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US insurance giant teeters, posts record loss

Reporter: Peter Ryan

ELEANOR HALL: But first to the turmoil on global share markets which are plunging in response to
the announcement of the biggest corporate loss in US history.

The world's biggest insurance company, American International Group, posted an unexpectedly high
$62-billion loss overnight.

The US Government immediately intervened with $30-billion to ensure the survival of the insurer -
which is regarded as 'too big to fail'.

But the fear of even more instability in the world's financial institutions has sent investors
running for the doors and the world's stock markets have hit lows not seen in more than a decade.

The Australian share market plummeted more than two per cent in early trade.

With the latest here's business editor Peter Ryan.

PETER RYAN: In terms of impact and importance, the potential failure of American International
Group rivals last September's collapse of Lehman Brothers. The near catastrophic turning point when
the credit crunch became the global financial crisis.

On Wall Street investors were selling first and asking questions later taking the Dow Jones
Industrial Average below the key support barrier of 7,000 points for the first time since 1997.

SAM STOVALL: We are rivalling the bear market of 1937, 1938 and we are still a good 30 percentage
points away from the worst decline from '29 to '33.

PETER RYAN: Sam Stovall, the chief investment officer at the ratings agency Standard & Poor's, says
memories of the Great Depression have inspired, fear and suspicion - amid expectations of more
negative news to come.

SAM STOVALL: The market basically has to feel that they've got their arms around all of this. The
market does tend to bottom out well before the fundamentals do. About five months ahead of the
recession typically ends about nine months ahead of an earnings trough or an unemployment peak.

But really we have to be able to look beyond this six-month valley to say have we really priced in
all the negative news. Have we learned all of the negative news regarding financials and I don't
think most investors feel that that's the case.

PETER RYAN: AIG's quarterly loss of $US61.7-billion, the biggest in American corporate history
illustrates a company burning money as asset values plunge around the world and liabilities

The US Government provided a $150-billion cash injection last year. Today they were forced to hand
over another $30-billion bailout.

MARK DOW: It is kind of like in poker when you are pot committed. This company is of systemic
importance and you have to protect it. Obviously that is the conclusion that the authorities have
come to or they wouldn't have kept supporting it the way they have.

PETER RYAN: Investment analyst Mark Dow says the collapse of Lehman Brothers delivered a hard
lesson that massive institutions like AIG are too big to fail.

MARK DOW: They insure a lot of people, the reinsure a lot of people. They are in the financial
markets as a counterparty to a lot of different companies that are important, so yeah, just like
Citigroup and a lot of other banks are too big to fail, it is.

And their equity may get wiped out but their liabilities need to be protected or else the whole
system comes down and we saw a little bit of what that looked like when Lehman came down in

PETER RYAN: Until September last year, AIG was little known outside insurance and banking circles.
Now the world is coming to grips with just how big and important it is.

ALI VELSHI: There is no other method, there is no shadow method by which you can insure companies
and the bottom line is without insurance, business grinds to a halt.

PETER RYAN: CNN finance expert Ali Velshi used the early days of the shipping insurer Lloyds of
London to describe the AIG business which is now finding itself in torrid waters.

ALI VELSHI: Somebody would say that we are sending a shipment of goods across to America - will you
underwrite it. And what they do is they write their names under the name of the ship that was going
and the underwriter was the person who said, I get a piece of the profits if this ship makes it
across to America or wherever it is going; but I pay a part of the cost if the ship doesn't go

That is what you need to do business and AIG is the biggest in the world at that business. There is
just no way. We've looked at this with hurricanes. We've looked at it with all sorts of things.
There is just no way to pull that kind of risk money.

Bottom line is that it is that tied into the economy and AIG going away is just not a logical

PETER RYAN: AIG's newly appointed chairman Ed Liddy was sounding surprisingly upbeat today despite
the levels of fear and taxpayer funded debt.

But he is confident the market will eventually turn and that some of the $180-billion already
stumped up will soon be paid back.

ED LIDDY: In some cases we will sell businesses and in some cases we will consider an initial
public offering. We will need the market to get a little bit better as we go but sometimes selling
things into the public is actually different than trying to sell it to one company that has got to
go out and raise a lot of money.

And they may not have the capacity to do that because they are worried about the capital position
they have being adequate to support the business they are in.

PETER RYAN: The potential ramifications of an AIG failure or the need for another US Government
bailout took an early hit on the Australian share market which fell to a new five-year low in early

With today's falls of more than two per cent, Australian stocks are getting closer to an important
psychological barrier of 3,000 points.

And the news is getting worse for anyone in the finance sector with the French investment house
Societe Generale announcing plans to sack a third of its Australian workforce.

ELEANOR HALL: Business editor Peter Ryan.

Reserve Bank board meets amid AIG angst

Reporter: Stephen Long

ELEANOR HALL: Economics correspondent Stephen Long joins me now in The World Today studio to
discuss the implications of AIG's huge losses and the challenges facing the Reserve Bank as its
board meets today to deliberate on Australian interest rates.

Stephen, AIG was given a lifeline by the US Government last year - how has it managed to end up in
this position now?

