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Chess Raymond Keene Twitter: @times_chess Scrabble Allan Simmons Win a Collins Dictionary & Thesaurus
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Fill the grid so that every
column, every row and every
3x2 box contains the digits 1 to 6.
Developed by Sudoku Syndication
Solution to Cryptic
Jumbo 1109
The winner is
Ken Jones of
Narbeth,
Pembrokeshire
S Y C O P H A N T I C B A B Y B O U N C E R
P R R R E H A A A N O E
I H A V E A C U N N I N G P L A N S A U N A
N M A H N L P M D A N D
A L P A C A V I L L A I N Y S A I N T L Y
C H C S I P T D R T
H O N E Y C O M B C H E S S M A N T Y P O
B O N A O R P N F A W
E N S U E F E L O N Y C O N D O L E N C E
E T L E L C N T O D A
T E R Z E T T O M A K E L O V E N O T W A R
I V T B R W N U R E
C O N T A G I O U S N E S S E L L I P S E S
O G T N E W B O N T P
B A S S O O N I S T D O G L E G G R E B E
B A R E E S R A I R E
L A T E D O W N B E A T S U S T A I N E D
E T M P C H T E L O
S P A N I S H S U R V I V O R S A L A A M
T C R O E E N M C M D E
O T H E R B E E N T H E R E D O N E T H A T
N E O I T L S R O I O E
E X D I R E C T O R Y S L E E P I N G C A R
Solution to Quick
Jumbo 1109
The winner is
Michael Adams of
Leafield, Oxon
Solution to Fridays Codeword
J A WB O N E C R A S S
U O R R R U L
R I M G I M M I C K R Y
O A Y I T N
R U N G A N T I D O T E
H S E Q V S
G R O W T H D U R E S S
R O O I E R
A U D A C I T Y D E E M
N K S T X U
D I Z Z I N E S S E L M
P O S L A R M
A D O P T F I R S T L Y
Word Watching: Cation (b) A
positively charged ion that is
attracted to the cathode during
electrolysis. Athabaskan (a) A
group of North American Indian
languages, including Apache and
Navaho. Patibulary (c) Of or
resembling a gallows, 15th-
century, usually jocular. Autarky
(a) Self-sufficiency, 17th century.
Polygon ankh, dhikr, dhow,
hadron, haik, hair, hairdo, hand,
handiwork, handwork, hank,
hard, hark, hawk, hind, hoar,
hoard, hoki, honk, hora, horn,
howk, khadi, khan, kowhai, rhino,
Polygon Roger Phillips
Using the given letters no more than
once, make as many words as possible of
four or more letters, always including
the central letter. Capitalised words,
plurals, conjugated verbs (past tense
etc), adverbs ending in LY, comparatives
and superlatives are disallowed.
How you rate: 15 words average; 21,
good; 26, very good; 31, excellent.
Answers to Fridays Polygon are to the
left. Todays answers are printed in
Mondays newspaper
The winner is David Barnes of
Ely, Cambs
whin, whir, who. Two Brains 1 On
a digital watch or clock(at pm)
they would read: 1415, 1805 and
1940. All famous battles in English
history (Agincourt, Trafalgar and
Battle of Britain). 2 They all gave
their names to geological periods-
Devon (Devonian), Siluri
(Silurian) and Jura (Jurassic).
Scrabble Computer simulation
top five plays in order of
preference for each rack: Rack
AEEFOOQ: OOF F15d (23),
AFORE A8d (24), change
AEFOOQ, OOF G6a (19), OOF
C5a (22); Rack AFILNQR: FAQIR
C3a (42), QIBLA F6d (38), FAQIR
E3a (39), QIN E5a (29), QADI
B6d (34); Rack AIIKOPQ: OKAPI
F15d (38) (which retains QI for a
possible 62 at J14), QADI B6d
(34), OKAPI C8a (35), QI E5a
(25), OIK F15d (26).
Literary quiz All were filmed
under these different titles:
1 Rosamond Lehmann (The Heart
of Me)
2 Philip K Dick (Blade Runner)
3 Philip Pullman (The Golden
Compass) 4 Nigel Balchin
(Separate Lies).
R I D I N G H A B I T H I P P O C A M P U S
A J U E A H A O P V U I
P R I V A T E E N T E R P R I S E E X T O L
S N N L G G P N R S A L
C A N U C K A L A R M I S T A T T A B O Y
A E C A E E T A R S
L A D Y S M A I D A S S A S S I N D A Z E
L E B E T T C O B V A
I S S U E E N S I G N C H A N G E L E S S
O K T R H A V L G F O
N O T C H I N G S T R I K E A B A R G A I N
O E E S S C P A I C
S E P A R A T E T A B L E S C R O M L E C H
U P N O Y P H N E O O
S Q U E E Z E B O X E R R A T A D E N I M
U B T X G L E R R I E
R E L Y S O R E N E S S D E D I C A T E S
R I G N A I L O H T
A S S U A G E W I T H D R A W J A N G L E
T H R R H H E B I G R A
I L I A D A L I C E I N W O N D E R L A N D
O N A T S R C U E I F E
N E G L I G E N T L Y Y O R K M I N S T E R
Puzzles
online
For more
of your
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puzzles and
crosswords
go to
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the times | Saturday September 20 2014 FGM 57
MindGames
The Times Crossword is in the back of the main paper
Codeword No 2195
A
A
P
P
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
26 5 16 5 24 5 20 13 21 17
5 25 23 12 17 7 4 12 12
20 7 5 11 21 20 10 17 21 23
20 17 12 20 26 5 10 22 6 3
15 8 25 7 10 10 13
6 5 18 21 17 10 25 15 22 26 25 10
20 12 5 6
8 22 15 5 7 9 16 21 14 14 6 25
17 4 21 20 1 22 22
22 19 25 25 11 22 15 21 6 13
11 6 12 8 5 22 8 3 4 1
12 17 9 7 21 20 1 7 12
20 4 3 25 9 1 25 2 21 8
1 2 3 4 5 6 7 8 9 10 11 12 13
14 15 16 17 18 19 20 21 22 23 24 25 26
Numbers are substituted for letters in the crossword grid. Below the grid is the
key with some letters solved. Completing the first word or phrase will give clues
to more letters. Enter them in the key and main grid and check the letters on
the alphabet list as you complete them. Yesterdays solution on page 57
Stuck on Codeword? To receive 4 random clues call 0901 322 5000 or text
TIMESCODE to 85088. Calls cost 77p from BT landlines plus network extras. Texts
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Calls cost 77ppm from BT landlines. Other networks and mobiles may vary. SP: Spoke,
W1B 2AG, 0333 202 3390 / 01437 8815 (Mon-Fri 9am-5.30pm).
Quick Crossword No 6511
Across
1 Flash on and off (6)
4 One who flew too close to
the sun (6)
8 North American rodent (7)
10 South American rodent (5)
11 Area of central London (4)
12 Fixer, securer (8)
14 Spiny rodent (9)
18 Get on very well (3,2,3)
20 Long hollow cylinder (4)
22 Small rodent (5)
23 Arctic rodent (7)
24 Coarse-grained rock (6)
25 An addition to a document
or building (6)
Down
1 Indian fried pastry (6)
2 Red fruit (7)
3 Farm building (4)
5 Mixed drink (8)
6 Man-made fibre (5)
7 Wriggle, writhe (6)
9 Measure used in recipes (9)
13 Male siblings (8)
15 Having great knowledge (7)
16 Londons river (6)
17 Hunting dog (6)
19 Come into contact with (5)
21 Portent (4)
Solution to Crossword 6510
1 2 3 4 7 6 5
8 9 10
11 12
13
14 15
16 17
18 19 20
21
22 23
24 25
S O V I A C P R
L E V E E V I O L A T E
A E T A N V V
V A R I O U S V A L U E
D T E O R
E V O K E S G R A V E S
N V S E
V E S S E L F E R V I D
I O R U U
S A V V Y V I V A L D I
I I D U I C V
O V E R A L L B R A V O
N T Y A V E N R
Need help with todays puzzle? Call 0906 757 7188 to check the answers. For help with
possible words to fit a specific clue text TIMESCROSS followed by a space and the
letters that you know, replacing the unknown letters with full stops, to 85088 to receive
a list, eg, TIMESCROSS P.P..R to 85088. Calls cost 77ppm from BT landlines. Other
networks and mobiles may vary. Texts cost 1 plus your standard network charge. SP:
Spoke, W1B 2AG, 0333 202 3390 (Mon-Fri 9am-5.30pm).
