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(generated from captions) management are aware of the

they want to discuss the reasons for the termination, if

situation with you, we have no

problem with that. To reiterate

our stance, we will not be

making further comment on this

matter. Is it a minor

incident is that how you regard it It's with the it It's with the lawyers,

that's all I have to say. The

ARU warned Lote Tuqiri his

career was on the line after

alcohol-related incidents in

2005 and 2007. But he is a

crowd-puller and remains

popular with fellow players. I

have spoken to a number of the

senior Waratah players, they

are disappointed and shocked

like I am at the decision, and

are left wondering why, but also questioning the

process. Lote Tuqiri has not

been in his best form and had

been overlooked for recent

Tests against Italy and France.

The ARU says neither his salary

nor onfield performance were

factors in the decision. Lote

was in the squad previously. If

- I've been able to consider

him, I would have, yes. Several

NRL clubs have expressed

interest in Lote Tuqiri, should

he seek to return to league.

That code's boss left the door

open We don't register players

after 30 June unless there are

exceptional circumstances, we

don't have any information at

this stage on which to base

that decision. Across the

Tasman there were rather different exceptional

circumstances, with France

officially apologising for the

behaviour of one of its rugby

players on a recent tour. After

the All Blacks lost the opening

test Mathieu Bastareaud claimed

to have been attacked by five to have been attacked by

New Zealand men as he walked

back to his Wellington hotel.

Security footage showed the

20-year-old entering uninjured,

he was force to admit he made

it up, hurting himself in a

drunk ep fall. As far as I'm concerned Mathieu Bastareaud's

rugby mad French Prime 2-3 lined apology is weak. The

rugby mad French Prime Minister

was keen to make amends.

Writing to apologise to harm

down. Francois Fillon is first

I've heard of him. I haven't

met him. John Key says New

Zealanders want to move on and

will forgive Mathieu

Bastareaud, who is recovering

in hospital after reportedly

trying to take his own

life. Former AFL champion Jim

Stynes is stepping down as

President of the Melbourne to

challenges after being face one of his greatest

diagnosed with cancer. diagnosed with cancer. The

Brownlow Medallist fought back

tears, telling of finding a

lump in his back three weeks

ago. Recruited from Ireland he

played more than 260 games, 240

consecutively and responded to

a call to lead the club out of

financial trouble. He's adamant he's standing down temporarily. Now to the weather

- dry, windy in Sydney and

Brisbane, windy with showers,

hail? In Melbourne, showers in Hobart and Adelaide. Lateline

Business coming up in a moment.

If you'd like to look back at

the interview with Jaap De Hoop

Scheffer or review any stories or transcripts visit the web

site at abc.net.au/lateline.

Now Lateline Business with Ali

Moore. Thanks. Tonight a

compromising situation, Chinese

steel mills appear poised to

accept a smaller cut in

prices. In is a major strategic

blunder in our view by the

Chinese, they obviously felt by

throwing their weight throwing their weight around

that they could negotiate a

greater price fall, but time

has been on the producer's

side. Doubling the deficit

Australia's trade figures take

a hit as exports slide. And the

battle for broadband, is

Telstra needed for a national network. Telstra's involvement

is potentially an ideal

scenario, it's ideal in that it

may fast track development of

the network, it's not mandatory The most mandatory The most important

thing we think is to get the

framework right to encourage

the right way. Telstra, put the incentive in Telstra, put

To the markets - the All Ords

closed flat on concerns about

the US jobless figures, the ASX

200 followed the same

patternment the Nikkei closing

half a percent down, Hang Seng

slipping 1%, in London, the

FTSE lower, we'll cross there shortly.

After holding out for a cut

of 40% on last year's contract

price for iron ore Chinese

steel mills offered a

compromise one day after a

deadline to agree to terms,

they reportedly accepted a

lesser cut of 33%, already

agreed to by rival Asian mills.

