Business and Finance

The Obama administration’s top environmental official in the oil-rich South and Southwest region has resigned after Republicans targeted him over remarks made two years ago when he used the word “crucify” to describe how he would go after companies violating environmental laws.

In a letter to Environmental Protection Agency Administrator Lisa Jackson sent Sunday, Al Armendariz says he regrets his words and stresses that they do not reflect his work as administrator of the five-state region including Texas, New Mexico, Oklahoma, Arkansas and Louisiana. Armendariz, who holds a doctorate in environmental engineering, apologized last week for his remarks. A senior administration official, speaking on condition of anonymity because of the sensitivity of the subject, told The Associated Press that Armendariz has since received death threats. His resignation was effective Monday, when he informed his senior staff. Sam Coleman, a career official who led the agency’s response to Hurricane Katrina and served as Armendariz’ deputy, took over as acting regional administrator.

“I have come to the conclusion that my continued service will distract you and the agency from its important work,” Armendariz wrote in the letter, which was obtained by the AP.

Republicans in Congress had called for Armendariz’ firing, after Oklahoma Sen. James Inhofe highlighted the May 2010 speech last week as proof of what he refers to as EPA’s assault on energy, particularly the technique of hydraulic fracturing, or fracking.

At a town hall meeting in Washington on Friday, Jackson had said only that she would continue to review the case, calling Armendariz’ words “inflammatory” and “wrong”. President Barack Obama appointed Armendariz in November 2009, at the urging of Texas-based environmental groups. He is one of the few Latinos in senior leadership at the EPA.

The regional administrator’s words “don’t comport with either this administration’s policy on energy, our policy at EPA on environmental enforcement, nor do they comport with our record as well,” Jackson said.

The EPA, perhaps more than any other agency, has found itself in the GOP’s crosshairs over its regulation of the gases blamed for global warming, steps it has taken to limit air pollution from coal-fired power plants, and its increased regulation of fracking, which is responsible for a gas drilling boom. Republicans, including presidential contender Mitt Romney _ who has called for Jackson herself to be fired _ have blamed the agency for high gasoline prices and clamping down on American energy.

Armendariz, who was based in Texas, frequently found himself at odds with the state government and the oil and gas industry, which are often aligned.

The scientist and environmental activist had long been frustrated by the government’s inability to clean up Texas’ notoriously polluted air, and he had called the EPA broken and testified on behalf of activist groups about just how badly the federal and state environmental agencies had botched things guaranteed fast personal loans.

Environmentalists said Monday that it was Armendariz getting crucified for doing his job _ enforcing the law.

“He took bold steps that have been needed for decades to move our state forward,” said Ken Kramer, director of the Lone Star Chapter of the Sierra Club. “The only people who will celebrate his resignation are the polluters who continue to foul Texas air and the politicians who serve those special interests.”

Several disputed contamination cases in Texas in which Armendariz was involved have helped stoke environmental concerns over fracking, a technique in which oil and gas producers inject water, chemicals and sand underground at high pressures to fracture rock so gas can come out.

In one case cited by Republicans, the EPA issued an emergency order in 2010 _ an unprecedented action in Texas _ accusing Range Resources of contaminating an aquifer and giving it 48 hours to provide clean drinking water to residents. Armendariz said he went around the state agency that oversees drilling because it wasn’t responding quickly enough. The order later was withdrawn after a state court ruled evidence that fracking had caused the contamination had been falsified.

“He was flat wrong,” wrote more than two dozen lawmakers in a letter to Jackson sent Friday, calling for Armendariz’ firing. “There was no contamination and his office failed to conduct appropriate or adequate science to support his claims.” The EPA has faced similar criticism for its analysis of potential drinking water contamination from fracking in Pennsylvania and Wyoming.

Armendariz’ speech was made in Dish, a small town northwest of Dallas, where residents’ concerns over the environmental impacts of hydraulic fracturing helped put the issue on the national stage.

