-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Technology Transfer 'Spy' Gives Lecture on Submarine Radar in China No Chinese Remainder Theorem? CHINA may be able to track America's nuclear submarines - something the Soviets never achieved - because an American scientist gave an illicit lecture in Beijing on special radar technology. Peter Lee, a Chinese-American working for a Pentagon defence contractor, gave his lecture in 1997, despite having told his employers that he was going to China for a holiday. The claims, published by the New York Times yesterday, have ominous implications for both the Pentagon and the White House. The development of radar for tracking submarines has been going on in America for 20 years while its own deep-sea missile vessels have remained undetectable. Having the ability to cruise undetected off the coast of an enemy with hundreds of nuclear warheads while knowing the location of any Chinese, Russian or other submarine is a cornerstone of American nuclear strategy. According to the newspaper report, federal investigators were blocked in attempts to prosecute Lee as a spy because the United States Navy refused to countenance the discussion of the technology in open court. He was given a light sentence for filing a false statement about his trip to China and passing other secrets to the Chinese in 1985. The US defence industry is still reeling from the revelation that Wen Ho Lee, a contact but no relation of Peter Lee, passed nuclear secrets to China while working at the Los Alamos nuclear laboratories in New Mexico. Defence analysts say that the information obtained by the China will allow it to become a major nuclear power in a matter of years rather than decades. The embarrassment for the White House over the submarine revelations stems from the fact that President Clinton has claimed that any spying by China took place before his election in 1992. There now seems to be evidence that as little as two years ago secrets were being given away. The London Telegraph, May 11, 1999 International Banking HSBC Buys Out Safra Banking Group for $10 Billion 30,000 Wealthy Customers HSBC Holdings, the London-headquartered international banking group, is to buy the private banking empire of Edmond Safra, the Lebanese-born financier, in a $10.3bn deal. The deal will bring 30,000 wealthy customers with $56.5bn of assets to HSBC, and will bring down a curtain on the career of Mr Safra, who has built three successive banking groups in Brazil, the US and Europe. HSBC has agreed to acquire Republic New York, the holding company for Republic National Bank of New York, for $72 a share, or $7.6bn. It is offering a further $72 a share, or $2.6bn, for the 51 per cent Republic New York does not own in Safra Republic Holdings, which operates private banks in Switzerland, France, Luxembourg, Guernsey, Gibraltar and Monaco. Republic, founded by Mr Safra in 1966, was hit last year by a $165.4m post-tax loss on investments in Russia, a rare wound for a conservative-rated bank. Although this scarcely dented its financial foundations, the episode is thought to have contributed to Mr Safra's decision to sell up. Now 67, and with no children, he is in poor health. HSBC expects $300m a year of cost savings from putting these businesses together, after restructuring charges of $450m. The heart of the business is managing the assets of wealthy and risk averse customers, many of them from the Middle East and Latin America. John Bond, HSBC chairman, said he believed those customers would stay with the institution after the departure of Mr Safra, described by some as a latter-day Rothschild or Rockefeller. " Mr Safra said he believed Mr Bond would "make the combined company the world's pre-eminent financial powerhouse". HSBC's success has been built on its operations in fast-growing markets in Asia and Latin America. However, Mr Bond recently set out a strategy of maintaining a balance between these emerging markets and the stabler economies of Europe and North America, with an emphasis on wealth management businesses such as Republic. Saban, Mr Safra's holding company, owns 29 per cent of Republic New York and a further 20.8 per cent directly in Safra Republic. The Financial Times, May 11, 1999 International Banking End of the Safra Era? >From Beirut to Brazil UBS and Credit Suisse may be the world's biggest private banks, and Geneva's private banks, like Pictet & Cie and Lombard Odier may have an unparalleled 200-year tradition. But few private bankers combine fame and reclusiveness to the same degree as Edmond J. Safra. Mr Safra's decision to sell his banking empire to HSBC Holdings in a $10.3bn deal will be seen by many as the end of an era for a private banker whose prowess has sometimes been compared with US banking dynasties like the Morgans. Others will see it as a sign that his style is no longer suited to today's increasingly competitive markets. The banks in Mr Safra's empire, which are controlled by Republic New York Corporation in the US and Safra Republic Holdings in Europe, tend to be over-capitalised and with highly liquid balance sheets. Yet they have generated above-average profits in the past and for years bankers have envied Mr Safra's ability to hold on to an extraordinarily loyal client base. Mr Safra, born in Beirut, comes from a family of Sephardic Jews which once financed camel caravans trading between Aleppo, Constantinople and Alexandria. Over the years he has acquired a reputation as a banker with the Midas