STEPHEN LONG: Well, Eleanor as with all of the bailouts that we have seen so far, even the huge
amounts of money thrown in by the Government didn't go anywhere towards matching the enormous
losses and write-downs.

Basically AIG was a house of cards and it has collapsed. The problem is it did something that an
insurance company should never do and that was get into trading, speculative trading of fancy
financial products, financial derivatives and other similar contracts.

The other thing it did very unwisely is it acted as an insurer through the credit default swaps
markets for these collatorised debt obligations and other fancy products that the Wall Street banks
invented that were backed by subprime mortgages and dodgy debt.

ELEANOR HALL: We haven't seen the end of the CDO situation yet, have we?

STEPHEN LONG: Oh, no, no. The losses are still mounting and that is the problem and there is
similar issues with a lot of insurance companies it must be said. Not to the same degree of
problems that we are seeing with AIG.

But Swiss Reid which is the world's largest reinsurer, that is an insurer of insurers, has posted a
loss equivalent to about $AU2.3-billion in the last quarter and it has had to have a huge bailout
from Warren Buffett the rich investor. And there are big concerns about this insurance and
reinsurance market and that it could be the next leg down in the credit crisis.

ELEANOR HALL: So what would happen if AIG or other reinsurance companies were to fail?

STEPHEN LONG: Well, it would make the collapse of Lehman Brothers last year, which sent the world
into a tailspin, look like a picnic. Basically AIG is so strategically important that it would
bring down the entire financial system were it to fail.

That is because it is a counterparty through those insurance contracts to a whole lot of products
and asses that the banks have; and so if that insurance wasn't there the losses in the banking
system would be just enormous and it would just bring down the entire financial system.

Beyond that there is a real economy effect as well because it is a major reinsurer and insurer so
if it was to fold, ships wouldn't sail, planes wouldn't fly, houses wouldn't be built, companies
wouldn't operate because they couldn't get the insurance or their insurers couldn't get backing.

And so that is why it is absolutely important and that is why the US Government really has
signalled from very, very early on in the AIG debacle that it would do anything within its power to
avoid this company failing.

ELEANOR HALL: Although that doesn't seem in any way to have reassured stock markets.

STEPHEN LONG: Well, as I said the problem is that there are just new risks emerging all the time in
these interconnected financial markets and people are seeing the link now between insurance
companies and the financial markets and it is just part of this tangled web, this terrible mess.

So yes, and HSBC shouldn't be underestimated either - a major world bank in serious trouble.

ELEANOR HALL: The board of the Reserve Bank met this morning to decide whether or not to cut
interest rates in Australia again. There seemed earlier in the week to be a wide range of views
among economists about what the bank should do, but what impact will this news about AIG have?

STEPHEN LONG: The news about AIG will have a material impact and it materially increases the
likelihood that the Reserve Bank will cut rates.

Now it is pretty clear from what Reserve Bank officials have said in their public statements and
commentary over the past few weeks that they wanted to pause. They wanted, if they at all could, to
take a break and see what impact the four percentage points of rate cuts they have already
delivered and the fiscal stimulus would have.

But each time they go into a meeting thinking we will pause or we will just cut by a little bit,
there is more bad news it seems before each meeting, and it should be borne in mind that before
many of the meetings they have had recently, they have gone in with a recommendation from staff for
a small cut and increased it.

This time they may have gone in with a recommendation for a small or zero cut. We'll see what
happens this afternoon.

ELEANOR HALL: Stephen Long, our economics correspondent. Thank you.

Regulators consider extending ban on short selling

Reporter: Sue Lannin

ELEANOR HALL: Hedge fund operators are among those accused of causing the global financial

One of the practices they engage in is short selling which can drive down the market.

Last year, Australian regulators tightened the short selling laws and imposed a temporary ban on
the short selling of financial stocks.

That ban is set to end on Friday but regulators are considering extending it partly because of
concerns about the share prices of Australian banks.

Finance reporter, Sue Lannin, has more.

SUE LANNIN: Hedge funds are considered by some to be on the wild west of the investment frontier.

They're accused of targeting vulnerable companies and driving down the share price by selling
shares they don't own in the hope of buying them back later at a cheaper price.

Last September Australia toughened up the law and restricted short selling.

It imposed a temporary ban and financial stocks are still not allowed to be short sold.

The head of corporate law at Melbourne University, Ian Ramsay, says the legal changes were a good
thing but the ban should now be lifted.

IAN RAMSAY: After all, there isn't any real evidence that the existing ban has effectively worked.
We've had a declining stock market around the world and there isn't real evidence before ASIC or
other regulators around the world, short selling where it is permitted, has destabilised the

SUE LANNIN: The big banks pushed for the ban and the Australian Bankers Association supports its
extension as financial stocks continue to plunge.

Macquarie Group, which reportedly has been targeted, refused to comment.

The corporate regulator, the Australian Securities and Investments Commission says it will make a
decision this week on whether the ban should be extended.

Hedge fund manager Tom Elliott from MM&E Capital says the ban on the short selling of financial
stocks has had no effect.