The Listener Crossword No 4312 Elementary Deduction by Rood
Senders of the first three correct
entries drawn will each receive a
copy of Brewers Dictionary of
Phrase and Fable. Write your
name and contact details in the
space provided and send to:
Listener Crossword No 4312,
63 Green Lane, St Albans,
Hertfordshire AL3 6HE, to arrive
by October 2.
Solution to Listener Crossword No
4309 on page 55
listenercrossword.com
More information about Chambers
books can be found at
chambers.co.uk
BridgeAndrewRobson
When youve shown a stopper
in the bidding, you dont need
one in the play, said the late
and great Scottish player-
writer Hugh Kelsey. Its advice
that my friend Zia Mahmood
has kept close to his heart all
his Bridge-playing career.
Take this deal from a first-
round Gold Cup match, kindly
reported to me by his opponent
Harold Schogger, whom The
Irrepressible Zia (TIZ) and his
team only narrowly beat. What
would you bid over Easts 1
with Souths hand?
West tried the sneak attack
of a club v 3NT. Declarer beat
Easts jack with the king and
promptly claimed nine tricks
via six diamonds and two
hearts. Game made.
3NT would have failed by
no fewer than five tricks if
West had found a spade lead
(East switching to the queen of
clubs). If West had led his part-
ners suit hearts, it would have
been a photo finish. Declarer
wins dummys king and cashes
six diamonds. My guess is East
will reduce to AK, Q9 and
QJ [AK4, Q9 and Q
would work better].
It would have been interest-
ing to see if TIZ would have
worked out to exit with a
strange-looking king of clubs.
West can only win and lead
over a black card, letting East
take his three black-suit win-
ners, but then have to lead from
Q9, presenting declarer with a
third heart trick and his game.
Easts 4 proved easy. He
ruffed the top diamond lead
and led the queen of clubs, cov-
ered by king and ace. He then
cashed the ace-king of spades
(preparing to leave the queen
out); when it dropped, he
crossed to the jack and ran
clubs (when they split 2-2). 10
tricks and game made.
Even if TIZ had gone down
five in 3NT on a spade lead, his
side would have shown a hand-
some profit. Thats the beauty of
his 1NT: when it loses, it wins.
andrew.robson@thetimes.co.uk
J 9 6 5
3
7 6 2
A 8 5 4 3
Q 3
J 8 5
A K J 10 9 3
K 10
10 8 7
A K 10 6
Q 8 5 4
9 2
A K 4 2
Q 9 7 4 2
-
Q J 7 6
S
E
N
W
Dealer East E-W Vul
S(TIZ) W N E
1
1NT(1) Pass 3NT end
(1) I like it in spite of the lack of
heart stopper (stopper, schtopper).
If your side has a game contract its
far more likely to be 3NT than 5
[and you can always bid diamonds
later if West supports hearts now
that partner can be deduced for heart
shortage]. Furthermore the 1NT over-
call is a rather effective preempt.
Table Two
Table One
S W N E
1
2(1) Dbl(2) 3 4(3)[end]
(1) Youcant crimethis honest bid. But...
(2) West chances a light negative
double showing spades and...
(3) East loves his fit and diamond void.
P
U
Z
Z
L
E
R
M
E
D
I A
Two Brains
Raymond Keene
Word Watching
Paul Dunn
Literary Quiz
Paul Dunn
Question 1 What is the
historical relevance of the
following: quarter past two, five
past six and twenty to eight?
Question 2
What is the nominal link
between: an English county, an
ancient British tribe and a
French mountain range?
Answers on page 57
Thanks to John Smith of Chester for this
weeks questions. Please send your
puzzles to keenebrain@aol.com. All
readers who have contributed to this
column receive a special mention.
Cation a. A holiday
b. A charged atom
c. Stoical
Athabaskan a. A native
language b. From a Balkan
sect c. Like a flowering shrub
Patibulary a. A marbled
entrance b. Bending like a
knee c. Gallows-like
Autarky a. Self-sufficiency
b. Wilful ignorance
c. A fowl
Answers on page 57
Altered images
Who wrote the following
novels and what do the books
have in common?
1 The Echoing Grove
2 Do Androids Dream of
Electric Sheep?
3 Northern Lights
4 A Way Through the Wood
Answers on page 57
In every clue the result of the wordplay requires an elementary deduction to yield the answer. The letters
involved, in clue order, lead to an instruction (a two-word phrase in the grid may help with positioning) and
provide a warning. After correctly resolving five clashes, solvers must highlight one word, whose resultant
representation includes all occurrences of a thematic letter (which solvers may prefer to enter in lower case) in the
final grid. The Chambers Dictionary (2011) is the primary reference; 5ac is in the Oxford Dictionary of English.
Name .....................................................................................................................................................................................
Address ................................................................................................................................................................................
.................................... Postcode ....................................... Phone number..............................................................
Across
1 Gazelles run by fertile tract without restriction (4)
5 Burnt meat smell, fine for Ramsays starter, stupid
for Afrikaner (3)
8 Indian clerk to perch on Irish toilet flushing last
two letters (6)
13 Madras pot reflected much of coral island with
lid (5)
14 Enlarged vessel, once empty, runs with difficulty
(no force) (5)
16 Section of sky to taunt aircraftsman possibly
from G8 (7)
17 Nag Charles about headdress for Camilla? (5)
18 Newly arrived from the east, wildebeest wool in
Ayr yard (5)
19 Samurais stowed by squadron in Lushun (6)
20 Vintage comb grips near edge (4)
23 Gaga in Scotland to perform old song with sex
appeal (6)
24 Scots strip thatch producer in Ireland (4)
25 Front and back of engraving in obscure Japanese
brass (6)
28 Canadian channel to learn about New York
University (4)
29 Almost embedded fathers old nails (5)
31 Locate most of deposit from hot springs (4)
35 Hoax takes in that lady before party protest in
India (6)
37 Housewife in Cape, jumper in view (4)
38 Habit worn about Greek island (6)
41 Young hawk earlier sent back Malay dish after
noon (4)
43 Become more acceptable to payment with Korean
cash (6, two words)
47 Trannie maybe to eat in back row (5)
48 Greedily eat local potato store quickly losing
energy (5, two words)
49 Drug users omitting first name circulated postal
surveys (7)
50 In places, hawk American bird (5)
51 Prince tracking fabulous bird journeys to
Mecca (5)
52 Bob, perhaps, a soldier initially imagines at least
as much as a peck (6)
53 Evil demon abandoning River Island (3)
54 Pleasure follows Australian ruler (4)
Down
2 Approach committee involved in producing
replica (8)
3 Air-conditioned car picked up railway clerk (7)
4 Pentagon press agent seizes north wing (5)
5 Amusement! Director knocked out with stones (7)
6 Anything said in parts starts to irritate centre of
the ear (4)
7 Condition to feign reality (4)
8 Scrap informal session with plough (5)
9 Worthless to Matthew two old abodes leak
(6, two words)
10 Snake seldom seen in fish container (5)
11 Ians robust wagon carries Queen (4)
12 Hip Aussie, once pursued by models, swaggers (6)
15 At one time, huge vessel with tenth docked (5)
21 Satellite pile up in Romania (4)
22 E German splitting head over tiny particle (5)
26 Turkish address housing Nigerian company (4)
27 Runner stashes blow among Bulgarian cash (8)
30 Islamic body has collapsed laughing (7)
32 Promise to pay money after one cleared heavy
metal (7)
33 Is bark preceding quiet rushing noise? (6)
34 Evil fool nearly drunk (5)
36 Drowsy, moving unsteadily (6)
39 One found under stone hut (5)
40 Chinese province to slam social gathering (5)
42 Pay cut before start of sexy adult dance (5)
44 Novices yellow colour aboard ferry (4)
45 Novel to starve mother (4)
46 House gods institute change in Georgia (4)
the times | Saturday September 20 2014 FGM 59
For more crosswords and your favourite
puzzles go to thetimes.co.uk/puzzles
1 2 3 4 5 6 7 8 9 10 11 12
13 14 15
16 17
18 19 20 21 22
23 24 25 26 27
28 29 30 31 32
33
34 35 36 37
38
39 40 41
42 43 44 45 46
47 48 49 50
51 52 53
54 55
Cryptic clues
Across
1 Tub-thumper (member of
Kennedys party) keen to get a
hearing (9)
6 Aggressive promoters stress right
to be involved in climb (8,5)
13 Team colours ones torn off in
angry rebuke (5)
14 Sons quietly contact managers,
wanting launch pad for ideas (11)
15 Some inspire curiosity? Come
again? (5)
16 Essential details revealed in dittys
rhymes (5-6)
