China bars GlaxoSmithKline finance director Steve Nechelput from leaving country amid bribery investigations

Senior Finance Executives Cautiously Optimistic about Business Prospects, but Uncertainty Challenges

Chinese police announced this week they have detained four GSK employees on suspicion of paying bribes to doctors, hospitals and others to encourage them to prescribe the company’s medications. China pursues Glaxo for bribery Police say the employees funneled as much as 3 billion yuan ($490 million) through travel agencies and consulting firms to hide the source of bribes, according to Chinese news reports. Investigators have not made clear how much of that money was paid as bribes. The official Xinhua News Agency said the scheme appeared to be aimed at evading GSK’s internal controls meant to prevent bribery. GSK has said it opposes bribery and was cooperating with the investigation.

Flaherty Remains at Finance in Canada Cabinet Shuffle

Thats a drop of 4.9 percentage points for the Conservatives from the end of last year, and a 10.5 percentage gain for the Liberals, who elected Justin Trudeau as their new leader in April. Since March, Harper has been dogged by scandal. Wright resigned from his post after the disclosure he paid about C$90,000 ($86,300) to Senator Mike Duffy to help with repayment of ineligible expenses Duffy has claimed, prompting an investigation from the the Royal Canadian Mounted Police . Senate Scandal Another senate lawmaker, Pamela Wallin, also left Harpers caucus amid investigation of her expenses. Harpers former minister of intergovernmental affairs, Peter Penashue, lost his seat in a special vote after he was found by the countrys independent voting agency to have received ineligible campaign contributions in the 2011 general election.

Further Progress on Housing Finance

One might expect considerable pressure for Congressional action in the event of a future housing crisis in which private investors hesitate to take on housing risk and American families find it costly to obtain financing. In the Hensarling approach, Congress could always enact legislation that provides a guarantee on new mortgages but not on old ones. This would be along the lines of a proposal by Harvard professors David S. Scharfstein and Adi Sunderam (though they would have the government offer insurance on a modest share of mortgages even in normal times, to maintain the capacity to scale up when needed). This implies that the proposed new housing system would not be resilient to future crises; the Corker-Warner approach explicitly takes into account the inevitability of future financial market convulsions.

GlaxoSmithKline offices in London.

Although some companies will always hold their cash, the responding finance executives understand the downsides of holding large cash reserves. The risks of holding cash most frequently identified by the finance executives are limiting innovation and new product development (52 percent) and holding back growth opportunities (49 percent). Finance executives also say holding cash risks limiting market share expansion (46 percent), geographic expansion (42 percent) and new market entry (40 percent). “CFOs, pursuing growth, appreciate the importance of investing cash wisely, but they need clearer visibility of their business to make confident use of resources,” said Schulman.

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