TOM ELLIOTT: It is very difficult to short sell banks at the moment. There is a way to do it and it
is probably going on but no, most of the selling going on in banks is just long share holders who
are getting out because they are worried about the medium-term outlook for financial services and
it is not very good.

SUE LANNIN: Do you think the ban on the short selling of financial stocks should be lifted?

TOM ELLIOTT: Look, I do and I would be accused of promoting self-interest because I manage a hedge
fund and we do short sell stocks as part of our investment activities. Look the rest of the world
hasn't been short selling. They have got rid of their bans. Australia is relatively unique for
having kept it on financial stocks.

Short selling is not causing share prices to fall. Panic on world markets causes share prices to
fall. At its very worst all short selling does is simply cause share prices to get to where they
have to go a bit more quickly.

SUE LANNIN: A media report today claims that foreign hedge funds are ganging up to short sell
Australian banks if the ban is lifted.

But Kim Ivey from the Alternative Investment Management Association, which represents hedge funds,
says it is just another rumour.

KIM IVEY: I think it is another example of emotive comment and rumours hitting, I guess, the press,
circulated by the press during a time of uncertainty. And I think that the sooner that we get to a
level playing field both in a regulatory sense and certainly in a market sense, then we won't have
these sorts of conspiracy theories being aired.

SUN LANNIN: But Kim Ivey, are foreign hedge funds targeting Australian banks?

KIM IVEY: Why would, I don't understand why they would. There are many, many banks obviously around
the world. There are many jurisdictions; there are many exchanges that do not have shorting bans in
place. If you look at the profitability of the Australian banks, they are in far better shape.

So I don't understand the logic of why people are saying that overseas groups are going to be
targeting Australian banks when they are in such good shape.

ELEANOR HALL: That is Kim Ivey, the head of the Alternative Investment Management Association,
ending that report by Sue Lannin.

Unions push for 'buy Australian' to protect jobs

Reporter: Alexandra Kirk

ELEANOR HALL: As the global economic crisis deepens, the winds of protectionism have started to
blow around the world.

Now the Australian union movement is joining in with a proposal for a "Buy Australia" clause to be
followed by all three tiers of government.

The ACTU says that the Commonwealth alone spends $44-billion a year on goods and services and that
if it used this to buy Australian products this would help to save jobs.

But the Federal Government is warning against a protectionist push, as Alexandra Kirk reports from

ALEXANDRA KIRK: Faced with the prospect of 300,000 jobs being lost over the next year, unions are
meeting today to devise a strategy to save jobs. They're pushing for the Federal Government to "Buy
Australian" when it spends $44-billion of taxpayers' money on goods and services each year.

Public sector procurement is big business.

And the 1850 jobs to be axed by clothing manufacturer Pacific Brands has galvanised the unions into

Tony Sheldon from the Transport Workers Union says government procurement and the Commonwealth's
$42-billion stimulus package are a good place to start - maximising the benefits of taxpayer

TONY SHELDON: It is critical that that money spent towards looking after Australian jobs and
Australian companies are able to, that are supported by taxpayers' money is actually providing good
paying, decent Australian employment.

ALEXANDRA KIRK: The Trade Minister Simon Crean is today meeting the head of the World Trade
Organisation Pascal Lamy - both are warning of the dangers of "creeping protectionism" in response
to the global economic downturn; worried it could spark a domino effect.

Mr Crean says protectionist measures invite retaliation. He says the Government's go for growth
strategy is the right approach.

SIMON CREAN: Well, there is no harm in the promotion of activities to try and encourage
Australian-made. It is when you mandate it and when you put up barriers against the competition,
that is what invites the retaliatory action. That is the downward spiral in trade; that halts any
of the recovery plans that we are talking about.

Understand this, Alex, the most effective way in which we can create job opportunity in this
country is to go for growth and what we are also about doing is enhancing that fiscal stimulus by
arguing for freer trade and trade liberalisation. And the reason for that is simple - the rate of
growth in world trade is faster than the rate of growth in world output.

ALEXANDRA KIRK: As it stands does the Government right now give preference to local suppliers and
jobs when considering its procurement purchases.

SIMON CREAN: It, it is urged many, many times, the giving of preference. I mean just simply arguing
that preference should be given all things being equal, of course, all countries do that and why
shouldn't they? It is the difference between the promotional and the urging, but leaving it to
effectively the competitive forces to determine the appropriate outcome.

ALEXANDRA KIRK: ACTU president Sharan Burrow is certain that jobs can be saved without flouting
world free trade rules.

SHARAN BURROW: We believe that right now, more than ever, acts of solidarity by businesses looking
to maximise Australian participation in their supply chain, looking to protect jobs, that is
essential to stabilising demand in the economy and therefore protecting jobs and families and
protects our economy to the extent it can from further downturns.

ALEXANDRA KIRK: And how many jobs do you think the Government could save?

SHARAN BURROW: Well, we would say it is not just the Government but in fact it is business overall,
because every company should be fighting for jobs at this point.

ALEXANDRA KIRK: Now would you make this mandatory for both the Commonwealth Government and also the
private sector?