Testing, which was urged by the EPA, showed some groundwater contamination and elevated toxic air pollution after operators began using a new method _ a combination of hydraulic fracturing, or fracking, and horizontal drilling _ to extract once out-of-reach gas.

Referring to how the Romans once conquered villages in the Mediterranean, Armendariz said, “They’d go into a little Turkish town somewhere, they’d find the first five guys they saw and they’d crucify them.”

“And so you make examples out of people who are in this case not complying with the law,” he said.” Find people who are not complying with the law and you hit them as hard as you can and make examples of them.”

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Associated Press correspondent Angela K. Brown contributed reporting from Fort Worth, Texas.

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Spanish stocks sank and its borrowing costs rose Friday after the government released data showing the country’s banks borrowed a record (EURO)316.3 billion ($415.9 billion) from the European Central Bank in March.

Bank of Spain data showed that ECB lending to the country’s financial institutions almost doubled since February when their reliance was (EURO)169.8 billion ($223.3 billion).

Concern is mounting over Spain’s ability to cut its national debt and lift its struggling economy out of recession when unemployment is nearing 23 percent.

The ECB made some (EURO)1 trillion in emergency three-year loans to banks in two batches in Dec. and Feb., lifelines to Spain’s troubled banks that find it hard to secure short-term financing elsewhere.

The injection spurred lenders to snap up battered government debt, driving Spanish borrowing costs down. However, the effects of the cheap loans across Europe have since dissipated and Spain is taking the brunt of market distrust.

Some of that distrust is misplaced, said analyst Manuel Escudero, who added that much of Spain’s industrial sector appeared to be riding the crisis instead of heading to a major downturn in output.

“I see much of Spain’s industrial sector beginning to internationalize instead of heading toward stagnation, it has slimmed down and is looking reasonably muscular,” said Escudero who heads Deusto University business school in the northern Basque region.

Klaas Knot, a member of the European Central Bank’s governing council, also said he did not see a need for the ECB to engage in buying up Spanish bonds or launch a third program of low-rate loans to European banks to steady markets.

Knot, said last week’s spike in the interest rate of Spanish government bonds was due to “awkward communication” by its government about its plans for budget cuts.

To boost confidence in its finances, the government last month unveiled an austerity budget with (EURO)27 billion ($35.5 billion) in tax hikes and spending cuts this year.

Spain is expected to enter its second recession in three years this quarter, with the country’s central bank forecasting its economy will contract 1.7 percent this year.

The Ibex 35 stock index in Madrid was down 3.6 percent at close of trading Friday and 10-year government yields rose 0.2 percent to 5.93, according to FactSet.

Just five years ago Spain was one of Europe’s most buoyant economies, but a nose-dive started in 2008 when the international financial crisis coincided with the bursting of a real estate bubble that had buoyed the economy for over a decade.

The government ordered banks to strengthen capital levels to cover exposure to bad real estate debt. Investors fear that sustained bank weakness, coupled with rising public debt and high funding costs could force Spain to apply for European aid.

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Markets were optimistic Monday that Greece will finally secure a massive but long-delayed international bailout, allowing the debt-crippled country to avoid defaulting on its debts next month.

A surprise easing in monetary policy in China over the weekend also added to the buoyant mood in markets _ many stock indexes are trading at multi-month highs, while the euro has recovered its poise.

The main focus of attention _ on a day when Wall Street will be shut for a public holiday _ will be Brussels, where the finance ministers from the 17 eurozone countries are gathering to discuss the elusive Greek bailout deal.

After some eurozone countries suggested last week that they might prefer Greece to default, the latest comments indicate the ministers will approve th euro130 billion ($171 billion) bailout. Greece has struggled to convince its partners in the eurozone, particularly Germany, that it will enact the austerity and reform measures in return for the cash.

France’s finance minister Francois Baroin told Europe 1 radio Monday that while details will have to be worked out, “the political commitments have been made.” Both parties in the Greek coalition government have agreed to push forward the measures in the event they are in government after expected elections in April.