17 Absurdly and ridiculously drunk?
Not I (11)
18 First of lorries in a French port not
carrying goods (7)
20 Offer to divide charge for
constituent of acetylene (7)
21 Type of desk where lines are
inserted in nonsense work (4-3)
23 City executive pinches state cash
sum not broadcast (6,13)
27 Its used on the river as an
alternative, its said (3)
28 Invitation to compete for cluster of
flowers? (6)
29 Initially how a blockhead rejected
a sponge (6)
31 Nibble good teachers provided
after drinks for everyone (9)
34 Lied, perhaps, after pal arranged
popular church music (9)
35 But one isnt necessarily
accommodated in the
gatehouse (6)
36 Canvas sheet captain finally cuts
in flight (6)
39 Priest regularly tucking into
clair (3)
40 Be absolutely confident, risking
bankruptcy in 23? (3,4,6,6)
42 Temporary current required inside
when kids are at school (7)
43 if wind and rain, for example,
are talked of (7)
45 Old gold coin found by retired
soldiers base (7)
47 Hardy girl cock-a-hoop about
large mosaic being so? (11)
49 Objectivity of blooming old nurse
recalled in sickrooms (11)
51 Again prepared leftist papers (5)
52 New interne embracing very old
actress (11)
53 German writer given a
miraculously sustaining food (5)
54 Varsity athlete taking two
Conservatives round the Archers
place (9,4)
55 Remove former head clutching
short flag (9)
Down
1 Free bus ride men originally
claimed improperly (11)
2 Sort of union mounting strike
when a woman is admitted? (7)
3 Fellow eating very soft fish (5)
4 Grand study of Herschels
epicurism (10)
5 Unpredictable strike-breaker
visiting Morecambe (7)
6 Woman and daughter digested
almost complete pulp novel (5,8)
7 Exaggerate honour? Terrible,
losing head about it (9)
8 Rush hour traveller, perhaps,
put up with enormous expense
at first (7)
9 Soldiers given award for
brightening-up of
barrack-room? (12)
10 Good turn unknown in French
city, making carved figures (9)
11 Ocean predators contributing to
major casualties (5)
12 Festive atmosphere created by
quietly cultured person (5,6)
19 Bouncer gets cross over article
about medium (7)
22 Warbler finally caught by tropical
bird (9)
24 Politician thus appearing on US
intelligence register? (9)
25 Japanese commander holding end
of short smooth-bore (7)
26 FBI agents in standard division (7)
30 Dry old choir he developed in
compound (13)
32 Recently delivered, perceived and
endured, so to speak (7)
33 Brooded over criminal disposed to
take in city (12)
34 Under pressure, poor chorister
accepts one very early (11)
37 Unexpected snag, a trekker losing
heart: its harmless though (6-5)
38 Girl with quarters invested in
range, having mixed feelings (10)
40 Pub employee, one bumping off
man with hereditary title? (9)
41 Veronicas source of
methamphetamine? (9)
43 Say which generation used this
amount of electrical power? (7)
44 Train plant round top of
empty can (7)
46 Reportedly purchase no matter
what article for such periods (7)
48 Note by Catholic dignitary
identifying place of debauchery (5)
50 Raise objections, being largely
coy (5)
Across
1 Feminist movement (6,3)
6 Be very impatient to start (5,2,3,3)
13 Become less tense (5)
14 Portable communication
device (6,5)
15 Folk-inspired form often used by
Dvork (5)
16 As an example (3,8)
17 Deliveries to hotel guests (4,7)
18 Verse form (7)
20 Narrow fissure (7)
21 Online location (7)
23 Without previous thought or
preparation (3,3,3,2,4,4)
27 Hearing organ (3)
28 Roundabout route (6)
29 Fungus attacking wood (3,3)
31 Avoiding alcohol (9)
34 Respiring (9)
35 Rather tired (6)
36 Surrounded by (6)
39 Equipment; clothing (3)
40 Australian landmark
structure (6,7,6)
42 Emit (light, etc) (7)
43 Stupid mistake (7)
45 Ask (someone) for something (7)
47 Four-faced solid (11)
49 Transient quality (11)
51 Listlessness (5)
52 Actors make-up (11)
53 In front (5)
54 One looking into others
minds (7-6)
55 Busy time in town (6,3)
Down
1 Verbatim, literally (4,3,4)
2 Channel for water wheel (4,3)
3 Disgraced US president (5)
4 A word exactly fitting its
context (2,3,5)
5 Variety of plague (7)
6 Heraldic authority (7,2,4)
7 Share out (9)
8 Stimulate (a reaction) (7)
9 Very small (6-6)
10 Indias City of Pearls (9)
11 Disneys fawn (5)
12 Companys protected
information (5,6)
19 Tire out (7)
22 Thats surprising to me! (1,5,3)
24 TV series cleric (6,3)
25 Lowest point of an orbit (7)
26 Hair cleanser (7)
30 Personification of death (3,4,6)
32 Unethical, unprincipled (7)
33 Boxing category (12)
34 Sherlock Holmes home patch (5,6)
37 Quite recently (3,5,3)
38 Searcher for minerals (10)
40 Travelling by ship (9)
41 Of aquiline appearance (4-5)
43 Native to Myanmar (7)
44 Art genre that is true to life (7)
46 Engage in a struggle (7)
48 Argentinian dance form (5)
50 Become sore by rubbing (5)
Quick clues
Prizes
The prize for each
of the first correct
solutions to the
Cryptic and times2
Jumbo clues to be opened will be a collection of
Times reference books including The Times
Universal Atlas of the World, Collins English
Dictionary & Thesaurus, and Bradfords Crossword
Solvers Dictionary published by HarperCollins
worth 110. Entries should be marked Cryptic
or times2 and sent to: Jumbo 1111, The Times,
1 London Bridge Street, London SE1 9GF, to arrive
by October 2. The winners and the solutions will
be published on October 4.
Name.........................................................................................................
Address.....................................................................................................
......................................................................................................................
......................................................................................................................
............................................................ Postcode.....................................
Phone number......................................................................................
Jumbo crossword No 1111
60 FGM Saturday September 20 2014 | the times
the times | Saturday September 20 2014 FGM 61
Business
Russian oil
hopes sunk
Rosneft forced to
quit Arctic well
Page 63
Devolution
warning
Business calls for
regional clarity
Pages 64, 65
Mobile store
jobs lifeline
Vodafone agrees
Phones4u deal
Page 66
GSKfined 300m in
China bribes scandal
Andrew Clark, Leo Lewis
Britains biggest pharmaceuticals com-
pany was facing calls last night for top-
level change after it paid a 297 million
fine and issued an abject apology to the
people of China for channelling bribes
to doctors who prescribe its drugs.
Mark Reilly, GlaxoSmithKlines
former country headinChina, andfour
other senior executives who oversaw
the British drugmakers illicit activities
in the worlds second-biggest economy,
were handed suspended jail sentences
of between two and four years. Mr
Reilly is to be deported to Britain.
GSKsincerelyapologises totheChi-
nese patients, doctors and hospitals,
andtotheChinesegovernment andthe
Chinese people, said the company,
which added that it deeply regrets the
damage caused.