But BHP Biliton and Rio Tinto

remain tight-lipped about the

negotiations. Desley Coleman

reports. It appears the

stand-off in pricing between

the sellers and buyers of iron

ore may have been won by the

mining Giants. This is a major

strategic blunder in our view

by the Chinese, they obviously by the Chinese, they

felt by throwing their weight

around that they could

negotiate a greater price fall,

but time has been on the

producer's side. Reports out of

China indicate the country's

steelmakers have cap ittual

late fearing exposure to a higher spot price may leave

them worse off. The

them worse off. The Chinese

need to know they can get the

product, quality they want,

when they wan it. There's been

reports that the Chinese are

willing to consider biannual

price negotiations, allowing

more upside for winners if spot

stability for the prices rally, and ensure

steelmakers. That's moving

towards the spot market. If

prices change dramatically in

the intervening 6 month period

they want to negotiate a price

closer to that price. Of

course, the benefit is if the

price drops they gain, but if

the price goes up they lose

over a 6 month period. over a 6 month

The stockpiles of iron ore in

China continue to grow with

long lines of trucks waiting to

load up and take raw materials

to steel factories, the

shipping industry says more

than 120 freighters laden with than 120 freighters laden

iron ore are queuing off the

coast. Some of the ships are

used as floating storage, we

have a ship sitting there for

three weeks wait tog

discharge. It's reported that

70 million tonnes of iron ore

are in piles at ports across

the country Perhaps china is

growing more strongly than

anticipated, and they need the

input, the materials. There's

been no confirmation from Rio

Tinto or BHP Biliton, that the

negotiations with the Chinese steel mills have been

concluded. Rio Tinto confirmed

that the London arm of its 19

billion equity raising has been

subscribed by 97% of eligible shareholders. The Australian

arm of the rights issue

finishes tomorrow. Analysts say

the support from the UK

investors is a good sign. This

was a large rights issue, $15

billion US, they've done well

to get to the acceptance level

considering there's uncertainy,

shareholders unsure, so a large

issue, virtually underwritten,

and it puts them in a better position balance sheet position balance sheet wise,

it's a good outcome. Rio

rejected a 24 billion bailout

by Chinese resources giant and

major shareholder Judge Denny

Chin in early June, it's

raising - Chinalco in June,

raising the money to plug a $38

billion debt hole created by

Alcan at the top of the

commodities mark. BHP Biliton

is a business that has less

debt, it has $11 billion

compared to Rio's $36 or $39

and the company has less

intangible assets, good will,

Rio has the goodwill from

Alcan, and the reality is Alcan, and the reality is that

BHP Biliton will earn three

times as much. Metrics are

better for BHP Biliton. There's

a long way to go before Rio is

free of debt worries. The $7.2

billion expected from the BHP

Biliton iron ore joint venture

requires regulatory approval.

There's no certainty with some

customers and the European

regulators opposing the

venture. Final nods are

unlikely to happen before next

year. For his take on the Rio

Tinto rights issue and the

apparent compromise over iron

ore prices I'm joined from

London by Stephen Pope, Chief market strategist with Cantor Fitzgerald, welcome to the