SHARAN BURROW: You have to look at what is available policy space within our international
obligations. This nonsense about protectionism is simply a distraction from looking at serious
policy initiatives.

These things can be encouraged and they can be put in tender arrangements from government through
to business more generally.

ALEXANDRA KIRK: And what will the tender say?

SHARAN BURROW: Well, we need to sit down and negotiate what it would say, but it would clearly look
to have companies provide an understanding of how they have gone about securing maximum
participation from Australian industry, whether it be manufacturing or services or construction or
other areas of the economy.

ALEXANDRA KIRK: On issue of price, what sort of a buffer do you think there should be, say between
choosing an Australian company or product that costs a bit more?

SHARAN BURROW: There is no magic figure - but if you look at price competitiveness and weigh it up
with the difference in cost of transport and the quality risk that companies bear, then we think
Australian businesses are competitive.

We are not asking the Government or any business to overturn international treaty obligations. What
we are saying is that there is policy space. If you ask Pascal Lamy or any other trade expert, they
will tell you there is policy space where you can look at sensible arrangements to maximise the
opportunity for businesses to be part and parcel of contractual arrangements and secure jobs into
the process.

ELEANOR HALL: That is ACTU President Sharon Burrow.

Rain fails to douse bushfire threat

Reporter: Rachael Brown

ELEANOR HALL: Fire authorities are warning Victorians that this morning's rain has not removed the
fire danger.

Northerly winds are expected to gust up to 100 kilometres an hour in some areas of the state this

Rachael Brown spoke to the Department of Sustainability and Environment's Kevin Monk.

KEVIN MONK: The winds are actually picking up as we speak in the north and there is also a strong
south-westerly wind change due across the state later on this afternoon. The rain that we have had
is very minimal possible only one to two millimetres in places. So we have still got strong winds

RACHAEL BROWN: Gusting up to how much at the moment?

KEVIN MONK: Gusting up to 90 to 100 k in various places.

RACHAEL BROWN: Can you explain just what type of damage they could do?

KEVIN MONK: That can blow over trees and break branches. We have already got reports of power lines
down at Mount Massenden.

RACHAEL BROWN: And the south-easterly - what time is that expected?

KEVIN MONK: It is expected to go across starting in the west of the state later on this afternoon
and then reach Melbourne by about 5pm.

RACHAEL BROWN: And there are four fires still burning across Victoria, albeit contained at Wilsons
Prom, Bunyip, the Kilmore East, Murrindindi south complex and Kilmore East Murrindindi north.

KEVIN MONK: Yes that is correct.

RACHAEL BROWN: Do the strong winds today or the wind change this afternoon pose particular problems
for any of those four fires?

KEVIN MONK: Yes. Under the northerly conditions, our area of concern then becomes the upper Yarra
Valley say from Healesville around Warburton further along. They are still under pieces of country
in that fire area that may spot over and cause some concerns to those communities. We've got large
numbers of resources in that area monitoring that.

And then as the south-west wind change comes through, our concern then moves to the easterly part
of the fire south of Lake Eildon. We have some difficult fire country there. We have been working
on part of that fire over the last week and our concern is that it may spot over our control line
in that area.

RACHAEL BROWN: How far are you expecting some fires to spot today?

KEVIN MONK: If they get a decent run-up they can go 10 to 15 kilometres.

RACHAEL BROWN: And have there been any urgent threat measures issued for any communities today?

KEVIN MONK: No. There is no urgent threat messages out. We have told communities surrounding these
fires that they may see smoke and people need to be alert. They need to listen to their local radio
station for any new fires that start in their area.

RACHAEL BROWN: And what about lightening strikes?

KEVIN MONK: Yes there is a possibility of lightning strikes, however there is also some possibility
of rain - between five and 15 millimetres coming through with the change later on today. So that
will be a welcome relief for many people.

RACHAEL BROWN: With the rain, how many mils have we seen fallen already today?

KEVIN MONK: Only a couple of mils in places today - nothing significant. It will dry up quickly.

RACHAEL BROWN: And what about hindering fire crews out there on the lines at the moment?

KEVIN MONK: Sometimes it makes the fire tracks a bit slippery and makes it difficult to do our back
burning; but I haven't heard any of those reports in yet.

RACHAEL BROWN: So it sounds like the rain won't provide as much relief as people would have hoped
so the winds are the main problem. How long will they continue for into tonight?

KEVIN MONK: Well, the strong winds should abate over tonight but we have got southerly cooler
conditions for at least four or five days so that is going to allow us more time to wrap up the
fires that we have got going. And again, depending on where the rain falls and how much of that can
be helpful to controlling our fires.

RACHAEL BROWN: So if crews can hold lines today then the prospects are good for the rest of the

KEVIN MONK: Oh, I'd say we'll know this time tomorrow how things are looking on those four major
fires that we have.

ELEANOR HALL: That is Kevin Monk, from the Victorian Environment Department speaking to Rachael

Measles outbreak on Sunshine Coast

Reporter: Nicole Butler

ELEANOR HALL: On Queensland's Sunshine Coast an outbreak of measles has forced the closure of a
school.*(See editor's note)

Doctors say there is a mini-epidemic developing in the region and health officials are blaming
parents who won't vaccinate their children.

