PARIS, Feb. 4--Embattled French bank Societe Generale faces fresh troubles Monday when a trial opens in Paris involving a vast money laundering scam between France and Israel.
Four banks, including Societe Generale, and 138 people, including the bank’s chairman Daniel Bouton, are on trial over the multi-million dollar scam that allegedly ran from 1996 through 2001, AFP wrote.
The other banks include Societe Marseillaise de Credit, Barclays France and the National Bank of Pakistan.
Societe Generale revealed late last month it had lost a staggering 4.8 billion euros ($7.1 billion) in the biggest rogue trading scandal in history.
Takeover talk is now swirling around France’s third largest bank, with two French banks eyeing a possible bid on Societe Generale.
Allegations of a money laundering network stretching between France and Israel initially surfaced during an investigation into a separate fraud involving companies in the Sentier garment-making district of Paris.
Cheques trafficked from France were allegedly cleared in money exchange offices or banks in Israel, where a third party can clear a cheque by paying a cash sum, making it difficult to trace the origin of the funds. The sums were then repatriated to French banks.
Among the 138 individuals charged in the France-Israel scam were six rabbis, a former French prosecutor and 57-year-old Bouton, along with other banking managers. They face 120 years in prison and stiff fines.
In the case of Societe Generale, investigators cite one example in which the bank received seven million euros ($10.4 million) in stolen cheques from the Israel Discount Bank between 1997 to 2001, “knowing these influxes had a criminal origin.“
All four banks are charged with contributing to money laundering and profiting from the deals. All deny the charges.
“Societe Generale and its representatives did not--either knowingly or unknowingly--participate in this system and in no way committed the crime of money laundering they are charged with,“ the bank’s lawyer Francois Martineau said.
Bouton is accused of turning a blind eye to the cheque system, though his lawyers insist he knew nothing about it.
Investigators have gathered 600 tons of paperwork and evidence for the trial which is expected to last until July.
Eighty five people have already been found guilty over the case in 2004.

A worker stands in front of containers at a port belonging to Shanghai International Port Group in Shanghai, China, in this file photo.

BEIJING, Feb. 4--China’s economy will probably expand at the weakest pace in six years in 2008 as a global slowdown curbs export growth, the World Bank said.
The Washington-based lender lowered its forecast for growth in Asia’s second-largest economy this year to 9.6 percent from a November estimate of 10.8 percent, according to a report issued in Beijing on Monday, Bloomberg wrote.
“The slowdown in the global economy should affect China’s exports and investment“, David Dollar, the World Bank’s country director for China, said at a briefing. “However, the momentum of domestic demand should remain robust.“
The World Bank is gloomier about the impact of weaker global growth on the Chinese economy than the International Monetary Fund, which last week kept its 2008 forecast for China unchanged at 10 percent. China’s economy expanded 11.4 percent in 2007, its fifth consecutive year of double-digit growth.
China was “well positioned“ to mitigate the impact of a global downturn as it could stimulate domestic demand by boosting government spending and easing credit controls, the World Bank said. The IMF expects growth in the world economy to ease to 4.1 percent this year from 4.9 percent in 2007.
“China has the financial power to sustain growth“, said Louis Kuijs, the World Bank’s senior economist for China. Price pressures should ease in 2008 as rising food costs taper off later this year, Kuijs said.
Inflation in China rose to a 11-year high of 6.9 percent in November, more than double the central bank’s annual target, before easing to 6.5 percent in December.
Higher food prices were thus far not spilling over into general inflation and there was no indication that excess demand was fueling price gains, Kuijs said.
Still, relatively high inflation would constrain China’s ability to lower interest rates or relax liquidity conditions and Kuijs said “inflation concerns call for relatively tight monetary policy“.
China’s import growth picked up in the second half of last year as export growth declined, with the increase in imports outpacing that of exports for three consecutive months in the fourth quarter, according to the World Bank.

WASHINGTON,
Feb. 4--In the nation’s first-ever $3 trillion budget, President Bush seeks to seal his legacy of promoting a strong defense to fight terrorism and tax cuts to spur the economy. Democrats, who control Congress, are pledging fierce opposition to Bush’s final spending plan--perhaps even until the next president takes office, AP wrote.
The 2009 spending plan sent to Congress on Monday will project huge budget deficits, around $400 billion for this year and next and more than double the 2007 deficit of $163 billion. But even those estimates could prove too low given the rapidly weakening economy and the total costs of the wars in Iraq and Afghanistan, which Bush does not include in his request for the budget year beginning Oct. 1.
Last year, when Democrats were newly in the majority, there were drawn-out veto struggles. This year’s fights could be worse because it is an election year.
As in past years, Bush’s biggest proposed increases are in national security. Defense spending is projected to rise by about 7 percent to $515 billion and homeland security money by almost 11 percent, with a big gain for border security. Details on the budget were obtained through interviews with administration officials, who spoke on condition of anonymity until the budget’s release.
The bulk of government programs for which Congress sets annual spending levels would remain essentially frozen at current levels. The president does shower extra money on some favored programs in education and to bolster inspections of imported food.
Bush’s spending proposal would achieve sizable savings by slowing the growth in the major health programs--medicare for retirees and medicaid for the poor. There the president will be asking for almost $200 billion in cuts over five years, about three times the savings he proposed last year.
There is no indication Congress is more inclined to go along with this year’s bigger cuts; savings would come by freezing payment rates for most health-care providers for three years.
In advance, Democrats attacked the plan as a continuation of failed policies that have seen the national debt explode under Bush; projected surpluses of $5.6 trillion wiped out; and huge deficits take their place, reflecting weaker revenues from the 2001 recession, the terrorism fight, and, Democrats contend, Bush’s costly $1.3 trillion first-term tax cuts.