“Officials have confirmed that momentum is building for approval of the deal and that while there are some gaps to be filled, the gaps are not so large that they risk derailing the whole process,” said Sue Trinh, an analyst at RBC Capital Markets.

Alongside the bailout, Greece is expected to conclude debt-reduction discussions with its private creditors. That should slice off around euro100 billion from Greece’s debt mountain. Even after that, Greece will have the highest debt burden of all the euro countries.

One of the last-minute hurdles to overcome is how to get Greece’s debt burden down to around 120 percent of GDP by 2020. One way that target could be met is if European central banks forgo profits due on their holdings of Greek debt.

Even though there are issues that need to be ironed out, investors are confident of a successful conclusion.

In Europe, the FTSE 100 index of leading British shares was up 0.8 percent at 5,952 while Germany’s DAX rose 1.4 percent to 6,944. The CAC-40 in France was 0.8 percent higher at 3,468.

The euro was 0.1 percent higher at $1.3223.

Sentiment has also been boosted by the surprise decision over the weekend by China’s central bank to lower the ratio of funds that banks must hold as reserves to 20.5 percent from 21 percent, effective Friday. That will free up tens of billions of dollars for loans at a time when the growth rate is expected to drop from last quarter’s 8.9 percent to closer to 8 percent. The cut is the second in two months.

Earlier in Asia, Japan’s Nikkei 225 index added 1.1 percent to close at 9,485.09, its highest closing level of the year. South Korea’s Kospi rose slightly to 2,024.90. Mainland China’s benchmark Shanghai Composite Index climbed 0.3 percent to 2,363.60 after gaining more than 1 percent earlier in the day, while the Shenzhen Composite Index gained 0.3 percent to 923.32.

Hong Kong’s Hang Seng dipped 0.3 percent to 21,424.79.

In the oil markets, Iran was battling with Greece to be the main focus of attention. Oil prices have jumped to a nine-month high near $105 a barrel Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country’s nuclear program.

Benchmark crude was up $1.50 to $104.74 per barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Earlier in the day, it rose to $105.21, the highest since May.

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Pamela Sampson in Bangkok contributed to this report.

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Time Warner Inc. reported fourth-quarter earnings Wednesday that rose from a year earlier and beat Wall Street’s expectations, largely due to the final Harry Potter movie.

The company also hiked its dividend and announced a new share buyback.

Shares of Time Warner (, Fortune 500) rose more than 2% in early trading.

Time Warner’s sales rose 5% to $8.2 billion, topping analysts’ forecasts of $8.1 billion. The growth was led by 7% revenue growth at Warner Bros., thanks to the DVD and Blu-ray release of Harry Potter and the Deathly Hallows: Part 2, the final installment of the wildly successful series.

The film’s DVDs, which went on sale in November, ranked within the top three selling DVDs domestically in 2011, and helped offset lower revenues from the silver screen releases and television license fees.

While Harry Potter’s days at the box office have come to an end, Time Warner CEO Jeff Bewkes said the franchise will live on and be a source of strength for the company.

Time Warner rakes in licensing fees for The Wizarding World of Harry Potter from theme park Universal Orlando, owned by NBCUniversal.

The park is set to expand in Florida, and a second Wizarding World of Harry Potter will open at the Universal Studios Hollywood theme park in California, bringing in more fees starting in 2014.

Bewkes also noted the excitement building up for The Dark Knight Rises, which will mark the end of Christopher Nolan’s Batman trilogy. Midnight IMAX shows for the July release are already selling out, he said.

Time Warner’s television networks were also strong performers during the fourth quarter. Revenue climbed by almost 5% at the networks, which include CNN, HBO, TBS, TNT and truTV.

Sales from subscriptions at the television networks edged up 5% while advertising sales ticked up 2%. Meanwhile, content revenue spiked 16% thanks to higher sales of HBO’s original programming, which includes "True Blood" and "Game of Thrones."

But revenue at Time Warner’s publishing unit, Time Inc. declined 1%, as sales from subscriptions decreased and advertising sales remained flat during the quarter business cards design.