They say the self-styled 'conscientious objection' to immunisation is inflicting huge health risks
on communities across Australia.

Nicole Butler has our report.

NICOLE BUTLER: It's an unsettling sight. Instead of students - Queensland health officials have
been streaming through the gates of Beerwah State High School on the Sunshine Coast.

A severe measles outbreak has forced the suspension of classes and over 400**(see editor's note)
pupils have been forced to stay home.

Doctors in the area have been alerted and local GP Mason Stevenson says the situation is serious.

MASON STEVENSON: We have a mini-epidemic of sorts here on the coast. We are really concerned and
part of the problem is we the low vaccination rate that we do have here on the coast.

NICOLE BUTLER: Australia-wide some people have chosen not to have their children vaccinated - after
a few highly-publicised claims about dire side effects.

Dr Stevenson says those so-called conscientious objections have caused the re-emergence of diseases
that had become quite uncommon.

MASON STEVENSON: We certainly have seen a real upsurge, for instance, in whooping cough and here on
the coast we certainly are seeing many, many cases than in the past couple of years.

NICOLE BUTLER: Dr Andrew Langley from Queensland Health is in charge of the situation at the
Beerwah State High School. He says student and staff immunisation records are being assessed and
vaccinations are being provided to anyone who wants them.

The public health physician says so far there's only two confirmed cases - but other tests are
still to be finalised.

ANDREW LANGLEY: We've been following up 12 reported cases. I am about to go and review all today's
laboratory data. But of those 12 cases, 11 of them are unvaccinated and our concern is that having
a larger number of unvaccinated people in the community enables an outbreak to establish and that
is what we are particularly concerned about.

NICOLE BUTLER: Dr Langley says the Sunshine Coast has one of the lowest vaccination rates in

ANDREW LANGLEY: The number of people objecting in the Sunshine Coast and it is not uniform across
the Sunshine Coast, is the second highest rate after the Northern Rivers area of New South Wales.
Measles virus has some particular characteristics that makes it hard to control. I mention that we
are following up 12 reported cases. Last year for the whole of Queensland, we only had 11 cases.

NICOLE BUTLER: Dr Langley says outbreaks of high contagious - and potentially lethal diseases like
measles - can happen where less than 90 per cent of the community has been vaccinated.

ANDREW LANGLEY: Even having ten per cent of the population not vaccinated can create problems if
measles is introduced to the community.

We believe in this situation that it has been introduced by somebody returning from overseas. We
are still seeking to confirm that. But there is certainly evidence of a chain of transmission to
the current cases and we are expecting further cases.

NICOLE BUTLER: Dr Langley expects it will take some time to control the outbreak and the Sunshine
Coast is a popular holiday destination.

But doctors say people who have had their MMR - measles, mumps and rubella vaccinations shouldn't
be concerned about travelling to the region

ELEANOR HALL: Nicole Butler reporting.

* Editor's note: Following the broadcast of this story the Education Department called to say that
the school has not officially closed.

**Editor's note: This transcript has been adjusted to correctly record the number of students in
forced suspension.

Turmoil in West Africa, as President and army chief killed

Reporter: Simon Santow

ELEANOR HALL: Now to the deadly end to a political feud in the small West African nation of Guinea

The former Portuguese colony has been thrown into chaos by the assassination of the President by
sections of his own military.

That killing came only hours after the country's army chief was killed in a bomb attack.

Simon Santow has more.

SIMON SANTOW: The African continent is no stranger to failed nation states and often bloody coups.

So in one sense it's no surprise that the latest country to stumble badly is tiny, grindingly poor
and gripped by the drugs trade.

But on the other hand, the West African country of Guinea Bissau has stood out from the crowd as a
state which is relatively politically stable until now.

Since Independence from the Portuguese in the mid 1970s, one man has dominated - Joao Bernardo
Vieira - first as a dictator then more recently as President of a democratically elected

His grip on power appeared firm until yesterday when his rival, army chief General Tag me Na Waie
was killed in a bomb blast.

Soon afterwards the President himself was gunned down.

Guinea Bissau military spokesman Zamura Induta.

ZAMURA INDUTA (translated): The state army chief was killed in an attack. We formed a commission to
try and control the situation and return to normal. Unfortunately a group of gunmen entered into
Nino Vieira's house and killed him.

The situation is now under control.

SIMON SANTOW: Reaction from Europe has been swift.

The Portuguese Prime Minister has called the killing a 'barbaric assassination' and offered
military and political help. While Africa is sensitive about the threat to democracy posed by the
violence in Guinea Bissau.

Dr Mohammed Ibn Chambas is the executive secretary of Ecowas, the West African regional

MOHAMMED IBN CHAMBAS: We are deeply concerned that at a time when in the region as a whole, there
is a move towards consolidating democracy - these event have happened. Added to that, of course,
was the intervention of the military in Guinea in December. So we see these two as certainly a step

SIMON SANTOW: Professor Helen Ware teaches peace studies at the University of New England,
specialising in African affairs.