program. To the rights issue,

the company announced it found

buyers for that small bit of

stock left over, but it's a

massive raising, and

significantly Chinalco took up

its fair share. Certainly it is

a big amount of money to put

out to offer, they'll be

pleased that the first figure

97% take-up. Chinalco - we knew

they'd come in, they didn't

want influence or interest diluated. There's no surprise

to see them take it up. I'm

pleased to see it was done well

and the Australian offering

will be well receive. We get

the figures on the Australian offering tomorrow. offering tomorrow. You

anticipate around 97% as

well. I'd imagine it will be in

the magnitude if not fully

taken, it's a good opportunity

to get involved in a strong and

powerful company. What about the iron ore price

negotiations, what do you make

of these reports out of the

Chinese media that have a deal

of credibility, that they are

prepared to capitulate. It's

trying to take it to the wire,

we have gone one day beyond

when they should have made an agreement. There's been

agreements from Japan, South

Korea, they won't want the iron

ore mills and found ris to be

idle. As you hear, ships are

light off the coast waiting to

discourse loads, generally

speaking China are trying

brinkmanship, if you get a

compromise around the 38% compromise around the 38% mark,

it will be fair tore all

parties. Do you think China is

enormously reluctant to be

relying on the spot

market? Yes, that was a great thing, if there was no

agreement suddenly one goes

over to the actual spot market

to determine where prices and

Cronn tracts have to be drawn

up. - contracts have to be

drawn up. If you leave things

open to market influence you

can be stung. They need an

agreement, and the idea that

they'd accept a biag

a-agreement against a one-year

lasting deal shows they need

some flexibility. If you look

at the European markets, the

European Central Bank kept

interest rates on hold, that

was widely expected. In terms

of how the European and

Eurozone economies shape up one

could argue they need to be

down around three-quarters of a

percent. With last week's huge

offering of 442 billion euro

one year money, somewhat

underwhere the euro bore

trades, they showed their hand,

they know the situation is

difficult and have given cheap

money into the market to keep

refinancing rates

refinancing rates unchanged.

There are concerns that we are

not finding monetary

transmission in the Eurozone

working, smaller companies

needing access to capital are

not getting it. Hooking at the

US all eyes on the jobless

numbers, looking at the

US. I've been told they came

through in the 400s, worse than

anticipated. The unemployment

rate didn't move as far as

generally we were expecting,

that should creep up towards

10%, this non-found payroll is

a shock number, we have to

digest it more. There digest it more. There would

have been a lot of General

Motors workers going on to the

list of non-farm seeking. A lot

of plants shut down whilst GM

went into Chapter 11

negotiations, that figure may

get pulled back when we get the

divisions. Hopes of an export

recovery for Australia are

dashed, the trade deficit

doubling in May. The monthly

result coming in at $556

million, exports sliding 5% n a

worrying sign for future growth

local businesses continue to

cut back on purchases of

capital equipment. Neal

Woolrich Woolrich reports.

It's another sign of the

economic malaise, in just seven

months Australia's

international trade has shrunk

in value by almost a quarter,

the trade deficit grew to 556

million in May, up from a

revised 282 million shortfall

in April. Exports fell 5% for

the month, outpacing a 4% drop

in imports. CommSec in imports. CommSec economists

Savanth Sebastian says the

strengthening dollar is making the trade position more

difficult. Overall it's likely

that the Aussie is expected to

appreciate further, currency

strategist expects the Aussie

to get up to 88 US cent.

Certainly it will make imports

cheaper, exports expensive,

trade deficits as a result in

the red. Coal, coke and

Briquette sales fell 15%

because of flunging contract

prices, mineral and commodity

exports was also down suggest

that Chinese stockpiling may

come to an end. I think

certainly in base metals we

have seen the State reserve

pulling back in terms of

stockpiling, importantly in

terms of iron ore, from China's

perspective, it's not likely

that they'll pull back from a

significant stockpiling because

you've got Japanese importers

also looking at Australian iron

ore at the moment. The headline

result would have been worse if

not for a drop in imports.

Shippments of consumer goods

falling 1% as households

tighten spending, a bigger

concern is the 14% plunge in

imports of capital goods like

machinery and industrial

equipment We have seen over the

last couple of months capital

expenditure data shows

businesses looking to pair back

investment. It's reflected in

the trade data, I think that

going forward businesses will

continue to bull back

investment over the next six -

pull back investment. They are

not looking to splash out

big. Capacity utilisation is

running 76%, it's come down,

there's scope for business to

regear when demand picks up.

The fact that investment is put

off suggests that there's spare

capacity, they are in a

position to gear up and

investment can be delayed until

demand is stronger. Tony

Pensabene says the industry

members are gearing up for a

recovery some time in the next

6 months. Sprections are that

growth is modest, recovery

slow, and that at the end of

the recovery conditions softer

than they were 2-3 years

ago. As things stand most

businesses and consumers would

probably settle for any sort of

rebound at all, even a week

one. To the movers on the

market - industrial property

group Goodman went up despite

the retirement of David Clarke,

long term Chairman due to ill

health. Newcrest jumping 3%

thanks to a rise in gold

prices, Hastings Diversified

Utilities fell 9% raising $250

million in new capital. The

Kwangmyongsong-2 slipped 2%.