The scandal was described as a
deeply disappointing matter by Sir
Andrew Witty, chief executive of GSK,
who pledged: We have, and will con-
tinue to, learn from this.
The display of penitence followed a
trial in the city of Changsha held be-
hind closed doors at the request of
GSK, which told the court it wanted
proceedings to be heard in secret for
reasons of business confidentiality.
It followed a 14-month investigation
into GSKs use of a 320 million hospi-
tality budget inChina that was allegedly
the front for a slushfundusedtoprovide
cash, gifts and sexual favours for physi-
cians who prescribed GSKdrugs.
GSKs shares roseby12pto14.49as
investors reacted with relief that the
case had been resolved, although the
Serious Fraud Office and the US
Department of Justice are still pursuing
parallel investigations.
Alistair Campbell, a drugs analyst for
Berenberg Bank, said that disquiet was
mounting about GSKs progress under
the leadership of Sir Andrew and Sir
Christopher Gent, the chairman who is
widely expected to retire next year.
Imdefinitely hearing some disquiet
among investors about the senior man-
agement of GSK. Theres an appetite
for some degree of change that could
either be a change of chairman, or chief
executive, or both, Mr Campbell said.
The business needs to improve and
thats for reasons beyond just China.
There has been substantial disappoint-
ment with the performance of the US
business and disappointment with the
Advair [asthma treatment] business.
The prosecution of GSK is part of a
broader crackdownoncorruptionbyXi
Jinping, theChinesepresident, whohas
pursued a policy of clamping down on
bribery with such vigour that compa-
nies such as Diageo and Herms have
reported a drop in sales of premium
spirits and watches.
Experts said that GSKs habit of
handing kickbacks to doctors was not
unique in the healthcare industry. One
China-based industry consultant said:
These were practices which previous-
ly werent necessarily regarded as
acceptable, but were overlooked. Now
theyre not overlooked.
Misdemeanours at GSK came to
light when a whistleblower contacted
senior executives in January last year.
The company hired a private investiga-
tor who looked into the claims. How-
ever, Peter Humphrey, the investigator,
fell foul of the authorities himself and
has ended up in prison for illegally ac-
cessing personal information about
Chinese citizens.
In an apparent further effort to
attack the companys integrity, a clan-
destinely filmed sex tape was made of
Mr Reilly last year and emailed to
senior executives in London. Mean-
while, further whistleblowers have
claimed that GSKhad paid similarly
inappropriate incentives to doctors in
Poland, Jordan, Iraq, Syria and Leba-
non.
Now, the yes
men move south
W
hat a thumping
victory for financial
markets as the
bookies have
proved again. Boy,
did they trounce those opinion
pollsters. Remember YouGovs
bombshell 12 days ago, showing
yes on 51 per cent and David
Camerons bug-eyed panic? Pity he
forgot to log on to Oddschecker
before he hoofed it up north with
his devo-max giveaways. The
bookies took a different view
they shortened the odds on a no
vote to 1-4. Bang on.
Follow the money. Yes, the Scots
have done exactly that, voting with
their pockets. Sure, Alistair Darling
bored for Britain, literally, droning
on about currencies, capital flight,
brakes on inward investment,
recession risk, the old central bank
conundrum all that deathly stuff.
He was right, though, even if he
did need a last-minute push from
unionist bosses. The vision thing got
Alex leaping Salmond only so far:
1.5 million voters. Or barely more
than the populations of Barking,
Barnet, Bexley, Brent and Bromley
combined. Not enough, luckily, to
trigger a chaotic break-up of the
307-year old Union.
In fact, no was already priced in
even a resounding one. True, the
pound rallied, hitting a two-year
high against the euro, but it barely
budged against the dollar. As for the
FTSE 100? Only 0.4 per cent up.
Maybe thats all those company
bosses deserved too for their brain-
numbing press releases, relating
how business dislikes uncertainty.
Do platitudes go into the bonus
scheme too nowadays? Neither is it
such a big thrill that Royal Bank of
Scotland and Standard Life are
staying put whatever the downer
for Edinburgh removal men. And
nor does it alter things much that
Mark Carney, the Bank of England
governor, now has one fewer excuse
for not putting up interest rates.
No, if there is change to come, its
rooted in the detail of the Cameron
bribe: greater tax and spending
powers for the Scottish parliament.
Why should the Scots get that and
not the rest of us? Indeed, as even
the PM hinted, the case can only
grow for big cities like Manchester,
Birmingham and Cardiff to take
more control of local infrastructure
spending, say, rather than continue
to suffer Whitehalls top-down,
comatose approach. Look out for
that, then, while remembering one
lesson: next time a votes on, follow
the people betting together.
Drugs didnt work
N
ot even GlaxoSmithKline has
devised a drug that enables
its chief executive to keep
tabs on all 99,000 staff in 115
countries. Yet, the companys
bribery farrago in China is a big
embarrassment for Sir Andrew
Witty, a man not short on the
ethical chat since taking over six
years ago. There are not many
walks of life where coughing up a
297 million fine and issuing a
grovelling apology to the Chinese
government keeps someone in
their job. So, Sir Andrew is lucky
hes running a business worth
70 billion that can ride out such
storms. But the whole episode does
raise questions about the drug
makers controls and, as
important, managements
willingness to react to news it
doesnt want to hear.
When, in July last year, it
emerged that a whistleblower had
sent an email alleging China sales
staff had been giving kickbacks to
doctors to prescribe Botox, GSK
said that its inquiries had found no
evidence of bribery or corruption.
Really?
Then, what about the notorious
sex tape, starring Mark Reilly, its
ex-China chief, which arrived with a
clutch of fresh corruption claims?
The tape turned up in the inbox of
13 executives, including Sir Andrew
a missive that would typically
invite questions over blackmail, say,
or Chinas legendary industrial
espionage. Instead, GSK allowed Mr
Reilly to hire a husband-and-wife
investigation team on a mere
20,000 budget astonishingly
lackadaisical, not least now the pair
have been jailed. By contrast, the
soon-to-be sacked Mr Reilly has got
off with a three-year suspended
sentence. He could just be deported.
GSK has now decoupled
salesmens targets from their pay.
You hope that works. Sir Andrew
cant afford any more deep regrets.
Genghis Sorrell
M
ongolia knows a thing or
two about dominant
personalities, what with it
being the home of Genghis Khan,
but is it really prepared for Sir
Martin Sorrell? The WPP boss has
made the land-locked nation,
squeezed between Russia and China,
the 111th country in the advertising
groups network. Hes commandeered
the creative agency of conglomerate
MCS Holding for a secret sum.
Sir Martin, who already marshals
179,000 troops around the globe
from the end of his mobile phone,
says that he visits Mongolia all the
time not so much for the Gobi
desert or the snowcapped peaks of
Bayan-lgii, but because WPPs
data wing Kantar does biz there for
multinational clients.
Still, the main attraction is
Mongolias GDP forecast to grow
9.5 per cent this year and 10 per cent
next. Its quite a rich country, as
you may have noticed. What SNP
would have positioned Scotland as,
he muses. If only Alex Salmond had
got himself a decent ad man.
alistair.osborne@thetimes.co.uk
business commentary Alistair Osborne
Inside today
Drugmaker in search
of a new remedy
Page 67
A
libaba executives
including Jack Ma,
its founder, enjoy a
stunning debut in New
York. The share price
soared immediately,
valuing the Chinese online
retailer at more than
$220billion. Page 63
Jack heads for
the big league
BEN HIDER/AP PHOTO/NYSE
62 FGM Saturday September 20 2014 | the times
Business
economics
Post-referendum landscape:
Business is warning
Westminster against devolving
too much power to the regions
in the coming months as the
repercussions of Scotlands
referendum on independence
become clearer. David
Cameron yesterday promised
to give England, Wales and
Northern Ireland more powers
as part of any deal on greater
devolution to Scotland, after
the nationalists were defeated.