She says the feud can be seen in terms of ethnic differences between the army chief and the

HELEN WARE: Over the past 29 years I think he has been President for 23. He is an interesting guy
because he has been president as a result of a coup but he was also actually elected president. He
comes from a very small ethnic group which only represents about five per cent of the population
and one of the many reasons why he didn't get on with the army was because the head of the army
came from a much larger and different ethnic group.

SIMON SANTOW: Can you see the country getting back on its two feet easily in the aftermath of this?

HELEN WARE: Well, unfortunately, probably the fifth poorest country in the world. Guinea Bissau
only legal export is cashew nuts which gives you an idea of the state the economy is in.
Unfortunately, it has come close to being what they call a narco-state based on narcotics.

Columbians fly drugs in from South America. Although it is a tiny country, it has a lot of islands
off the coast and a lot of these actually have small airports; so that Columbians fly the drugs in
there and then they are forwarded onto Europe.

SIMON SANTOW: Dr Graeme Counsel is a specialist in African studies from Melbourne University.

GRAEME COUNSEL: Many commentators have suggested that the President has turned a blind eye to the
drug trade and in doing so, indeed the drug cartel have allowed him to stay in power.

SIMON SANTOW: What is the nature of the drug problems?

GRAEME COUNSEL: Well, Guinea Bissau is a Portuguese speaking country as was some of the South
American nations which are involved in the importation/exportation of cocaine. But not only that,
because of Guinea Bissau's poverty they don't have a navy whatsoever and if they have an air force
it is barely functioning; but I believe that they no longer have an air force that is capable of
putting a plane in the air.

And so it is extremely easy for these huge and powerful drug cartels to fly drugs, planeloads full
of cocaine to Guinea Bissau and simply dump them there and then arrange for Guinea Bissauans to
import them to Europe, which they do so via boat.

ELEANOR HALL: Dr Graeme Counsel from Melbourne University, ending that report from Simon Santow.

Fire a major cause of death among young Indian women

Reporter: Meredith Griffiths

ELEANOR HALL: Fire has long been a major cause of death for young women in India.

Now for the first time, researchers have quantified the problem.

The medical journal The Lancet has published a study showing that there were 163,000 fire related
deaths in India in one year. And that almost two thirds of the victims were women aged between 15
and 35.

Associate Professor Devleena Ghosh from the University of Technology in Sydney told Meredith
Griffiths that she is not surprised by the findings.

DEVLEENA GHOSH: It actually reveals what a lot of social activists and feminists have been saying
which is that oppression of Indian women hasn't really changed because of the advance of the Indian
economy through globalisation and a larger wealth of the middle-class sector.

And that the dowry system and the general sort of status of women still remains relative low
amongst large segments of the society.

MEREDITH GRIFFITHS: The research has also said that official figures tend to underestimate the rate
of fire related deaths in India and that sometimes they are put down to things like cooking

DEVLEENA GHOSH: Yes, indeed. There have been certain legislations that have been put through the
Indian Parliament including the taking of dying declarations by women who have been burnt and
subsequently died.

It has been made a relatively easier to arrest and certainly prosecute cases against families,
usually the married families, of women also who die or are burnt in these sorts of accidents. But
the very large number of these accidents, just like rape and assault, go unreported.

Because of the huge population of India and the general underfunding and the smaller numbers of
police relative to the population, the police don't attend every single death which is seen as you
know, sort of not 'normal' in inverted commas, abnormal deaths such as deaths by burning.

So unless somebody, some interested person reports this to the police, it is very often not

MEREDITH GRIFFITHS: What could be going on here with all these deaths from fire related injuries?
What is really going on?

DEVLEENA GHOSH: Well, it is a large number of deaths of course 104,000 but of course there are a
very large number of females in India you know, less than half of one billion.

I would say that a lot of them would be homicides because of mostly dowry or other sorts of
domestic violence situations. Some of them are probably accidents; but a large number of them would
possibly be sort of assisted accidents or homicides.

Usually sort of like carried out by the husband's families, although I mean there are cases also
where the woman's own family may sort of murder their own daughters or children especially if the
woman have been seen to bring you know, shame onto the family by not wanting to marry the man
chosen for them or by having boyfriends or by generally going out of the house.

Again, sort of death by fire is a more common form of death for woman in India then almost any
other. A lot of woman also set themselves on fire if life is really difficult and they can't stand
it anymore. That seems to be one of the ways that they kill themselves.

But a lot of those fires could also be put down to high levels of persecution either by their birth
or their married family.

MEREDITH GRIFFITHS: Why is that prevalence of fire? So whether it is the homicides or the dowry
deaths you are talking about or the suicides - what is it that seems to be the reason that fire is
the method chosen there?

DEVLEENA GHOSH: Oh, well it is sort of the clinched answer would be the traditional order of
burning of the woman on the funeral pyre. But you know, I think is probably over-determined.

I think one of the reasons for deaths by fire has to do with sort of like woman being in a domestic
sphere and a lot of woman actually still cooking with coal ovens or with kerosene or with cylinder
gas sometimes. You know forms of cooking fuel which are by Western standards extremely dangerous.