Well, it's 3 months since the Government announced plans to

form a new company, with the private sector will form a new company, together

invest up to $43 billion over

eight years to build a high speed National Broadband

Network. The Government will be

the majority shareholder, it

will sell down interests within

five years of the new network

becoming operational. The

private sector can invest via

cash or the contribution of

assets. Tomorrow submissions to

a Senate Committee on the

broadband plan close and

yesterday the Government

announced the first round of

regional locations benefitting

from the National roll out. The

debate is raging about the best

way to build the network, will

it doouply Kate existing

services, who will - duplicate

existing services who will tip

in assets and is it viable. I

was joined earlier by Maha Krishnapillay earlier, Director of Government and Krishnapillay earlier, the

Corporate Affairs with Optus,

who was in Melbourne and in

Sydney Tim Smealie of Numerico

Advisory. Gentlemen, welcome Advisory. Gentlemen, welcome to

Lateline Business. Thanks, Maha

Krishnapillay, if I can start

with you, because Singtel Optus

made a number of submission

toss the Government over toss the Government over the

National Broadband Network, are

you hoping or planning to tip

your cable network into the NBN

in return for equity. The most

important thing is the NBN

network is built. Broadband, we

said, is essential to the

future productivity of this

country, it's important it's

built in the right way, under

the right circumstances, we

said we can assist by putting

in our infrastructure to kick-start kick-start the National

Broadband Network build, but throughout that process we throughout that process we have

