, D.C., to celebrate their respective deals in the sting operation.
The company Alvirez worked for is not identified in the superseding information, but he was formerly president of ALS Technologies Inc, which makes tear gas launchers, bullets and other ammunition
Tuesday, February 23, 2010
Health-care reform's fatal assumption
NEW YORK (Fortune) -- At the bipartisan health-care summit scheduled for February 25th, President Obama is pledging to champion the voluminous bills passed by the House and Senate as the foundation for reforming the $2.2 trillion medical marketplace.
But each piece of legislation comes with a deadly expectation that could cost taxpayers dearly: the benevolence of corporate America.
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"Many people say Americans will like the bills once they pass," says Edmund Haislmaier of the conservative Heritage Foundation. "But what they're more likely to get is a surprise in the form of hundreds of billions a year in extra spending."
That surprise comes from an assumption made by the Congressional Budget Office: that few employers will drop their plans even when the government offers generous subsidies and imposes penalties that are absurdly low.
Both the House and Senate measures lay out the subsidies that the federal government is obligated to grant lower-income and middle-class health-care consumers when the plans would go into effect in 2014. It's a big contractual entitlement, but it's likely cost is vastly understated.
Let's examine the size of the subsidies. The House and Senate bills both set caps on the percentage of income Americans pay for premiums. They also subsidize the out-of-pocket costs of deductibles and co-pays.
Since the plans are quite similar, we'll use the one in the House legislation. For a family of four, the bill puts a limit of between 3% and 12% of income from $20,500 to $82,000 a year on a sliding scale. The lower a family's income, the higher the share paid by the taxpayer.
For a household in the middle of America's income spectrum, earning $61,500, the CBO reckons that the average yearly premiums and out-of-pocket costs for a family policy will reach $20,500 by 2016. When the plans are fully implemented, the family is obligated to cover $10,500, and the government pays the balance of $10,000. For a family making around $40,000 the government contributes even more -- around $19,000.
The CBO projects that these subsidies will cost $93 billion in 2016. But that assumes that just 29 million Americans collect them, and that the number of people covered by their employers actually increases. And that number is likely to decrease sharply.
0:00 /4:44Health care costs will go up
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Why? Here's where the fatal flaw comes in. Companies that drop their plans face relatively minor penalties under the provision that's won the most Congressional support, an annual fine of $750 per worker.
Most big industrial companies are already paying around $15,000 per family in health-care costs. Hence, they could shoulder the fine and reduce their costs by 95%, simply by dumping their workers into the subsidy pools the plans mandate.
Using the CBO numbers, the government's subsidy per person comes to $3,200 in 2016. Say just half of all employers cancel their plans, throwing 80 million Americans into the pools. That would cost an extra $256 billion.
But those workers would presumably get raises, since in a free labor market employers are likely to put what they now pay for health care into paychecks. The government would collect extra income and payroll taxes, as well as the yearly fine of $750. All told, the extra revenue from taxes and the penalty would harvest around $100 billion to partly offset the additional subsidies -- but only partly.
So the net extra cost would be $156 billion ($256 billion minus $100 billion). Meanwhile the total spending on subsidies would soar from the projected $93 billion to almost $250 billion, an increase of 170%. That's the $93 billion the CBO is already predicting, plus the additional $156 billion from the tens of millions of employees who would lose their corporate plans and receive subsidies instead.
The $250 billion represents a permanent, structural spending increase of 1% of GDP, and it's headed higher from there. Message to taxpayers
But each piece of legislation comes with a deadly expectation that could cost taxpayers dearly: the benevolence of corporate America.
cnnad_createAd("270381","http://ads.cnn.com/html.ng/site=cnn_money&cnn_money_position=220x200_ctr&cnn_money_rollup=quigo¶ms.styles=fs","200","220");
"Many people say Americans will like the bills once they pass," says Edmund Haislmaier of the conservative Heritage Foundation. "But what they're more likely to get is a surprise in the form of hundreds of billions a year in extra spending."
That surprise comes from an assumption made by the Congressional Budget Office: that few employers will drop their plans even when the government offers generous subsidies and imposes penalties that are absurdly low.