And I think the association of the woman with the domestic sphere and the use of what is available,
and also I think certainly for sort of like for a lot of these families including the woman
herself, she doesn't want her family to get in trouble. I mean the death by fire can certainly be
put down to some sort of accident whereas death by hanging or poison cannot. So those are probably
the reasons.

ELEANOR HALL: That is Professor Devleena Ghosh from the University of Technology in Sydney,
speaking to Meredith Griffiths about that Lencet report.

VC winner takes up fight for trauma patients

Reporter: Stephanie Kennedy

ELEANOR HALL: Britain's most highly decorated serving soldier has condemned his government for
failing to help former soldiers who are suffering from mental trauma after their tours in Iraq and

A British study has revealed that young ex-servicemen are three times more likely than their
civilian counterparts to kill themselves.

In London, Stephanie Kennedy reports.

STEPHANIE KENNEDY: Nearly five years ago, just north of Basra during a Shi'ite rebellion, Lance
Corporal Johnson Beharry's platoon was sent to rescue a foot patrol pinned down by enemy fire.

But his convoy of armoured Warrior vehicles was ambushed.

With his commander severely wounded, the young soldier took the initiative crashing through the

His Warrior was hit repeatedly by rocket-propelled grenades. With a bullet lodged in his helmet he
pushed on - leading the convoy back. He saved up to 30 soldiers including his unconscious

Six weeks later he did it all over again - under heavy rocket attack Johnson Beharry managed to get
his vehicle out of another ambush.

It was described as the most extraordinary story of one man's courage and he was the awarded the
country's highest honour for bravery- the Victoria Cross - the first since the Falklands War and it
was also the first VC to a living solider in 40 years.

Now his comrades are under attack again - but this time the battle is back home in the UK.

In a demonstration of the courage that earned him the Victoria Cross - Lance Corporal Johnson
Beharry is once again defending his fellow soldiers.

He says it's disgraceful that some veterans are struggling to receive treatment for mental trauma.

Recently he had to wait several hours at a hospital for treatment through the National Health
Service - the NHS.

JOHNSON BEHARRY: The NHS don't have my record, so they don't know my problems, they don't know my
trauma. So if I go with a problem I need to explain everything to them again which at the time I
was in so much pain, I was so angry with myself, I was so angry even with the people around me
because of the way I was feeling. I don't want to explain anything.

STEPHANIE KENNEDY: Johnson Beharry's decision to speak out is unusual as he is still a serving

But he has the support of other highly decorated servicemen and women including Colonel Bob Stewart
- a former UN Commander of British troops.

BOB STEWART: Johnson Beharry is just highlighting a problem that is quite evident because in the
good old days, we used to have hospitals that would deal with someone and you could go back to

Now when someone is discharged from the armed forces with a mental or physical problem that will be
with them for life, they are put into the National Health Service and the National Health Service
has to deal with them.

They keep saying that you go to the top of the list if there is a problem in the National Health
Service but the truth of the matter is, you don't.

STEPHANIE KENNEDY: And a new report reinforces the increasing problems suffered by veterans. The
number of suicides has risen dramatically particularly within the first two years of discharge.

Robert Marsh is from Combat Stress, a mental health charity for veterans.

ROBERT MARSH: Over the last three years we have seen a 53 per cent increase in the number of new
veterans seeking our help and if one bears in mind that veterans come to us 14 years after they
have left the armed services, what with Iraq and Afghanistan in the background, what are we going
to be expecting in five, 10, 15 years' time.

STEPHANIE KENNEDY: The British Government says veterans receive priority treatment at public
hospitals but officials acknowledge the system doesn't always work.

In London this is Stephanie Kennedy reporting for The World Today.

Former millionaire faces new charges

Reporter: Scott Bevan

ELEANOR HALL: A decade ago Mikhail Khodorkovsky was hailed as Russia's richest man.

Now the former head of the country's biggest oil company is in prison for corporate crimes and he's
facing new embezzlement charges in a trial starting today in Moscow.

Yet human rights activists say that what's also on trial is the Kremlin's intolerance to anyone
speaking out against the way it wields power.

Moscow correspondent Scott Bevan has this report.

SCOTT BEVAN: Few have fallen so far as Mikhail Khodorkovsky. In the 1990s and into the early years
of this decade, he was the CEO of the oil giant Yukos and at one stage he was estimated to have
been worth $US15-billion.

In 2005 Khodorkovsky was convicted of tax evasion and fraud and was sentenced to eight years in
prison. Since then Yukos has been broken up and sold off under orders of the state and Khodorkovsky
has spent most of his time in Siberia.

However for the past week Mikhail Khodorkovsky has been back in a familiar city, Moscow. But he is
as far away from his former life as he has ever been.

For the one-time oil tycoon has been transferred to the capital to stand trial on new charges. He
and a former business partner Platon Lebedev are accused of embezzling the equivalent of

Vadim Klyuvgant is Mikhail Khodorkovsky's lead defence lawyer and he has rejected the allegations.

