U.K. Tussles With EU Over Telecom Competition: Compliance

  • Toshiba's Muromachi shies away from tough love on wrongdoers
  • Treasury nominee's new gig stalled by Senate probe of others

Britain’s antitrust regulator triggered a possible tug of war with the European Union over who should probe CK Hutchison Holdings’ plan to acquire Telefonica SA’s O2 unit in the U.K.

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The Competition and Markets Authority said Friday that it asked the European Commission for jurisdiction over the review because the deal’s impact would be most felt by U.K. customers. The commission in Brussels has already started to examine the tie-up and set an Oct. 16 deadline for an initial decision.

Li Ka-shing’s Hutchison agreed to acquire the O2 unit in March, creating Britain’s biggest wireless provider by customers. The CMA said it’s received support from the telecommunications industry in making the request, according to the statement.

The European Commission generally rejects requests such as the one by CMA, as it develops ground rules for mobile-phone competition. EU regulators spurned a similar U.K. bid for jurisdiction over the deal that created EE Ltd. five years ago.

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Compliance Action

Hong Kong Charges Former Top Official Tsang With Misconduct

Donald Tsang, who completed his tenure as Hong Kong’s No. 1 official in 2012, was charged with two counts of misconduct in public office, the anti-corruption bureau said.

Tsang, 70, is the city’s highest-ranking official to face charges by the anti-corruption bureau. He was released on bail and said that he had a “clear conscience” as he left the Hong Kong court. Tsang will next appear in court on Nov. 13.

Public confidence in Hong Kong’s government officials has been shaken in the past four years amid a series of scandals.

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Interviews

Zero Tolerance? Toshiba Tries Opposite in Accounting Scandal

While companies like General Electric Co. are known for zero-tolerance policies, punishing any wrongdoing with immediate dismissal, Toshiba Corp., one of the icons of Japan Inc., is testing the other end of the scale.

President Masashi Muromachi said Thursday that the company had identified 30 more executives involved in an accounting scandal which spanned almost seven years and reduced reported profit by about $1.3 billion. Muromachi said the wrongdoers will be “punished.” They won’t be dismissed. He also disclosed that two of the directors who stepped down in a board reshuffle remain on the payroll as advisers.

Toshiba’s action risks making a mockery of Prime Minister Shinzo Abe’s efforts to improve corporate governance in a country that has long been known for paying scant attention to shareholder interests.

Toshiba has lost about $6 billion of market value since it withdrew its earnings forecast in May and announced an accounting probe that was later expanded. The internal investigation showed that company operations, including personal-computer manufacturing and power plants, overstated profits and delayed booking losses.

Three former presidents have since quit and the company has revamped the board. For the past six years, Muromachi has overseen the chip business and served as its chairman. The 40-year company veteran said he will step down within three years.

Muromachi told reporters he couldn’t comment on possible responsibility of board members because an internal panel set up to investigate hasn’t completed its work. He cited the 30 executives who will be punished in response to a question about the roles of managers below the director level.

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Comings and Goings

Fed Leak Probe Stalls Obama Nominee for Senior Treasury Post

Seth Carpenter’s rise to a senior post at the U.S. Treasury Department has been delayed by the preoccupation of the Senate Finance Committee with an investigation in which he’s not implicated.

Carpenter, 44, got his Ph.D. from Princeton University under the tutelage of Ben Bernanke, then rose quickly at the Federal Reserve and finally was tapped by Treasury.

Now, though, the Senate Finance Committee has been sitting on Carpenter’s nomination while seeking information about who leaked confidential information in 2012 about Fed policy to a newsletter for Wall Street traders. While people familiar with the matter said Carpenter isn’t a focal point of investigations, and earlier reviews by the Treasury and White House found no evidence he played a role, the search for answers is complicating his confirmation to become a senior Treasury liaison with Wall Street.

The delay was confirmed by two people familiar with the committee’s investigation. The Justice Department is also in the early stages of an investigation to determine whether information was leaked improperly and whether anyone profited.

Lawmakers have been pressing the Fed for information about how the central bank’s intentions were passed to newsletter Medley Global Advisors, and how in-house investigators responded to the leak.

Carpenter referred a message seeking comment to the Treasury, which declined to comment. Darren Gersh, a spokesman for the Fed, also declined to comment.

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