Both the House and Senate measures lay out the subsidies that the federal government is obligated to grant lower-income and middle-class health-care consumers when the plans would go into effect in 2014. It's a big contractual entitlement, but it's likely cost is vastly understated.
Let's examine the size of the subsidies. The House and Senate bills both set caps on the percentage of income Americans pay for premiums. They also subsidize the out-of-pocket costs of deductibles and co-pays.
Since the plans are quite similar, we'll use the one in the House legislation. For a family of four, the bill puts a limit of between 3% and 12% of income from $20,500 to $82,000 a year on a sliding scale. The lower a family's income, the higher the share paid by the taxpayer.
For a household in the middle of America's income spectrum, earning $61,500, the CBO reckons that the average yearly premiums and out-of-pocket costs for a family policy will reach $20,500 by 2016. When the plans are fully implemented, the family is obligated to cover $10,500, and the government pays the balance of $10,000. For a family making around $40,000 the government contributes even more -- around $19,000.
The CBO projects that these subsidies will cost $93 billion in 2016. But that assumes that just 29 million Americans collect them, and that the number of people covered by their employers actually increases. And that number is likely to decrease sharply.
0:00 /4:44Health care costs will go up
vidConfig.push({videoArray: ["/video/fortune/2010/02/17/f_cs_health_care.fortune.json"], collapsed:false});
Why? Here's where the fatal flaw comes in. Companies that drop their plans face relatively minor penalties under the provision that's won the most Congressional support, an annual fine of $750 per worker.
Most big industrial companies are already paying around $15,000 per family in health-care costs. Hence, they could shoulder the fine and reduce their costs by 95%, simply by dumping their workers into the subsidy pools the plans mandate.
Using the CBO numbers, the government's subsidy per person comes to $3,200 in 2016. Say just half of all employers cancel their plans, throwing 80 million Americans into the pools. That would cost an extra $256 billion.
But those workers would presumably get raises, since in a free labor market employers are likely to put what they now pay for health care into paychecks. The government would collect extra income and payroll taxes, as well as the yearly fine of $750. All told, the extra revenue from taxes and the penalty would harvest around $100 billion to partly offset the additional subsidies -- but only partly.
So the net extra cost would be $156 billion ($256 billion minus $100 billion). Meanwhile the total spending on subsidies would soar from the projected $93 billion to almost $250 billion, an increase of 170%. That's the $93 billion the CBO is already predicting, plus the additional $156 billion from the tens of millions of employees who would lose their corporate plans and receive subsidies instead.
The $250 billion represents a permanent, structural spending increase of 1% of GDP, and it's headed higher from there. Message to taxpayers
California solar project gets $1.4 bln US guarantee
SAN FRANCISCO/WASHINGTON (Reuters) - The United States Monday gave its biggest backing yet to a renewable energy project, guaranteeing $1.37 billion in loans for a California development by BrightSource Energy Inc that uses the sun's heat to power a steam turbine.
BrightSource's proposed solar thermal plants are expected to generate about 400 megawatts of electricity and power about 140,000 California homes, giving it the heft to compete with plants fueled by coal and natural gas.
President Barack Obama's administration has touted green energy investments as a way to create jobs and increase international economic competitiveness.
"We're not going to sit on the sidelines while other countries capture the jobs of the future -- we're committed to becoming the global leader in the clean energy economy," Energy Secretary Steven Chu said in a statement.
The sector has seen projects being launched and agreements being signed with utilities, who count on solar thermal to meet California clean energy goals, but construction has yet to start on a large scale for the solar thermal industry.
Financing of projects has been a big challenge with the tightening of the credit markets as capital requirements of these green energy companies are very large.
Solar thermal technology is different from its better-known rival, rooftop photovoltaic. Solar thermal companies like BrightSource and rivals Abengoa Solar, eSolar Inc have technology that uses the sun's rays, reflected by thousands of small mirrors, to heat liquids to create steam in turbines and generate electricity.
