PRESS DIGEST - Financial Times - Jan 14

FRAUD SET TO RISE AS ECON0MY WEAKENS

The predicted slowdown in the economy this year is likely to lead to more corporate fraud being uncovered, business advisers warn. Simon Bevan, head of fraud services at accountancy firm BDO Stoy Hayward, said: "With an economic downturn now already affecting the property and financial services sectors, I expect to see many more frauds being discovered in 2008." Because processes come under heightened scrutiny during periods of belt-tightening, more frauds are detected. Alex Plavsic, head of fraud investigations at KPMG, said: "If the current credit crunch does lead to a slowdown through 2008, we may, therefore, see the detection of some high-value frauds in its wake."

TAX TENSIONS THREATEN TO DRIVE FOREIGN BANKS AWAY

Foreign banks have warned that London's pre-eminence as an international financial centre could be damaged by new tax initiatives that run the risk of making the capital less business-friendly. A Revenue & Customs crackdown on offshore accounts, stricter rules on the number of visits someone can make to the UK before being deemed a resident for tax purposes, and proposed increases to taxes of foreigners living in the UK have all increased friction between banks and the government. John Treadwell, managing director of the Association of Foreign Banks, said: "The foreign banks contribute greatly towards the success of London . and the government should not forget that these banks always have a choice of location."

WATCHDOG ATTACKS NUCLEAR GO-AHEAD

The government's watchdog for sustainable development has attacked ministers for giving the green light last week on construction of a new generation of nuclear power stations. The Sustainable Development Commission, which is funded by government but independent of it, launched one of its strongest critiques of policy to date, calling ministers to account for failing to respond adequately "to the legitimate concerns expressed by the general public over new nuclear power". Tim Jackson, the commission's economics expert, said: "They have carried out a consultation and then ridden roughshod over the results of that consultation."

AUSTRALIAN INVESTOR BUYS FORTH PORTS STAKE

Babcock & Brown, one of the world's most active port investors, is thought to have taken a stake of about 15 percent in the UK's last independent port operator, Forth Ports (FPT.L). The move by the Sydney-based investment bank, which could threaten Forth's existence as an independent company, is believed to be on behalf of a fund the bank manages. It is not at present clear whether the stake-building was for Babcock & Brown Infrastructure, which took over the UK's PD Ports in 2005 and has stated its aim of becoming the world's first large-scale international operator of bulk ports. B&B is expected to clarify its intentions in an announcement on Monday.

SCI FACES CALLS FOR CAVANAGH'S RESIGNATION

Shareholders at SCi Entertainment SEG.L are demanding that chief executive Jane Cavanagh quits following last week's profit warning and 50 percent fall in share price. Some are also calling for Tim Ryan, SCi's chairman, and Bill Ennis, Cavanagh's husband and commercial director of the company, to hand in their resignations. Shareholders contacted Ryan and Citigroup, the company's brokers, last Friday insisting that Cavanagh should go. Over the weekend, talks with shareholders were held but no decisions have yet been taken on management changes.

THEO FENNELL LOSES NONE OF ITS LUSTRE

Theo Fennel (TFL.L), the jeweller whose designs are coveted by celebrities such as Elton John and David Beckham, will announce on Monday that it is trading in line with market expectations and has escaped the worst of the retail-sector slowdown over the Christmas period. Sales in December rose two percent compared with the previous year and, as a result, the company expects pre-tax profits to be in line with market forecasts. Richard Northcott, the chairman, said: "Following last year's record Christmas, these results are a little more measured but, against the current climate, impressive nonetheless." The share price rose more than seven percent to close at 78 pence.

ONE BILLION POUND WAR CHEST FOR LAXEY

Laxey, the activist shareholder, has started efforts to raise a billion pounds for an Aim-listed opportunity fund to take advantage of the deflated share prices of many listed property companies. Shares in the UK's largest-quoted property company, Land Securities (LAND.L), are currently trading at well over a 30 percent discount to their net asset value while the discount on shares in British Land (BLND.L) is closer to 50 percent. Laxey will aim to buy large shareholdings and push for corporate changes. Its co-founder, Colin Kingsnorth, said: "The sector faces widespread consolidation . Stronger companies will profit. There is no reason why we wouldn't support a 'take private', a sale, or a rights issue, depending on circumstances."

DEADLINE FOR BSKYB APPEAL ON ITV STAKE

The Competition Appeals Tribunal has given BskyB (BSY.L) until the end of the month to appeal against a ruling by the Competition Commission that the pay-TV operator's 17.9 percent stake in ITV (ITV.L) is against the public interest. The Commission argued that BskyB's level of ownership could lessen competition and recommended that it reduce its stake to below 7.5 percent. The final decision however rests with John Hutton, secretary of state for business, enterprise and regulatory reform, who is due to announce his conclusion by January 29. BskyB has been granted the right to wait until it has heard Hutton's verdict before deciding whether or not to appeal.

REVVING UP AN ELECTRIC RACING CAR AT WESTFIELD

Just over a year since facing bankruptcy, Westfield Sportscars marked its revival with the unveiling last week of an electric racing car - a prototype - that can accelerate from nought to 60mph in three seconds. Managing director Julian Turner has overseen an increase in production from 220 units in 2006 to nearly 300 last year and hopes to top 400 in 2008. The business in now profitable on annual turnover of about 3.5 million pounds and Turner aims "to double or treble that". Westfield has been working hard at marketing its cars. "My aim has been to improve perceptions," said Turner. "Customers say the cars now have a better build quality . and offer greater value for money."

CLOSE SALE PROSPECTS INCREASE

Close Brothers (CBRO.L) edged closer towards a sale over the weekend after the stockbroker Cenkos Securities indicated it could pay more than 1.5 billion pounds for the London-listed merchant bank. Cenkos originally made an indicative approach at 950 pence a share in mid-November, which was swiftly rejected. Progress was hampered by Cenkos's refusal to sign a non-disclosure agreement, a pre-condition to gaining access to Close's books. It has now told Close it would pay 1025 pence a share and has signed the agreement. Sources close to the situation detect a thawing in relations between the rivals. "What's clear is that the tone has become more friendly," said one.

Prepared for Reuters by Durrants