The New York-based parent company of CNNMoney.com and Fortune said its net income rose to $773 million, or 76 cents per share, up just 0.5% from the same quarter in the prior year.

Adjusted net income, the commonly used profit metric for media companies, rose 25% to $946 million, or 94 cents per share. Analysts polled by Thomson Reuters were looking for earnings per share of 87 cents.

Separately, Time Warner said it is raising its quarterly cash dividend by 11% to 26 cents per share, and announced a $4 billion stock repurchase program.

Throughout 2011, the media giant has repurchased approximately 144 million shares, for about $4.9 billion, helping its stock jump more than 12% in 2011.

For 2012, the company said it expects adjusted EPS growth to be in the low double digits, from a base of $2.89 in 2011. That would compare to 20% growth in adjusted EPS in 2011.

"We’re investing aggressively in programming, production and marketing," said Bewkes, adding that the company is focusing on expanding its international presence.

Movie ticket sales hit 16-year low

For the full year, Time Warner booked a $2.9 profit and an 8% jump in revenue to $29 billion. Both topped Wall Street estimates. Adjusted net income rose 12% to $3.1 billion, or $2.89 per share. Analysts polled by Thomson Reuters were looking for earnings per share of $2.82.

The company’s TV networks and Warner Bros. divisions both reported a 9% jump in revenue for 2011, primarily due to sports programming, including the NCAA basketball tournament, that aired on TBS, TNT and truTV and the Harry Potter movies.

Rival media conglomerate Walt Disney (, Fortune 500) also posted a better-than-expected profit late Tuesday, but revenue growth fell short of expectations. News Corp. (, Fortune 500) opens its books after the closing bell Wednesday. 

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Alberici Corp. said today it has bought a Topeka, Kan.-based company that specializes in building water treatment facilities using the design-build method.

Terms of Alberici’s deal to buy CAS Construction LLC were not released. Mike Burke, executive vice president of Alberici, said in a statement the acquisition provides Alberici with additional design-build capabilities and the ability to reach new customers and markets.

Alberici and CAS began working together three years ago, when they teamed with engineering firm Burns & McDonnell on the $73 million aquifer recharge system for the city of Wichita, Kan.

Mike Hafling, president of CAS, and other senior managers will remain with the company, which has been renamed CAS Constructors. LLC. Charles A. Stryker founded the company in 1985 and managed the business until his death in 2006.

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Should Republican presidential candidate Mitt Romney choose to release his tax returns, it likely will spur yet more debate about how much the rich should pay in taxes.

In particular, a lot of scrutiny may be given to how much tax Romney paid on the money he has made from Bain Capital, an investment firm he founded in 1984 and left in 1999.

That’s because the U.S. tax code lets fund managers of some investment firms pay a far lower tax rate on much of their compensation than they would if that money were treated as a salary or bonus.

The rule applies to managers of venture capital funds and private equity funds, both of which Bain runs.

The firm, which is a privately held investment partnership, uses money from outside investors to either invest in start-ups, buy out public companies, or invest capital in private ones, all in an attempt to boost their value and sell them at a profit.

Compensation for general partners — as Romney was at Bain — is typically based in part on the profits made on winning investments.

The partnership will set a minimum rate of return that the fund must achieve when it sells an asset, say 8%. And the general partners then get 20% of any profits above that. That compensation is called "carried interest."

Fact or fiction? Romney’s private equity past

But rather than being taxed as regular income — rates on which go as high as 35% - carried interest is taxed at the much lower capital gains rate of 15%.

The case made for applying the capital gains rate is to encourage investment. But general partners are entitled to carried interest even if they have not invested their own money in the fund (although most do invest some).

That’s why many — including President Obama — have called for carried interest to be taxed as regular income that is paid in exchange for investment services.

General partners are also paid a fixed management fee, which is taxed as ordinary income. Typically that fee is worth about 2% of the fund’s assets.

Since 1999, Romney - whose personal fortune is estimated to be as high as $264 million — has continued to profit from Bain’s work thanks to the terms of his retirement package.