The conditional loan guarantees from the U.S. Department of Energy, the largest federal loan commitment offered to a renewable energy firm, would help BrightSource build three utility-scale solar thermal plants for its Ivanpah project, which will be located on federally-owned land in the Mojave Desert in southeastern California.
"It's a good beginning for the industry," BrightSource CEO John Woolard said in an interview. "It really allows Ivanpah to be the first (solar thermal) project to be constructed in almost 20 years now" in California.
California, and other parts of the world, are betting heavily on solar thermal. About a quarter of the clean energy contracts approved in 2009 in California by capacity was solar thermal, according to the Public Utilities Commission.
Construction on the first Ivanpah plant is expected to begin during the second half of this year, with commercial operations beginning in 2012.
All three plants are expected be on line by 2014.
The loan guarantee is conditioned on BrightSource meeting financial and environmental requirements, including local, state and federal regulatory approvals.
BrightSource has run into trouble from environmental groups who are concerned that the construction would harm desert plants and wildlife, including the desert tortoise.
The company earlier this month agreed to reduce the footprint for the Ivanpah project to minimize the environmental impact.
TO RAISE EQUITY FINANCING
The company, which counts search giant Google and Silicon Valley fund VantagePoint Venture Partners among its investors, already has contracts to deliver more than 2,600 megawatts of power to California utilities PG&E Corp (PG&E) and Edison International's Southern California Edison (SCE).
PG&E will purchase approximately two-thirds of the power generated at Ivanpah and SCE will purchase approximately one-third.
Woolard said that the key value of federal loan guarantees is that it helps strong renewable energy projects get financed, especially since the credit markets have yet to reach normal levels of activity.
It "replaces or helps shore up that component," he said.
Woolard did not reveal the total funding needed for the project but said the company would be raising equity financing from sources such as private investors, energy companies and investment funds.
"There is an equity commitment," Woolard said. "We will be going out to raise equity (financing) in the next four to six months. So that will be the next step in the process."
The loan guarantee is the sixth such offer to renewable energy companies by the Obama administration, which has touted green energy investments as a way to create jobs and increase international economic competitiveness.
Under the program, the Department of Energy issues a conditional commitment to guarantee loans to be provided by the U.S. Treasury's Federal Financing Bank. (Additional reporting by Tom Doggett; Editing by Peter Henderson and Marguerita Choy)
BrightSource's proposed solar thermal plants are expected to generate about 400 megawatts of electricity and power about 140,000 California homes, giving it the heft to compete with plants fueled by coal and natural gas.
President Barack Obama's administration has touted green energy investments as a way to create jobs and increase international economic competitiveness.
"We're not going to sit on the sidelines while other countries capture the jobs of the future -- we're committed to becoming the global leader in the clean energy economy," Energy Secretary Steven Chu said in a statement.
The sector has seen projects being launched and agreements being signed with utilities, who count on solar thermal to meet California clean energy goals, but construction has yet to start on a large scale for the solar thermal industry.
Financing of projects has been a big challenge with the tightening of the credit markets as capital requirements of these green energy companies are very large.
Solar thermal technology is different from its better-known rival, rooftop photovoltaic. Solar thermal companies like BrightSource and rivals Abengoa Solar, eSolar Inc have technology that uses the sun's rays, reflected by thousands of small mirrors, to heat liquids to create steam in turbines and generate electricity.
The conditional loan guarantees from the U.S. Department of Energy, the largest federal loan commitment offered to a renewable energy firm, would help BrightSource build three utility-scale solar thermal plants for its Ivanpah project, which will be located on federally-owned land in the Mojave Desert in southeastern California.
"It's a good beginning for the industry," BrightSource CEO John Woolard said in an interview. "It really allows Ivanpah to be the first (solar thermal) project to be constructed in almost 20 years now" in California.
California, and other parts of the world, are betting heavily on solar thermal. About a quarter of the clean energy contracts approved in 2009 in California by capacity was solar thermal, according to the Public Utilities Commission.
Construction on the first Ivanpah plant is expected to begin during the second half of this year, with commercial operations beginning in 2012.
All three plants are expected be on line by 2014.
The loan guarantee is conditioned on BrightSource meeting financial and environmental requirements, including local, state and federal regulatory approvals.