Platinum hit a bid high of $1,774 an ounce on Monday.

SINGAPORE, Feb. 4--Platinum roared to another record high on Monday as supply concerns persisted in main producer South Africa, lifting sister-metal palladium to its best level in six years and overshadowing gold.
South African mines, which produce four-fifths of the world’s platinum, made slow progress in bringing back production on Friday after the state power firm allowed them only limited increases to their electricity consumption, Reuters wrote.
Platinum hit a bid high of $1,774 an ounce, up from $1,752/1,759 an ounce late in New York on Friday. Palladium rose to $415.00/419.00 an ounce from $410.00/413.00 an ounce to track gains in platinum.
“There’s buying interest coming from producers. Investment demand for platinum is also picking up especially in Japan,“ said William Kwan, a dealer at Phillip Futures in Singapore. “A couple of Japanese clients keep calling us here, some asked about how to invest in platinum,“ he said.
The benchmark platinum futures contract <0#JPL:> on the Tokyo Commodity Exchange also touched another record high of 5,797 yen per gram to reflect a firm cash market. It later dipped to 5,779 yen, still 98 yen higher than Friday’s close.
After first saying it would be able to meet 90 percent of the needs of gold, platinum, diamond and coal miners, utility Eskom said last week that generating plant breakdowns meant it could supply only 80 percent of their needs.
Platinum and palladium are used in jewelry and in vehicle catalysts, where it helps clean exhaust gases.
Spot gold fell slightly to $909.25/910.50 an ounce from $910.00/910.75 late in New York. The metal rallied to a record high of $936.50 on Friday before a rebounding dollar erased much of the gains and dragged down the price to as low as $904.70.
Meanwhile, oil prices steadied Monday as traders weighed gains in global stock markets against worries of a possible US recession that would stunt oil demand. Asian stock markets climbed Monday on improved market sentiment after Wall Street rose last week, AP said.
But Monday investors appeared to remain focused on weak economic data in the US that pushed oil futures down nearly $3 a barrel at the end of last week.
Light, sweet crude for March delivery was flat at $88.96 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

A businessman walks past the electronic stock board showing Monday's gain of Japan's stock index in Tokyo.

SHANGHAI, China, Feb. 4--Asian markets rallied Monday as investors were heartened by Wall Street’s rebound last week and by reports downplaying the impact of disastrous winter storms on China’s broader economy.
Investors also snapped up shares of major miners Rio Tinto and Aluminum Corp. of China on Friday’s news that the Chinese company and Alcoa Inc. had bought a big stake Rio Tinto, which is listed in both Sydney and London, AP reported.
China’s stock market was by far the strongest Monday, with the benchmark Shanghai Composite Index surging 6.2 percent to 4,590.12 by midday, lifting the market off six-month lows hit last week.
Hong Kong’s Hang Seng index jumped more than 3 percent, and Japan’s Nikkei 225 index rose 2.7 percent to close at 13,859.70 points. markets in South Korea and India also rose strongly.
Last week’s rally on Wall Street--which put in its best five-day gain since March 2003--boosted sentiment in Asia, where markets have tumbled since the start of the year on worries about a US recession. While those concerns lingered, investors focused on Microsoft Corp.’s bid for Internet company Yahoo Inc. and a possible rescue plan for the troubled bond insurance sector.
In Tokyo, Yahoo Japan shares surged 9.5 percent, while Softbank Corp., which owns part of Yahoo Japan, surged 16 percent. Japanese bank, brokerage and real estate issues also advanced.
Investors in mainland China and Hong Kong bid up stocks after China’s state-run newspapers carried front-page statements by top economic officials downplaying the likely impact of the winter storms that have gripped southern China with its worst snowfalls in 50 years.
“There’s no need to worry. The losses will be recovered and investors should not worry“, the China News Service quoted Li Rongrong, chairman of the agency in charge of big state corporations, as saying.
So far, official estimates put the damage from the storms at $7.5 billion (5 billion euros). Last week, the government ordered banks in regions affected by the storms to relax limits on lending, also reassuring investors worried over inflation-fighting credit tightening policies.

SAN FRANCISCO, USA, Feb. 4--Google Inc. raised the specter of Microsoft Corp. using its proposed $42 billion acquisition of Yahoo Inc. to gain illegal control over the Internet, underscoring the online search leader’s queasiness about its two biggest rivals teaming up, AP wrote.
The critical remarks, posted online Sunday by Google’s top lawyer, represented the Mountain View-based company’s first public reaction to Microsoft’s unsolicited bid for Yahoo since the offer was announced Friday.
“Microsoft’s hostile bid for Yahoo raises troubling questions,“ David Drummond, Google’s chief legal officer, wrote. “This is about more than simply a financial transaction, one company taking over another. It’s about preserving the underlying principles of the internet: openness and innovation.“
Microsoft has been trying to depict a Yahoo takeover as a boon for both advertisers and consumers because the two companies together would be able to compete against Google more effectively.
But Google is painting a starkly different picture, asserting that Microsoft will be able to stifle innovation and leverage its dominating Windows operating system to set up personal computers so consumers are automatically steered to online services, such as e-mail and instant messaging, controlled by the world’s largest software maker.
In a move that illustrates just how badly Google wants to torpedo the deal, Google Chief Executive Officer Eric Schmidt called Yahoo CEO Jerry Yang Friday to offer his help in repelling Microsoft, according to a report Sunday on The Wall Street Journal’s Web site, which cited anonymous people familiar with the matter.
The assistance didn’t include a counterbid, but may have included supporting other potential suitors, or a revenue guarantee in exchange for an ad partnership with Yahoo, the people said, according the newspaper.