Those who support taxing carried interest as a capital gain make a few arguments.

First, they say, the "sweat equity" of the general partner is as valuable as the financial equity of fund investors.

Second, the partner gets paid carried interest only if the fund does well. And it’s potentially subject to a clawback if other asset sales don’t meet their minimum "hurdle" rates.

Last, they contend, if rates did go up, it would discourage investment and risk-taking.

Gingrich’s ‘Bain bomb’ fizzles

"Carried interest is an important aspect of the capital gains tax system that is based on the uniquely American principle that we reward those who take entrepreneurial risk, whether that risk involves investing capital or other aspects of ownership that require years of time, effort, and vision," said Ken Spain, a spokesman for the Private Equity Growth Capital Council.

Others aren’t convinced.

"It’s not going to change how people do business," said Victor Fleischer, an associate professor of law specializing in venture capital and private equity taxation at the University of Colorado. That’s because the tax increase would only affect general partners, not the people who invest the bulk of money in private equity funds, he said.

Moreover, just because carried interest is dependent on good performance and may be clawed back isn’t reason to tax it more lightly than other income, Fleischer added.

"The fact that compensation is risky and not guaranteed doesn’t justify treating it as a capital gain."

Since 2007, measures to tax carried interest as ordinary income have been included in various bills, often to help pay for the cost of other tax cuts or spending increases. Should the change ever pass, it’s not expected to swell federal coffers, raising less than $20 billion over 10 years. 

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In a Dec. 30 story about iceberg lettuce being removed from grocery stores after salmonella was found in an Arizona field adjacent to the grower’s property, The Associated Press, relying on information from Kroger and its affiliated Smith’s Food and Drug, erroneously reported the lettuce had been removed from stores in North Carolina, among at least six other states. Kroger said Saturday the product never made it to its North Carolina stores.

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Global stock markets were mixed Friday on 2011’s last trading day and turned in heavy losses for the year after Europe’s debt crisis and natural disasters battered a struggling global economy. Japan’s benchmark hit its lowest close in three decades.

Benchmark oil hovered below $100 per barrel and the dollar weakened against the yen but rose against the euro.

Asian traders recorded gains for the day Friday but markets in Tokyo, Shanghai and Hong Kong ended the year with double-digit losses.

Japan’s Nikkei 225 index, after three straight days of losses, rose 0.4 percent to 8,429.45, but it was the lowest closing since 1982. China’s benchmark gained 1.2 percent to close at 2,199.42 _ still, a 20 percent loss for the year.

European shares were steady or slightly down in early trading. Britain’s FTSE 100 lost 0.2 percent at 5,555.92. Germany’s DAX was marginally down at 5,846.35 and France’s CAC-40 was nearly unchanged at 3,127.34.

Wall Street appeared headed for a lower closing, with Dow Jones industrial futures down 0.2 percent at 12,194 and S&P 500 futures slipping 0.2 percent to 1,255.40.

Hong Kong’s Hang Seng Index gained 0.2 percent to close at 18,434.39.

Australia’s benchmark S&P ASX 200 ended the year at 4,140.4 _ down 0.4 percent on the day and 14.5 percent lower for 2011. A day earlier, South Korea’s benchmark Kospi closed at 1,825.74 on Thursday _ 11 percent down on its last trading session of the year Thursday.

Analysts said global stocks tumbled in lockstep, suffering from the effects of natural disasters, a wobbly recovery in the U.S. _ and an escalating European debt crisis that has resisted repeated measures taken by the region’s governments and financial institutions.

“The big reason is Europe. Europe tried to muddle through without a real solution. They can save a small country like Greece, but they cannot save a big country like Italy. Two trillion euros in foreign debt _ nobody in the world has that kind of money,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

“Europe will enter a lost decade, a decade of no solutions and no growth,” he said. “Maybe except in Germany, their machinery is still selling.”

Japan’s benchmark plunged after the March 11 tsunami and earthquake disaster that destroyed huge chunks of the island nation’s northeastern region, left 20,000 people dead or missing and set off the world’s worst nuclear crisis since Chernobyl.