touch, founding not one, but three successful banks in different corners of the globe. The first was in Brazil, where Mr Safra established himself in S�o Paulo at the age of 24, laying the foundations of what would become the Geneva-based Trade Development Bank. In 1962 he sold the Brazilian operations to his brothers. Four years later, Republic National Bank opened in New York with Robert Kennedy to cut the ribbon. Republic shook up the sleepy New York banking market, winning business by offering customers free gifts in return for making deposits. At one point, this gift programme made it the largest single distributor of colour televisions in the US. Mr Safra's greatest mistake, in his own estimation, was to sell Trade Development Bank in Europe to American Express in 1984 for $550m. Relations soured almost immediately, culminating in Amex paying $8m to his favourite charities after admitting responsibility for a smear campaign against him. Over more than 50 years in banking he has been able to steer clear of most of the banking "black holes", such as the third world debt crisis, injudicious leveraged buy-outs and the investment banking follies, which have tarnished the reputation of many others. This is to a great extent because the Safra businesses, unlike most banks, are built on deposits rather than lending. Loans make up less than 30 per cent of their total assets, with the rest of the balance sheet invested in the safest of securities. So it was all the more surprising last year when Republic became one of the biggest casualties of the Russian debt default. The bank had a bigger exposure to Russia, in proportion to its size, than any other US institution, and took a loss of $191m in the third quarter. It took a further $97m charge to cover a restructuring that included shutting its prime brokerage unit, which dealt with hedge funds. Mr Safra, now 67, who started in banking at 16, has always given the impression that he was part of a dynasty. In a rare interview a couple of years ago in Bilanz, a Swiss business magazine, he said that he wanted his banks to "last ten thousand years". In 1997 he underlined his ambition when Safra Republic, parent of his Swiss private banking group, launched the first ever 1,000-year corporate bond. So Mr Safra's decision to sell his banking empire to HSBC raises a number of questions. Mr Safra will still own Banque de Credit National, the Beirut bank set up by his father, and his brothers own Banco Safra in Brazil and Safra National Bank in Bank in New York. But these are unlikely to have the same clout in international banking circles as Mr Safra's various banks. One reason why Mr Safra may have decided to sell out is that there was no obvious successor. He married late and has no children. Most of his trusted advisers, such as Walter Weiner, a US lawyer who chairs Republic National, and Jacques Talwil, who was given the job of teaching Edmond the banking business, are 70 or over. There was no sign that his brothers in Brazil had produced children which could match Edmond's Safra's nose for the foreign exchange markets and ability to get to know clients. The second reason why Mr Safra may have decided to quit private banking is that his approach has becoming increasingly old-fashioned. He once said that "the duty of a banker is to safeguard what customers have entrusted to him. He is a confidant, sometimes a friend. He is the custodian of people's secrets. And our clients show their trust by confiding money to use. We invest it prudently, because it is not our money." This approach may go down well with Mr Safra's increasingly elderly clients, many of whom had been forced out of their homes in eastern Europe or the Middle East. But these days success in private banking is driven more by investment performance and an ability to cross-sell products to a younger generation of high net worth individuals more interested in doubling or tripling investment portfolios as opposed to preserving capital. But the most important reason for Mr Safra's exit may be the losses on Russian securities, which came despite his reputation for staying in touch with markets. The error could have been partly due to his ill-health. Last year it was disclosed that he was suffering from Parkinson's disease. It is understood that in the run-up to last year's Russian crisis, Mr Safra was suffering from a renewed bout. Mr Safra has always been in touch with the markets. Jacques Talwil, Mr Safra's long-time confidant, says that his boss telephoned the four corners of the earth every day - New York, Geneva, S�o Paulo or Nice - analysed the situation and pondered any decisions with care. But when it was time for action he was "as fast as lightning". However, Mr Safra's legendary ability to read the markets deserted him during last year's Russian crisis. Although the impact on Safra Republic was limited - it increased its net income by 10 per cent last year and earned 15.7 per cent on its equity - it had a much more dramatic impact on Republic National, Mr Safra's US retail bank, which has always advertised itself as one of the world's safest banks. Mr Safra has always been a private banker who lives and sleeps his trade and the events of the last 12 months may well have convinced him that at 67 his ability to oversee his banks' trading as successfully as he did 20 years ago was on the wane. The Financial Times, May 11, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. 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