said that we have to get the

regulatory regime correct, have all participants involved in

the right way. We had 10 years

of history of frustration and

litigation around this sector,

it's important to get the

regime right. If you are happy

with the regime and parameters

you'd put your Cable network

into the NBN. That's an into the NBN. That's an option

we are happy to discuss with

Government. You are actively

discussing it. Absolutely. We

think we can kick-start the think we can kick-start

National Broadband Network to

about 25% of the Australian

population by converting our

pay TV HFC network a hybrid

fibre co-axe into a fibre to

the premises, it's a big start,

an effective way to do it. an effective way to do

There are many ways to do There are many ways to do that,

there are a number of other

players who are sure the

Government will want to talk

to. Tim Smealie, I bring you in

there, other players, if there, other players, if the

National Broadband Network

takes the Optus cable

takes the Optus cable network,

what happens to Telstra a lot

of that cable network goes down

the same streets. I think

there's a lot of water to go

under the bridge to determine

what the National Broadband

Network will look like, as Network will look like,

highlighted by Maha

Krishnapillay, we have to look

at regulatory and competition

policy has failed to date. We

need to step forward to a new

framework, once that is

established, look at how do we

deliver a Broadband Network for Australia deliver a new National

within the parameters of what

the Government is aiming to

achieve, and also in a context

that encourages commercial

participation, whether that is

at the construction level, but

also looking at does it

encourage a new level of

competition at the consumer

level. Does Telstra have to be level. Does Telstra have to

involved for it to

work. Telstra's involvement is

potentially an ideal scenario,

it's ideal in that it may fast

track development of the

network, but it's not

mandatory. If you think about

Telstra, they are not a telco

equipment manufacturer, they

don't produce fibre, glass

fibre, they are not an

engineering and civil works

business. So the Government

will still have choices of does

Telstra participate, if they

do, that may fast track the

process, but they will - they

will have the ability to

approach the same suppliers to

build the network as Telstra

would. Maha Krishnapillay, do

you agree with that, could the

network, not necessarily in the

eight years of building it, but

down the track, would it be commercially viable if you are

in there as a player of

in there as a player of the National Broadband Network, and

running alongside you is

Telstra duplicating. As Tim

said it's a major leapfrog

forward in terms of technology,

the technology used in terms of

fibre to premises is different

to existing networks. The most

important thing it to get the

network built. Telstra, I think

need to be involved. The

reality is in our sector we had

a situation where Telstra has

been at war with many of the

sector. At least since 1997

deregulation. The important

thing is to get the framework

right to encourage Telstra,

putting the incentive in the

right way. People have

commented that Telstra appears

to be a happier smilier organisation than in previous

times. Before I get your

comment on that let me put to

you something Telstra wrote in

a submission to the Government

on the black spot scheme, and

they did say that Telstra, like

other industry participants

will consider vending in assets

for equity in NBN company, does

that indicate that they are

looking to do what you are

doing. I think the reality is

that they might talk about

those things as they have

talked about other talked about other things in

the past. Until the fundamental

incentives are changed nothing

will change in the sector. The

incentive is built around the

fact that Telstra earns 60-88%

margin on a fixed network, they

protected that tooth and claw

through the courts for the last

decade, until it's changed you

will not have real

negotiations, we believe, with

Government. That's what it

comes back to, the separation

of Telstra in its structural

separate world. You want

structural separation, does

that go so far as to say if I'm

a Telstra shareholder I end up

with two pieces of paper, two

shares in two different

companies or is it less than

that. That's a model we put

forward. We said an easy way to

do it is to say to

shareholders, you have one

share in an organisation now,

in the future you'll have a

share in a Telstra network

company and a retail

company. Do you agree? I don't

believe structural separation

is a requirement under the NBN.

It may challenge the framework

as Maha Krishnapillay suggested

around increasing competition,

but the competition level is

going to increase regardless

under an NBN environment, it

will be a wholesale only

network, so if you - if you own

the network, you are not going

to have the ability to have a

fully integrated business and

have control over the NBN

network and deliver services to

the consumer, the structural

separation may provide a

short-term solution and may

stimulate competition as Maha

Krishnapillay suggested in the

short-term but over the time

frame of constructing a

network, we'll get to the end

of NBN, being available to

consumers, the structural

separation of Telstra separation of Telstra is

irrelevant in that context. The

issue of course is in terms of tipping assets and

participation, it boils down to

the funding of this, and the funding of this, and the

Communications Minister talks

about something like 11 million

coming from the Government, 10

billion from the private

sector, the rest from an

infrastructure bond. If

everyone Partis pace, tips in

assets, there's going to be a

lot of money required to lot of money required to build

this in this environment, is

that a big arriving. One of the

key factors that investors are

looking for given the looking for given the turmoil

over the last 18 months is

certainty, that applies not

just to the NBN, and the

returns available to investors,

but also to Telstra

shareholders. They, at the

moment don't have certainty of

what will their business look

like, what do they own, what

does the company look like in

three years time, five years time. Hence the share

price. Hence the share price.

There's unserpty, the dynamics

apply - uncertainy, the

dynamics apply whether it's

existing in existing businesses

like Telstra, Singtel

Optus... You are knig that

vestors will not be - implying

that investors will not be that investors will not be keen

to take it up. No, not at all,

investors will want certainty

if they put money into the

vehicle, what's the return,

what is the framework,

protection mechanisms to ensure

that their capital invested is

safe, and it's exactly the safe, and it's exactly the same

issue that Telstra shareholders

have. Krish r this is what you

would say too? Absolutely, the

key factor is regulatory risk,

the key investors are looking

for as major players like

ourselves, mum and dad

shareholders, or superannuation

funds. The key will be how much

it costs to build initially it costs to build initially ,

how much of the traffic will be

going on that network, and how

much it costs to run the

network, if you actually build

it for as cheaply as possible

for a start, that requires

vending in of assets by some of

the players, and if you

actually make sure that 60% of Australia's broadband traffic

goes across that network, you

have a commercially viable

investment network, and you get

a commercial return on that

network, it will be attractive,

a nice solid utility rate of

return, and that's what we

need. Tim Smealie, the future

world, one that all of the players in the mark players in the mark will

prepare for, how different will

that be it you look at all the

players in the market at the

moment, it there room for everyone and everyone and a National

Broadband Network. I truly

believe the level of

competition is going to

intensify very intensify very significantly

over the next 10-20 years, it

is going to be a network that

is wholesale only. So it's not

just going to be the existing

telcos that offer services. In

essence any business that has a

brand and has customer

relationships would have the

ability to resell broadband

services from NBN company. So

much expectation and a lot more

water under the bridge to go

before this is over. Tim Smealie, and Maha Krishnapillay, thanks for

joining us. Thank you. Thank

you. Lateline Business offered

Telstra the opportunity to join

the debate. They declined the debate. They declined to take part.