BrightSource has run into trouble from environmental groups who are concerned that the construction would harm desert plants and wildlife, including the desert tortoise.
The company earlier this month agreed to reduce the footprint for the Ivanpah project to minimize the environmental impact.
TO RAISE EQUITY FINANCING
The company, which counts search giant Google and Silicon Valley fund VantagePoint Venture Partners among its investors, already has contracts to deliver more than 2,600 megawatts of power to California utilities PG&E Corp (PG&E) and Edison International's Southern California Edison (SCE).
PG&E will purchase approximately two-thirds of the power generated at Ivanpah and SCE will purchase approximately one-third.
Woolard said that the key value of federal loan guarantees is that it helps strong renewable energy projects get financed, especially since the credit markets have yet to reach normal levels of activity.
It "replaces or helps shore up that component," he said.
Woolard did not reveal the total funding needed for the project but said the company would be raising equity financing from sources such as private investors, energy companies and investment funds.
"There is an equity commitment," Woolard said. "We will be going out to raise equity (financing) in the next four to six months. So that will be the next step in the process."
The loan guarantee is the sixth such offer to renewable energy companies by the Obama administration, which has touted green energy investments as a way to create jobs and increase international economic competitiveness.
Under the program, the Department of Energy issues a conditional commitment to guarantee loans to be provided by the U.S. Treasury's Federal Financing Bank. (Additional reporting by Tom Doggett; Editing by Peter Henderson and Marguerita Choy)
California health insurer draws hail of charges
LOS ANGELES (Reuters) - A review of 3,000 consumer complaints against Anthem Blue Cross, California's largest for-profit health insurer, has found over 700 violations of state law during the past four years, state regulators said on Monday.
The investigation into claims-handling practices by Anthem, a unit of WellPoint Inc, comes as the company fends off sharp criticism from the Obama administration for its plans to raise premiums for some individuals by up to 39 percent.
On a third front, lawyers delivered opening statements in the Los Angeles trial of a breach-of-contract suit brought against Anthem by a man who claims the insurance company wrongfully denied coverage for a life-saving liver transplant.
Anthem was singled out for review by California Insurance Commissioner Steve Poizner, who is seeking the Republican nomination for governor this year, on the basis of a large number of consumer complaints, spokesman Darrel Ng said.
"We understand that when you handle thousands of claims, human error is a factor. But it looks like that there may be something else going on, which is why we started the enforcement action," Ng said.
The 700-plus violations cited by regulators were submitted to an administrative law judge for further review and possible sanctions. The company faces fines of up to $10,000 for each violation, or more than $7 million if all cases were proven.
The lion's share involved a failure to pay claims within 30 days, or to respond quickly enough to regulators investigating consumer complains, Poizner's office said.
COMPANY 'TAKES ISSUES VERY SERIOUSLY'
Regulators said they also found dozens of instances in which the company misrepresented policy provisions or offered "unreasonably low settlement offers."
"We take the issues raised ... very seriously," WellPoint said in a statement, adding that the review "represents a small fraction" of the "many millions" of claims it handles each year. "We look forward to receiving the specifics from the investigation and to ... resolve these issues."
Anthem agreed earlier this month to delay its planned premium hikes until May after Poizner retained an outside actuary to examine the company's rates. Competitors such as Blue Shield of California and Aetna also have raised premiums significantly in recent years, Ng said.
The administration and congressional Democrats have seized on Anthem's proposed premium hikes as part of their strategy to boost support for an overhaul of the U.S. healthcare system. Top WellPoint executives have been called to testify on Wednesday on Capitol Hill.
Indianapolis, Indiana-based WellPoint, the largest U.S. health insurer by membership, has said Anthem's planned premium increases in California are in line with its rivals, reflecting soaring medical costs and an exodus of healthy consumers from its ranks.
In the breach-of-contract case going to trial this week, a lawyer for liver transplant patient Ephram Nehme, 62, told a Los Angeles Superior Court jury that his client was forced to go out of his coverage network, and out of state to Indiana, for his surgery because his illness had rapidly progressed.