Business groups welcomed
greater local autonomy over
spending decisions, but there
were concerns that differing
tax rates or employment laws
could undermine the UKs
internal market and damage
growth. Page 64
Markets: Stocks rallied, the
pound fluctuated and investors
dumped their insurance
against independence after the
Scots pulled back from
separation. Sterling briefly hit
a two-year high against the
dollar, climbing by 1 per cent,
before heading into reverse in
later trading. The FTSE 100
surged close to 6,900, before it
too dipped later in the day. The
index closed up 18.63 points at
6,837.92. Page 64
banking & finance
1.01%
Banking reaction: The big
Scottish-based banks that
threatened to move their
headquarters to England last
week amid concerns that
Scotland would vote for
independence have professed
their commitment to the
nation. Lloyds Banking Group
and Royal Bank of Scotland
were among five financial
institutions that had said they
would move their headquarters
or operations if Scotland voted
yes. After it voted to stay in
the 307-year-old Union, they
were among a handful of
Scottish-based businesses that
affirmed their future north of
the border.
Foreign investors: The threat
of Scottish independence
spooked foreign investors to
such an extent that more than
$1 billion (613 million) was
withdrawn from British
equities in the week before the
referendum. Research from
Bank of America Merrill Lynch
showed that the sell-off pushed
total weekly redemptions from
European funds to $4.6 billion,
representing the biggest flight
of capital in more than three
years. Page 65
Lending to business: European
Central Bank plans to boost
lending to business were dealt
another blow after banks
decided to repay billions of
euros of cheap ECB credit. The
ECB said banks would repay
nearly 20 billion (15.7 billion)
of credit, known as long-term
refinancing operations, it had
advanced at the height of the
eurozones debt crisis. The
news came a day after the
ECBs fresh offer of up to
400 billion of low-cost loans
fell flat.
Aviva: Britains second-largest
insurer offloaded its stake in its
Spanish joint venture after a
court ruled in its favour in a
long-running legal dispute.
Aviva sold its holding in CxG
Aviva to Novacaixagalicia
Banco for 287 million in cash,
in a deal that will increase its
surplus capital and should
complete by the end of the
year. A court ruled that NCG
Banco had breached its
shareholder agreement in the
joint venture in the wake of its
merger in 2010 and subsequent
restructuring a year later.
Shares gained 1p to 535p.
consumer goods
0.30%
Heineken: Days after rebuffing
a bid approach from
SABMiller, the Dutch brewer
confirmed that it had started
the search for a successor to
Ren Hooft Graafland, its chief
financial officer. The early
favourite to succeed him is
Robin Hoytema van
Konijnenburg, executive
director of global tax and
financial markets, a role Mr
Graafland once held during his
33 years with the company. Mr
Graafland turns 60 this time
next year, and his present four-
year term on the executive
board runs out next April.
Anheuser-Busch InBev: Inge
Plochaet, president of the
Budweiser and Stella Artois
brewers UK and Ireland
operations, is leaving to pursue
other career interests. She will
be replaced by Steve McAllister,
the head of the companys
operations in Germany, Italy,
Spain and Austria.
engineering
0.94%
Siemens: Europes largest
engineering company plans to
offer more than $6.1 billion, or
$80 per share, for Dresser-
Rand, the American
compressor and turbine maker,
according to Manager Magazin,
of Germany. The bid puts the
German company in
competition with the Swiss
pump maker Sulzer, which is in
talks on a potential merger
with Dresser-Rand.
health
0.62%
GlaxoSmithKline: Britains
biggest pharmaceuticals
company was facing calls for
top-level change after it paid a
297 million fine and issued an
abject apology to the people of
China for channelling bribes to
doctors who prescribe its
drugs. Mark Reilly, GSKs
former country head in China,
and four other senior
executives who oversaw the
British drugmakers illicit
activities in the worlds second-
biggest economy were handed
suspended jail sentences of
between two and four years.
Mr Reilly is to be deported to
Britain. Pages 61, 67
industrials
2.82%
Arkema: The French chemicals
group has struck a deal to buy
Bostik, the maker of Blu-Tack,
from Total, the French oil
group, for 1.74 billion. Bostik
is one of the worlds largest
adhesives makers, and Arkema
said that the deal would boost
its cashflow from the first year
of the acquisition. Page 66
leisure
0.86%
Hilton Worldwide: Having
started his hotels career
unblocking toilets at a Holiday
Inn in Washington, Chris
Nassetta is used to sorting out
other peoples mess. Yet when
Blackstone Group, which had
just bought Hilton in a top-of-
the market $26billion deal,
asked him to turn around the
rundown hotel chain, he had
little idea how big a mess he
was taking on. Within weeks of
the deal closing, the global
economy began to stutter. The
father of six daughters says
that, in some ways, the
recession made his job easier.
The downturn allowed us to
be more focused on executing
the changes.
Just Eat: The recently floated
takeaway delivery service has
announced the merger of
RestauranteWeb, its Brazilian
division, with that of local rival
iFood.com Agencia de
Restaurantes Online to create
the clear leader in the Brazilian
online delivery food market.
The group, which will emerge
with a 25 per cent stake in the
enlarged business, is to inject
3.5 million to boost expansion.
natural resources
0.90%
African Minerals: The crisis-
struck iron ore miner has
secured a lifeline from its
Chinese partners, but analysts
said that it had been given
only a temporary reprieve. The
company, which mines iron
ore in Sierra Leone, has been
beset by governance concerns
and allegations of dubious
related-party payments, which
it denies. The controversy over
a $50 million payment to a
company that was linked to an
African Minerals director has
compounded the impact of the
weak iron ore price and
investor fears over the
potential impact of the ebola
virus on its operations. Alan
Watling, its chief executive,
announced price rises
yesterday that he hopes will
mean its Tonkolili mine can
generate cash by the end of the
year. In the meantime, it will
continue using its $284 million
credit facility to keep it afloat.
Arctic oil: Russias dream of
exploring the Arctic for oil is
in tatters after sanctions forced
ExxonMobil and its partner
Rosneft to abort their first well.
Moscow appeared to confirm
reports that the two companies
had suspended the operation
in the Kara Sea one week
before Americas sanctions,
imposed over the conflict in
Ukraine, take effect. Page 63
retailing
0.84%
Home Depot: The American
DIY chain said that a data
breach it admitted to last week
resulted in the information on
56 million credit cards being
compromised more than
the 40 million affected by last
years breach at the discount
retailer Target. Some of the
credit-card data stolen from
Home Depot has already been
offered for sale online on the
black market.
Phones 4u: Vodafone has
agreed to take over 140 stores
from the collapsed mobile
phones retailer in a deal that
saves 900 jobs but leaves
thousands of staff waiting to
learn their fate. PwC, the
administrator, said that it had
agreed a deal with Vodafone as
part of the break-up of Phones
4u. The stores will be
rebranded to Vodafone and the
mobile network operator will
take on the 887 employees at
the stores. Page 66
technology
0.20%
Alibaba: Shares in the
Chinese online giant soared on
its New York debut yesterday,
raising $21.8 billion in what is
set to be the biggest US initial
public offering. Opening at
$92.70, a 36 per cent premium
to the $68 offer price, the
shares spiked to $99 before
levelling off at about $90. That
would value the company at
between $220 billion and
$230 billion, edging it close to
Walmart, the worlds biggest
retailer. Page 63
telecoms
0.68%
Eircom: The Irish
telecommunications group has
pulled plans for an initial
public offering. The former
state-owned company, which
was privatised in 1999, had
been planning a stock market
listing as a way to raise capital
that could then be used to pay
down debt.
South Yorkshire: The regions
telecoms network is set to be
upgraded to fibre-optic cables
after local councils signed a
deal with BTat a fraction of
the 150 million spent on a
botched network in the area
four years ago. A new
22 million project, funded by
BT, local councils and the
governments Broadband
Delivery UK pot, will connect
98 per cent of homes across
the region. BT has already
connected nearly a quarter of
a million homes in the area
and the new project will help
to subsidise the wider upgrade
to less populated areas. Page 66
Mexico: has received its first
bid from a consortium to build
a $10 billion state-owned
mobile network, a linchpin of
efforts to break the hold of
Carlos Slims Amrica Mvil
on telecom services. Telecom
equipment makers Alcatel-
Lucent and Ericsson helped
the consortium to craft the
proposal, four sources said.