Disaster damage extended to key suppliers for major companies like Toyota Motor Corp. and Sony Corp., which suffered production disruptions. The Thai flooding that followed caused similar problems for automakers, including Honda Motor Co., but on a smaller scale.

The Tokyo market also saw two big-name brands lose much of their value.

One was Tokyo Electric Power Co., the utility that runs Fukushima Dai-ichi nuclear power plant, where at least three reactors went into meltdown after tsunami destroyed backup generators to keep power going at the plant.

Some officials say TEPCO may have to be nationalized because of ballooning losses and the costs to bring the reactors under control and compensate victims.

Another was camera and medical equipment maker Olympus Corp., whose offices have been raided by criminal investigators after fabricated accounting to cover up massive investment losses came to light no fax payday loans.

A British executive, who has since resigned from the board, was first to draw attention to the dubious investments, and has become a celebrity figure raising questions about old-style Japanese management.

Across the board, Japanese companies have been slammed by the rising value of the yen, which erodes the value of revenue from exports.

The Nikkei lost nearly a fifth of its value over the past year. It nose-dived right after the disaster, recouped some of those losses in July, but then started a decline that has the benchmark hovering at below the March value.

China’s benchmark Shanghai Composite Index lost 21 percent in 2011 as the impact of Beijing’s multibillion-dollar stimulus faded and the government tightened curbs on lending and investment to cool blistering economic growth.

The flood of state spending and bank lending after the 2008 crisis fueled a surge in real estate and stock prices. In 2010, Beijing responded by clamping down on credit and real estate speculation to cool inflation and soaring housing prices.

Beijing is trying to steer growth to a more sustainable level after 2010’s explosive 10.3 percent expansion. Growth eased to 9.1 percent in the three months ending in September, down from 9.5 percent the previous quarter.

Chinese leaders have promised to ease credit to help exporters and smaller companies cope with falling global demand and weaker domestic growth. But they say most controls will remain in place. That has disappointed stock traders who are hoping for interest rate cuts and looser controls on bank lending. They have responded in recent weeks by dumping stocks and moving some money to U.S. and European markets.

The benchmark Hang Seng Index slipped in the second half of the year as concerns over Europe accelerated, sending it to a 2011 low in early October before bouncing slightly to end the year at a 20 percent loss.

Hong Kong is Chinese territory, but its financial markets are open to foreign companies and investors, which made it a popular destination this year for foreign companies looking to go public, drawn by the prospect of raising their brand profiles with China’s newly wealthy as growth flags in their home markets.

Italian fashion house Prada was one of the biggest names to list in Hong Kong, with an initial public offering in June that raised $2.5 billion, making it the sixth-biggest IPO globally this year, according to deal tracking service Dealogic.

Other foreign companies that took out primary or secondary listings in Hong Kong include MGM China Holdings Ltd., the Macau casino arm of MGM Resorts International, luggage maker Samsonite S.A. and U.S. luxury handbag maker Coach Inc. However, the slumping market means share prices for many companies that went public are ending the year lower than IPO price.

Benchmark crude for February delivery fell 28 cents to $99.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 29 cents to settle at $99.65 in New York on Thursday.

In currency trading, the dollar fell to 77.58 yen from 77.65 yen late Thursday in New York. The euro fell to $1.2913 from $1.2939.

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Chicago was shaped in part by commodities exchanges where contracts representing corn, wheat and hogs have changed hands for more than a century.

But two prominent exchanges are threatening to leave the state if Illinois doesn’t change the way it taxes their trading.

State lawmakers are expected to convene Tuesday and to discuss a deal that would appease the CME Group Inc. and CBOE Holdings Inc., while meeting demands made by another Illinois mainstay, Sears.

Those who back the tax breaks say they’ll help keep jobs in a state whose unemployment rate hangs just above 10 percent payday advance lender.

Opponents say the state simply can’t afford to make such deals and question whether the companies would make good on their threats or whether they’re simply exploiting the state’s weak bargaining position.

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