Anthem lawyers have said the company was under no obligation to reimburse Nehme for the $205,000 cost of his surgery because he went out of network after the transplant had been approved at an in-network Los Angeles hospital.
But Nehme's lawyer, Scott Glovsky, said his Los Angeles doctors recommended that he go to Indiana because he risked waiting too long if he stayed in California. He said Anthem denied authorization of the Indiana surgery without conducting an inquiry or talking to any of Nehme's physicians. (Editing by Dan Whitcomb and Eric Walsh
The investigation into claims-handling practices by Anthem, a unit of WellPoint Inc, comes as the company fends off sharp criticism from the Obama administration for its plans to raise premiums for some individuals by up to 39 percent.
On a third front, lawyers delivered opening statements in the Los Angeles trial of a breach-of-contract suit brought against Anthem by a man who claims the insurance company wrongfully denied coverage for a life-saving liver transplant.
Anthem was singled out for review by California Insurance Commissioner Steve Poizner, who is seeking the Republican nomination for governor this year, on the basis of a large number of consumer complaints, spokesman Darrel Ng said.
"We understand that when you handle thousands of claims, human error is a factor. But it looks like that there may be something else going on, which is why we started the enforcement action," Ng said.
The 700-plus violations cited by regulators were submitted to an administrative law judge for further review and possible sanctions. The company faces fines of up to $10,000 for each violation, or more than $7 million if all cases were proven.
The lion's share involved a failure to pay claims within 30 days, or to respond quickly enough to regulators investigating consumer complains, Poizner's office said.
COMPANY 'TAKES ISSUES VERY SERIOUSLY'
Regulators said they also found dozens of instances in which the company misrepresented policy provisions or offered "unreasonably low settlement offers."
"We take the issues raised ... very seriously," WellPoint said in a statement, adding that the review "represents a small fraction" of the "many millions" of claims it handles each year. "We look forward to receiving the specifics from the investigation and to ... resolve these issues."
Anthem agreed earlier this month to delay its planned premium hikes until May after Poizner retained an outside actuary to examine the company's rates. Competitors such as Blue Shield of California and Aetna also have raised premiums significantly in recent years, Ng said.
The administration and congressional Democrats have seized on Anthem's proposed premium hikes as part of their strategy to boost support for an overhaul of the U.S. healthcare system. Top WellPoint executives have been called to testify on Wednesday on Capitol Hill.
Indianapolis, Indiana-based WellPoint, the largest U.S. health insurer by membership, has said Anthem's planned premium increases in California are in line with its rivals, reflecting soaring medical costs and an exodus of healthy consumers from its ranks.
In the breach-of-contract case going to trial this week, a lawyer for liver transplant patient Ephram Nehme, 62, told a Los Angeles Superior Court jury that his client was forced to go out of his coverage network, and out of state to Indiana, for his surgery because his illness had rapidly progressed.
Anthem lawyers have said the company was under no obligation to reimburse Nehme for the $205,000 cost of his surgery because he went out of network after the transplant had been approved at an in-network Los Angeles hospital.
But Nehme's lawyer, Scott Glovsky, said his Los Angeles doctors recommended that he go to Indiana because he risked waiting too long if he stayed in California. He said Anthem denied authorization of the Indiana surgery without conducting an inquiry or talking to any of Nehme's physicians. (Editing by Dan Whitcomb and Eric Walsh
Reuters Summit-WRAPUP 1-Online travel bookings shift overseas
NEW YORK (Reuters) - Growth in online travel bookings is rapidly shifting overseas, leading to a race to bolster operations in Asia and Latin America, the chief executives of two top online travel companies said Monday.
Speaking at the Reuters Travel and Leisure Summit, Dara Khosrowshahi of Expedia Inc and Jeffery Boyd of Priceline.com agreed that overseas growth is fundamental to their business strategies.
Khosrowshahi, the 40-year-old leader of the largest U.S. online travel agency, said he expects non-U.S. bookings to account for at least half of Expedia's business within five years, up from 37 percent currently.
"Europe is a great market for us. And for us, the Asia-Pacific and Latin American markets are new emerging markets," he said.