The Mexican government,
which estimates the network
will require an investment of
about $10 billion over ten
years, wants to pick a winner
in mid-2015, two sources said,
according to Reuters.
Need to knowYour 5-minute digest
World markets
Commodities
Currencies
6,950
6,850
6,750
6,650
6,550
FTSE 100
6,837.92 (+18.63)
Nikkei
16,321.17 (+253.60)
Gold
$1,216.26 (-10.42)
Brent Crude
$98.20 (-0.05)
/$
$1.6321 (-0.0051)
/
1.2712 (+0.0027)
FTSE 250
15,859.10 (+136.29)
16,400
16,200
16,000
15,800
15,600
16,000
15,600
15,200
14,800
$ $
102
100
98
96
94
Thu Wed
1,260
1,240
1,220
1,200
1,180
Tue Wed
1.280
1.265
1.250
1.235
DowJones (midday)
17,294.81 (+26.23)
17,400
17,200
17,000
16,800
16,600
Fri Tue
Thu Wed Tue Fri
Thu Fri
Tue Wed Fri Thu
Thu Wed
Fri Tue
Tue Wed
Fri Tue
Wed Thu
Thu Fri
Tue Wed Fri Thu
$
1.660
1.640
1.620
1.600
1.580
Quote of the week
Graph of the day
Gold price ($ per troy ounce)
1,400
1,350
1,300
1,250
1,200
1,150
Gold dipped yesterday, completing its third consecutive weekly
drop. A decline in unemployment raised the prospect of tighter
monetary policy in America, as the Federal Reserve indicated
that it could raise borrowing costs more rapidly than expected.
Any increase in interest rates would hurt investment in
non-interest-bearing assets such as bullion
Q3, 2014 Q2, 2014 Q1, 2014 Q4, 2013
Company Change
Domino Printing Higher sales 9.3%
Infinis Energy Scotland stays in the UK 8.8%
3i Sells stake in a company 3.3%
RBS Relief that Scotland voted no 2.6%
Babcock International Strong ties to Scotland 2.4%
BHPBilliton Chinas economy is unconvincing -1.3%
Rio Tinto Copper falls for fourth week -1.6%
Randgold Resources Cheaper gold -1.7%
Surgical Innovations Will miss City targets -31.4%
Clean Air Power Profit warning -34.2%
The days biggest movers
Name Pre-tax figure
Profit (+) loss (-)
Dividend
BrainJuicer (media HY) 1.5m (1.3m) 1p p Nov 12
Mobile Tornado (technology HY) -1.4m (-1.4m) 0p
RM2 (industrials HY) -$22.1m (-$8.9m) 0c
6 Results in brief are given for all companies valued at more than 30 million. f = final p = payable
Results in brief
A jumble of
wishful economic
theorising, social
democrat idealism
and Sixties
hippiedom
Adam Posen, the former Bank
of England policymaker, takes
issue with the Nobel laureate
Joseph Stiglitzs support for
Scottish independence
the times | Saturday September 20 2014 FGM 63
Business
Russias dream of exploring the Arctic
for oil is intatters after sanctions forced
ExxonMobil and its partner Rosneft to
abort their first well.
Moscowappearedtoconfirmreports
that the two companies had suspended
the operationinthe Kara Sea one week
before Americas sanctions, imposed
over the conflict inUkraine, take effect.
Sergei Donskoi, the natural resour-
ces minister, said: I have received in-
formation that possibly drilling has
been halted.
Asked whether the drilling had been
stopped because of sanctions, he said
that there was a high probability.
The latest round of sanctions, which
were co-ordinated with the European
Union, were much tougher than ex-
pected. For the first time, they banned
US companies from participating in
existingprojects todevelopArcticshale
oil or deepwater fields.
Previous restrictions had covered
only future projects, allowing Exxon-
Mobil to proceed with its Arctic joint
venture with Rosneft, which is jointly
owned by the Russian government and
BP.
Vladimir Putin fired the starting gun
on the race between Russia and the
USto open up their vast Arctic waters
to oil exploration at the start of last
month. The move came days after the
USand the EU announced their first
round of Russian sanctions.
Christopher Granville, managing di-
rector of Trusted Sources, the consult-
ancy, said: This well was the most
closely watched project in the whole
global oil industry, never mind Russia.
The Arctic is the next big thing.
The sanctions leave ExxonMobils
Arctic ambitions in limbo. The com-
pany signed the joint venture three
years ago with Rosneft, which lacks the
technical expertise required for deep-
water drilling in some of the most chal-
lenging conditions in the world.
The pair agreed to invest $3.2 billion
toexplorethreehugeblocks intheKara
Sea in the Russian Arctic.
Drilling was supposedtoendanyway
at the beginning of next month before
the onset of winter and ExxonMobil
may already have gathered useful seis-
mic data from the aborted well.
President Obama said that the sanc-
tions would be lifted if the ceasefire
heldbetweenUkraineandtheRussian-
backed separatists or if peace negotia-
tions between the sides made progress.
The UScompany, which has ear-
marked half its global exploration bud-
get to Russia over the next decade, will
hope for a diplomatic solution in time
for the start of next summers drilling
season. If the sanctions remaininplace,
Rosneft faces the prospect of exploring
on its own. European oil companies
could not replace the US company
because EUsanctions baninvolvement
in new projects.
Mr Granville said: Rosneft could
continue on their own but it will be
much, much slower.
ExxonMobil and Rosneft both de-
clined to comment on their operation.
USsanctions may have sunk ExxonMobils ambitions for Arctic oil
Tim Webb
Alibaba racks up
the superlatives
on its first day
of share-trading
Other floats put in the shade
Agricultural Bank of China
$22.1bn (2010)
ICBC (Industrial and Commercial
Bank of China) $22bn (2006)
Visa $19.7bn (2008)
NTT Mobile (Japan) $18.4bn (1998)
Facebook $16bn (2012)
Its all right,
Ma, youre
still living
the dream
Jack Ma embarked on a charm offen-
sive with the US establishment within
hours of launching Alibabas shares on
the New York stock exchange.
Before he launched himself on a
round of dining with leading figures
from the worlds of politics and busi-
ness, however, he set himself another
job: win over the hearts and minds of
ordinary investors.
For amanwithanimpishsenseof hu-
mour, this was not hard. In a television
interviewbefore shares started trading,
Mr Ma claimed inspiration from a
mythological American everyman.
I got my story, my dream, from
America. The hero I had is Forrest
Gump, he said. Ive been watching
that movie for about ten times.
He watched the 1994 Tom Hanks
filmjust before leaving for his latest trip
to the United States, to remind himself
that no matter how much wealth you
have, you are still you.
Somehow, you just cant imagine
Steve Jobs or Bill Gates getting that sen-
timental. Somehow, its hard not to like
Mr Ma all the better for it. Hes some-
thing akin to a Chinese Warren Buffett.
Now that he had reached 50 and was
rich, Mr Ma told CNBC, he wanted to
use his multimillion-dollar windfall to
help other people make money.
Thats not to say that he does not
have serious ambitions for Alibaba.
We want to be bigger than Walmart,
he said. They changed the business
last century . . . we hope that 15 years
later, they say, [Alibaba] is a good com-
pany like Microsoft, like IBM, like Wal-
mart. They shaped the world.
Mr Ma was expected to meet more
than 20 high-profile chief executives.
His guest list was understoodtoinclude
JeffreyImmelt, of General Electric, and
Larry Fink, of BlackRock. Next week
Mr Ma will cosy up to US political roy-
alty by attending the Clinton Global
Initiative, an annual get-together in
New York for world leaders, sharing a
stage with Mary Barra, the chief execu-
tive of General Motors, and others.
Alexandra Frean Washington
Shares in Alibaba soared on the com-
panys New York debut yesterday, rais-
ing $21.8 billion in what is set to be the
biggest US initial public offering.
Opening at $92.70, a 36 per cent
premium to the $68 offer price, the
shares spiked to $99 before levelling
off at about $90. That would value the
company at between $220billion and
$230billion, bigger than the rival etail-
ers Amazon and eBay combined and
edging it close to Walmart, the worlds
biggest retailer.