The 150 year jail term given

to fraudster Bernie Madoff has

again highlighted how tough the

American justice system can be

on corporate criminals. But

it's also again highlighted the

perception that corporate

criminals get an easy ride criminals get an easy ride in

Australia. But is that Australia. But is that right?

Andrew Robertson reports. When

US prosecutors turned their

sights on white collar

criminals there's no holding

back, 24 years jail for Enron

boss Jeffrey Skilling, and 25

years for WorldCom's Bernard

Ebbers and Tyco Ebbers and Tyco International's Dennis Kozlowski seemed harsh

until this week's 150 years for

$80 billion fraudster Bernie

Madoff. I don't think you can

find another financial fraud

that is on this level of magnitude or magnitude or duration. While Bernie Madoff's case is

exceptional at the same time as

Enron, WorldCom, and Tyco

International were grabbing the

headlines in 2005, Australia's

biggest corporate collapse HIH

Insurance was also

unfolding. Former HI HBOS Ray

Williams served 2 years and 9

months, fellow HIH director

Rodney Adler 2.5 years, Brad

Cooper was jailed for five

years for bribery. Does

Australia go easy on corporate criminals. Australia actually

has tougher regulatory

enforcement than most developed

economies, most of Europe,

places like Japan, are not as

prosecutorial and generally the

penalties are not as heavy

here, there's a big gap between

the punitiveness of the US

justice system with respect to

white collar crime and

Australia. Professor John

Braithwaite conducted extensive

research on criminal justice

systems, he believes the tough penalties 'Meet The Press'ed

out to US corporate criminals

is a reflected of a culture

different to Australia. All

keened of justice is different

in US, higher imprisonment

rate, us of capital punishment

is a common and whole range of

solutions that we would tend solutions that we would tend to

solve through negotiation and

persuasion. That the Americans

tend to resort to prosecution. Professor Michael

Adams is the head of law at the

University of Western Sydney

and has been studying the jail

sentences given to Australia's

corporate criminals. In

Queensland the PhD was done

comparing white collar crime in

banks, embezzlement with people

holding up banks, they looked

at the amount of money stolen

and the jail sentencing, it's

fascinating, someone walking in

with a shotgun gets less money,

and will go to jail for longer

than somebody that may have

embezzled millions. Unlike embezzled millions. Unlike the United States, Australia's

courts are getting tougher with

the worst corporate attenders

as maximum headline jail

sentences increase, the highest

given to a Gold Coast

entrepreneur in 2004. Getting

corporate offenders to court in Australia can be difficult

because of the way the judicial

system works. The DPP likes to

win cases and has a successful

hit rate. ASIC, doing the

investigation, they have to

present their brief, their

legal case, it's the DPP's decision whether to continue

that legal action. In that legal action. In the

United States there's a less cautious approach where

prosecutors such as New York's

Elliott Spitzer and Ruud oval

Giuliano used big court

victories over the big end of

town as springboards to a

political career. Tomorrow's

business diary. Captain Agar's perform perform -

Before we go, a look at

what's making news in the

business sections of tomorrow's

papers. Herald sxun - how the

bank guarantee keeps

bank guarantee keeps lending

alive. Australian - lending

collapse ahead as businesses

and Cop assumers cut and Cop assumers cut debt. The

Financial Review - examining

the Government's plan to retrain the retrain the unemployed. Sydney

Morning Herald looks at the new competition for Australia's

airlines. That's all for

tonight. As I leave you the Dow

opened, it's down 25 points,

the Dow futures showing a fall

of 128 points off the back of

that worse than expected jobs

data, FTSE down 81, or 1.9%.

If you want to review any If you want to review any part

of the program visit the web

site at

abc.net.au/latelinebusiness.

I'm Ali Moore, I'm Ali Moore, goodnight. Closed Captions by CSI