The value of the company's bookings rose 26 percent year-over-year in the fourth quarter of 2009. International bookings increased 38 percent. Domestic bookings increased 19 percent.
Asia-Pacific and Latin American markets account for about 5 percent of the total value of Expedia's bookings, but the company hopes to double that in the next couple of years, Khosrowshahi said.
"We're aggressively investing in China and Australia, India and Brazil," he said.
His rival, Boyd, 53, said about two-thirds of Priceline's bookings are non-U.S.
Priceline, which made its name with its name-your-own-price auction, saw gross bookings growth of 52.9 percent year-over-year in the fourth quarter.
International bookings were up 81 percent. Domestic bookings grew 20.6 percent.
"The international markets are less mature. The online market is less well-developed. Competition is not as far ahead as it is here in the United States," Boyd said.
He also noted that the hotel business is more fragmented in international markets.
"We expect to have higher growth in the international markets, from new markets like Asia that are less well-penetrated and are currently enjoying higher levels of economic growth," Boyd said.
REBOUNDING BUSINESS TRAVEL
Corporate travel demand is up after a painful recession, but companies likely will curb travel expenses and steer employees away from costly first-class accommodation, Khosrowshahi said.
"The phones are ringing again, from what the partners tell us," he said. "Again, it is off of a very low base, but we do see some encouraging signs from our hotel partners."
He said that while demand is improving, U.S. companies remain conservative in their travel spending and are adhering more closely to internal travel policies that may have been neglected in recent years.
The travel industry has been hit in the past year by an economic downturn that eroded travel demand. Travel companies responded by slashing fees and offering promotions to bolster bookings.
Boyd said the online travel business was recovering from a recession that saw the erosion of travel demand.
"We probably have seen the beginning of a recovery in business travel already, at least according to what the hotels are saying," he said.
Speaking at the Reuters Travel and Leisure Summit, Dara Khosrowshahi of Expedia Inc and Jeffery Boyd of Priceline.com agreed that overseas growth is fundamental to their business strategies.
Khosrowshahi, the 40-year-old leader of the largest U.S. online travel agency, said he expects non-U.S. bookings to account for at least half of Expedia's business within five years, up from 37 percent currently.
"Europe is a great market for us. And for us, the Asia-Pacific and Latin American markets are new emerging markets," he said.
The value of the company's bookings rose 26 percent year-over-year in the fourth quarter of 2009. International bookings increased 38 percent. Domestic bookings increased 19 percent.
Asia-Pacific and Latin American markets account for about 5 percent of the total value of Expedia's bookings, but the company hopes to double that in the next couple of years, Khosrowshahi said.
"We're aggressively investing in China and Australia, India and Brazil," he said.
His rival, Boyd, 53, said about two-thirds of Priceline's bookings are non-U.S.
Priceline, which made its name with its name-your-own-price auction, saw gross bookings growth of 52.9 percent year-over-year in the fourth quarter.
International bookings were up 81 percent. Domestic bookings grew 20.6 percent.
"The international markets are less mature. The online market is less well-developed. Competition is not as far ahead as it is here in the United States," Boyd said.
He also noted that the hotel business is more fragmented in international markets.
"We expect to have higher growth in the international markets, from new markets like Asia that are less well-penetrated and are currently enjoying higher levels of economic growth," Boyd said.
REBOUNDING BUSINESS TRAVEL
Corporate travel demand is up after a painful recession, but companies likely will curb travel expenses and steer employees away from costly first-class accommodation, Khosrowshahi said.
"The phones are ringing again, from what the partners tell us," he said. "Again, it is off of a very low base, but we do see some encouraging signs from our hotel partners."
He said that while demand is improving, U.S. companies remain conservative in their travel spending and are adhering more closely to internal travel policies that may have been neglected in recent years.
The travel industry has been hit in the past year by an economic downturn that eroded travel demand. Travel companies responded by slashing fees and offering promotions to bolster bookings.
Boyd said the online travel business was recovering from a recession that saw the erosion of travel demand.
"We probably have seen the beginning of a recovery in business travel already, at least according to what the hotels are saying," he said.
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