Within minutes, trading had already
surpassed Twitters first day. Demand
was so high that underwriters were
considering exercising an option to sell
more shares. That could eventually re-
sult in the amount raised jumping to
more than $24 billion, overtaking Agri-
cultural Bank of Chinas record $22.1
billion listing in 2010.
It was a remarkable achievement for
a company that began life 15 years ago
in the Hangzhou flat of a former
Englishteacher. That teacher, JackMa,
saidyesterdaythat hestill hadbigambi-
tions for the company.
The flotation provides Mr Ma with a
hugewar chest. Hesuggestedthat some
would be spent on the companys eco-
system in helping small companies,
particularly in China, southeast Asia
and Africa, to use Alibabas ecommerce
trading platforms to make money.
The IPO will mean a big payday for
many at the company and
early investors. Mr Ma was
expected to make about
$870 million from selling
about 12.8 million shares.
Walter Price, of Al-
lianz Global Inves-
tors, described the
stock sale as one of
the best managed
IPOs he had ever
seen.
Peter Garnry, of
Saxo Bank, said the
opening price was
close tothe $90fair value he hadplaced
on the shares. He expected Alibabas
operating profit to grow by more than
30 per cent a year over the next three
years. Thesharepricewill moveintan-
dem with the increase in operating
profits, he said.
Youssef Squali, a Cantor Fitzgerald
analyst, started coverage of Alibaba
with a buy rating and a fair value of
$90 on the stock.
It is understood that more than 1,700
investors from around the world tried
to buy shares, but only half were
successful. Most shares were under-
stood to have gone to Americans, with
about 25 investment firms taking about
half of the stock.
But retail investors also showed in-
terest. TD Ameritrade, the online bro-
ker, said the level of individual orders
was 75 per cent the level of initial de-
mand recorded just before the flotation
of Facebook, a company much better
known to American small investors.
Tempus, page 54
6An Edinburgh-based investment
trust renowned for taking big bets
on technology stocks is one
of the rare British winners
from the Alibaba flotation,
notching up a paper profit
of about $200 million
after buying into the
company two years
ago in a private
deal.
Scottish
Mortgage
Investment Trust
paid $50million for
Alibaba convertible
preference shares in
September 2012.
These, in effect,
convert into 2.7 million Alibaba
shares, valued at $183.6million at
the $68-a-share issue price.
The value of the stake grew to
$257million as the Alibaba share
price was pushed as high as $95 in
the first few minutes of trading in
New York yesterday.
Its nice to dwell on the
occasional winners, Tom Slater, the
deputy manager of the trust, told
The Times, recalling how Alibaba
was much less popular with
investors two years ago when it did
the placement. It was a pretty
difficult market environment. There
was a lot of negative press at the
time over the fallout with Yahoo!.
The placing was part of a deal to
enable Yahoo! to reduce its stake in
Alibaba.
SMIT saw the company as
attractive because of its dominant
share of ecommerce in the worlds
fastest-growing large economy.
The Alibaba effect boosted SMIT
shares yesterday, pushing them to a
record of 239p, up 4p. It is now
Britains biggest investment trust,
weighing in at 3billion.
Wellcome Trust, the medical
research charity, is also understood
to have been a big winner yesterday,
sitting on a profit of more than
100million after investing in two
stages, most recently in 2012. It
confirmed that it held Alibaba
shares but did not comment further.
Jack Ma claims that he has made a Forrest Gump journey from zero to hero
Alexandra Frean Washington
JEWEL SAMAD/AFP/GETTY IMAGES
Kara Sea drilling has been suspended
Stars such as Arnold
Schwarzenegger
have been quick to
embrace Jack Ma
64 FGM Saturday September 20 2014 | the times
Business
John Longworth, director-general of
the British Chambers of Commerce.
John Cridland, the director-gener-
al of the CBI, added: Business is up
for more devolutionbut we want dev-
olution that makes a difference to
peoples lives and living standards.
Government structures are part of
this but, ultimately, strong local polit-
ical and business leadership with
meaningful powers and incentives
aremorelikelytowork. Weneedtobe
careful that the common single
market is protected.
The key areas of concern for
business are:
Business taxes
Business wants UK corporation tax
and capital gains tax rates preserved
across all regions. We are strongly in
favour of uniformbusiness taxes, Mr
Cridland said. Corporation tax raises
40billion a year and has proved a
key consideration for where busi-
nesses locate their operations.
Competition between regions could
distort incentives, and different
rates might complicate a companys
operations. Business rates are
alreadyhandleddifferentlyinNorth-
ern Ireland and Scotland.
Employment law
The last thing that companies want is
a variety of employment laws requir-
ing different contracts that cost them
more in legal fees. We would like
employment contracts and the mini-
mumwage tobe consistent across the
UK, Mr Cridland said. Easy move-
ment of labour across thecountryhas
beencentral tothenations prosperity
andanything that might set that back
could prove damaging.
Delay
David Cameron has set a tight
timetable for formalising additional
tax and spending powers for Scot-
land, with proposals due by Novem-
ber and draft legislation scheduled
for January. His surprise announce-
ment yesterday that greater Scottish
devolution should be matched by a
new deal for the other regions may
delay that timetable.
Uncertainty caused by poli-
ticking, as well as a
lack of clarity about howtax will vary
for eachjurisdiction, couldmeanthat
foreign investors considering putting
money into British ventures freeze
their plans.
According to Morgan Stanley ana-
lysts: Such political uncertainty can,
of course, have economic effects (eg,
dampening investment). The refer-
endum and its aftermath may also
diminish international investor per-
ceptionof the UKinterms of political
stability, in our view.
Neverendum
Like Quebec before it, one referen-
dummaynot be the endof it, withthe
nationalists working towards a fresh
poll as soon as feasible. Business
does not want the worry about con-
tingency planning hanging over its
head. It costs money to monitor and
prepare for and is a cause of concern
for customers.
Paul Marsh, emeritus professor of
finance at the London Business
School, said: There
should be a clear
statement from the
UK government
that, in the inter-
ests of Scotland, and
to quell further un-
certainty, there will not
be another referen-
dum for at least a
generation, where
generation means at
least 25 to 30 years.
Business is warning Westminster
against devolving too much power
to the regions in the coming months
as the repercussions of Scotlands
referendum on independence be-
come clearer.
David Cameron yesterday prom-
ised to give England, Wales and
Northern Ireland more powers as
part of anydeal ongreater devolution
to Scotland, after the nationalists
were defeated.
Although business groups wel-
comed greater local autonomy over
spending decisions, concerns were
voiced that differing tax rates or em-
ployment laws could undermine the
UKs internal market and damage
growth. Scotland is already getting
new powers to vary income tax from
2016 under the Scotland Act 2012.
With Britain facing its biggest con-
stitutional change in generations,
business groups also urged politi-
cians to deliver the planned reforms
swiftly to remove any lingering un-
certainty that may delay investment
decisions.
Businesses will now expect West-
minster and Holyrood to reacha dev-
olutionsettlement that is clear, fair to
both sides and swiftly executed, said
Clarity and
speed vital as
regions gain
more power
The independence party turned sour for Yes campaigners as the no vote left Scotland with the promise of greater devolution
Excitement over, its back to Carney
Stocks rallied, the pound fluctuated
and investors dumped their insur-
ance against independence after the
Scots pulled back from separation.
Sterling briefly hit a two-year high
against the dollar, climbing by 1 per
cent and posting its largest two-day
gain in a year, before heading into
reverse in later trading.
The FTSE 100 surged close to
6,900 in early trading as euphoria
swept the markets, adding billions of
pounds of value to Londons blue-
chip shares, before it too dipped later
in the day. The index closed up
18.63 points at 6,837.92 andthe pound
ended 0.91 cents lower at $1.6309,
having touched $1.6530 in the mo-
ments after the referendum result
was formally announced.
With the threat of secession re-
moved, investors offloaded their
hedges against wild currency swings
and the price of short-dated volatility
fell from 33 per cent to 5 per cent,
marginally above the levels in July
and August before concerns about
independence erupted.
Mark Stafford, a forex trader with
Investec, said that the market reac-
tion indicated that investors had ex-
pected a no vote. Last week, as it
seemed that supporters of independ-
ence might pull off a victory, sterling
hit a ten-month lowof $1.6051. It had
rallied, though, since the weekend.
Short-dated volatility went as
high as the 2008 crisis, as no one
wanted to take risk over the referen-
dum, Mr Stafford said. But now
were back to watching [Bank of En-
gland governor] Mark Carney and
[US Federal Reserve chairwoman]
Janet Yellen. Its boring again.
Anne Richards, chief investment
officer at Aberdeen Asset Manage-
ment, added that investors quickly
turned their attention elsewhere.
The markets will very quickly move
on from Scotland, she said.
The uncertainty createdby the ref-
erendum has left its mark on the
investment markets, experts said.
Banc De Binary, the options trader,
calculated that, despite yesterdays
rally, 7.5 billion has been wiped off
the value of the top 30 Scottish com-
panies in the past six months.
Miles Costello, Philip Aldrick
Philip Aldrick, Miles Costello
Quebecs second separatist vote in
1995 ended in narrowdefeat for yes
UNIVERSAL NEWS & SPORT
Business Scottish referendum
the times | Saturday September 20 2014 FGM 65
Business
Big business
unites with
a heartfelt
sigh of relief
PhilipAldrick, Miles Costello
Companies up and down the UK wel-
comed Scotlands decision to remain
with the Union.
As thethreat of capital flight, arunon
the banks and investor anger receded,
one of Scotlands leading corporate
figures also called for a period of recon-
ciliation after emotions were stirred up
by the debate.
Both sides of the independence de-
batenowneedtocometogether sothat,
from today, Scotland moves forward
united, Martin Gilbert, the chief exec-
utive of Aberdeen Asset Management,
said.
Scotland has long been a world
leader in business sectors such as oil
and gas, whisky and investment, and
the task now is to grow the rest of the
economy with the strong support of
politicians of all parties.
John Longworth, director-general of
the British Chambers of Commerce,
called a halt to the politicking: The
companies I speak to are clear that this
cannot simply be the first in a series of
referenda, until one side or the other
gets the result that it wants.
Business and investment prospects
across the UK would be deeply hurt by
a Quebec-style neverendum a
lesson that politicians must heed.
Economists feared that a narrow
victory by the unionists would have left
the prospect of another referendum
hanging, deterring investment as hap-
pened after Quebec nearly seceded
from Canada in 1995.
David Cameron claimed that the
10.6-point winning margin would put
the debate to bed perhaps for a life-
time.
However, economists warned that it
could resurface again before long.
John Cridland, director-general of
the CBI, said: Business has always be-
lievedthat theUnionis best for creating
jobs, raising growth and improving liv-
ing standards, and welcomes that the
people of Scotland want to play an
integral role in this internationally
successful partnership.
The Institute of Directors Scotland
said that political parties and business-
es nowneeded to get together to focus
on growth.
Greater fiscal and political auto-
nomy for Scotland are on the way, and
previously opposing groups now need
to work together, and with the business
sector, tomake sure that the outcome is
successful, David Watt, the IoD Scot-
land executive director, said.
Philip Aldrick
T
he big risk may have passed but
the ripples remain. Greater
devolution for Scotland is likely
to be the start of a more federal
Britain the United States of the
United Kingdom, as it were.
David Cameron set the wheels of
sweeping constitutional reform in
motion yesterday by saying that the
English, Welsh and Northern Irish
should have more power over their
own laws.
Where does it stop? Boris Johnson,
the mayor of London, has requested
devolution for the capital, as has
Margaret Hodge, a prospective
Labour mayoral candidate.
Lord Heseltine recommended
transferring 58 billion of spending to
the regions in his No Stone Unturned
growth review for the Conservatives
two years ago. The Tories shelved the
plans, but Labour has dusted them
off.
Decentralisation can be a big
winner. Decisions made locally tend
to be quicker and more effective. The
danger, though, is that devolution
suffocates growth by lumbering
business with bureaucracy.
If a UK company ends up with
four different corporation tax rates
and a library of contradictory
employment rules, only the lawyers
will benefit. Devolution must come
with a commitment not to tie
companies up in red tape and strangle
the recovery.
Edinburgh already has significant
new powers coming its way, including
greater control over income tax and
the option to raise 2.2 billion of debt
independently of the UK, under the
Scotland Act 2012. Those powers will
now be beefed up further, and all
parties are offering Scotland more
control over where the money is
spent.
Federalism could be good for
Britain, but only if a guiding one
nation principle remained. Too much
devolution could be damaging.
Political risk has not been removed
completely, its just a lot less acute.
Devolution all very well but it must not compound red tape
In the end, Scotland
was not Quebec.
The winning margin
for the unionists was
not measured in
decimal places it was substantial
enough to put the debate on
independence to bed.
The 10.6-point gap, even with the
Scottish diaspora excluded from the
vote and schoolchildren marking
ballot papers, was comprehensive.
The nationalists won in only four of
32 constituencies. For both the
Scottish and the UK economies, it
was the best result possible.
A yes would have been
destabilising rocking stock markets,
triggering capital flight, crashing the
pound and setting off 18 months of
uncertainty that would have drained
both countries of investment as the
terms of separation were negotiated.
Yet, at least a yes would have
been definitive. A paper-thin no
victory would, perhaps, have been the
worst of all worlds, leaving the whole
country, north and south of the
border, in political limbo and markets
unsure where to look.
Investment would have dried up,
Scotland would have embedded a risk
premium into the cost of doing
business north of the border, and the
rest of the UK would have been on
shakier ground.
The relief was almost audible as
Edinburghs silent, cosmopolitan elite
turned out in droves to save the
union. The pound rallied, stock
markets bounced. Royal Bank of
Scotland said that it wouldnt be
moving house to England. It is
business as usual, the bank declared.
At the end of a long, fraught
campaign, then, nothing changes.
But nothing remains the same.
Markets have been in a sleepy
reverie for too long. The promise of
central bank intervention across the
world since the financial crisis has
all but removed traditional risk. Of
the fear and greed that drive
investment decisions, fear has
vanished but greed remains.
Dangerously familiar bubbles are
brewing. Everything from junk debt
to suspiciously innovative financial
instruments has been priced to go.
Markets have been sleepwalking
towards the same abyss that plunged
the world into crisis in 2008.
Harking back to Lehman Brothers
this week, Claudio Borio, the head of
economics at the Bank for
International Settlements, warned: It
all looks rather familiar. The dance
continues until the music eventually
stops. And the longer the music plays,
and the louder it gets, the more
deafening is the silence that follows.
Scotland was a healthy reminder of
that looming silence, that risk is ever
present. The FTSE volatility index, a
proxy for risk, yesterday settled back
at levels higher than before the pre-
referendum polls first shook markets
out of their complacency. A little of
the fear appears to have remained.
So it should. The Bank of England
has been paralysed by Scotland but
no longer. There was never any
chance that interest rates could rise
until the Scottish question was
resolved.
A phoney rhetoric has been played
out on Threadneedle Street. The
minutes to the Banks monthly
Monetary Policy Committee meetings
have not once suggested that
independence was a factor in the rate
decision. The first mention of the
referendum was this month, but only
to observe in passing the currency
market reaction to the polls.
For whatever reason, the Banks
dialogue has been disingenuous in the
extreme. As legitimate as its tortured
arguments over economic slack may
be, the elephant in the room was
deliberately being ignored.
When Mark Carney, the Banks
governor, spoke of contingency
planning, he would not have been
thinking solely of banking
interventions, he would have been
considering delaying the first rate
increase.
The debate can now be more open,
more honest. Two MPC members
fear that slack in the economy is too
small to be a relevant measure any
longer, and are voting to raise rates.
Others may join them now that the
risk of economic Armageddon has
passed, although lingering threats
from a weak eurozone and a
belligerent Russia remain.
Scotlands decisive no vote has
removed the UKs most immediate
and most substantial economic risk.
More significant, though, it could be
the point at which
policy in the UK can
finally start to move
from emergency
back to normality.