VADIM KLUVGANT (translated): In the mind of any normal person, lawyer, an economist, just any
normal person, it is impossible to find any logic in this case.

SCOTT BEVAN: Critics of the Khodorkovsky case say the 45-year-old is paying the price for becoming
mixed up in politics at a time when then President Vladimir Putin was seizing back power from the
oligarchs who had had so much influence over the nation during the 1990s.

Tanya Lokshina is from the Russian chapter of Human Rights Watch.

TANYA LOKSHINA: He actually acted as an opponent of the Kremlin on quite a number of issues and by
doing that he was simply becoming too bold.

SCOTT BEVAN: Tanya Lokshina says the Khodorkovsky case is just the highest profile example of how
freedom of expression, especially criticism of the Government has been attacked in Russia.

TANYA LOKSHINA: The Kremlin is saying those who dare criticise us, those who dare go against us,
may get in trouble. So watch yourselves, watch whatever you are saying - don't get too bold.

SCOTT BEVAN: While human rights groups and supports of Mikhail Khodorkovsky campaign for a fair
trial, his parents have visited him in the Moscow prison where he is being held.

Marina Khodorkovsky has recounted part of her conversations with her son.

(Marina Khodorkovsky speaking)

'He literally told me I am ready for anything, for a new prison term, for anything'.

This is Scott Bevan in Moscow for The World Today.

Oxford Uni quiz show winners disqualified

Reporter: Barbara Miller

ELEANOR HALL: Now to the scandal over the British quiz show champions who have been stripped of
their title.

Due largely to the academic brilliance of the captain, a team from Oxford University last week won
the final of the show, University Challenge.

Newspapers have been filled with profiles of the young woman, who has been dubbed the Human Google.

Today though, the focus is on another member of her team.

Barbara Miller has more.

BARBARA MILLER: University Challenge has been showing on British television for around 40 years.
Not much has changed in that time. Teams of four students battle it out each week in knock-out
rounds, hoping to make it to the final.

They're posed a series of questions. Whoever presses the buzzer first gets to answer. The show
doesn't usually capture the wider public's attention, but this year was different.

(Excerpt from show)

JEREMY PAXMAN: Corpus Christie Trimble ((Sound of bell)

Corpus Christie Trimble (Sound of bell)

BARBARA MILLER: The captain of the team from Corpus Christi College at Oxford University Gail
Trimble just kept getting the right answers:

(Sound of bell)

JEREMY PAXMAN: Corpus Christie Trimble.

(Sound of bell)

JEREMY PAXMAN: Corpus Christie Trimble.

BARBARA MILLER: As her team progressed through the competition she became something of a star. She
was dubbed the Human Google - and it's not hard to understand why.

JEREMY PAXMAN: Known that according to Aristophanes was built by the birds to separate ...

(Sound of bell)

JEREMY PAXMAN: Corpus Christie Trimble.

GAIL TRIMBLE: Cloud-cuckoo-land.


Surname is shared by the author of the tower of physics and the director of 'It's a Wonderful

(Sound of bell)

JEREMY PAXMAN: Corpus Christie Trimble.


JEREMY PAXMAN: Capra is right.

Another starter question - which of Shakespeare's plays is the only one to be set in Vienna and
concerns the city's Duke adopting a disguise.

(Sound of bell)

JEREMY PAXMAN: Corpus Christie Trimble.

GAIL TRIMBLE: Measure for Measure.

JEREMY PAXMAN: Measure for Measure is right. Here are your bonuses.

There are Latin abbreviations. Vis meaning namely ...

BARBARA MILLER: And when the gong sounded in the final show Corpus Christi had well and truly
beaten their opponents from Manchester University.

The final score stood at 275 to 190.

A record 5.3-million people watched the show, many of them simply to see Gail Trimble in action.

But attention soon began to turn to this member of the Corpus Christi team.

I'm Sam Kay. I'm from Frimley and Surrey and I'm studying chemistry.

BARBARA MILLER: It transpired that by the time the final rounds were recorded this was no longer
the case.

Sam Kay had in fact taken up a graduate position with Price Waterhouse Coopers, and so was breaking
the rules by competing since he wasn't a student.

There was talk of a rematch, but the BBC decided to disqualify the team.

Manchester University have been declared the winners.

Their team captain is Matthew Yeo.

MATTHEW YEO: We accept the judge's position but we feel saddened that it has had to happen in this
way. But more than that we feel that the debate about cheating, alleged cheating and the judgement
passed today, detracts enormously from the achievements of the Corpus team, the achievements of my
colleagues and our team and also the other teams on University Challenge.

BARBARA MILLER: While Manchester is careful not to gloat at Corpus Christi's fate - that's more
than can be said for some sections of the media.

REPORTER: The mighty Corpus. Good at Aristophanes, not good enough at the rule book.

BARBARA MILLER: Students at Oxford University are disappointed by the BBC's decision.

STUDENT: I sort of think if he has only just graduated, it is a bit nit-picking.

STUDENT 2: Personally I think that they shouldn't have been disqualified, but I guess if you break
the rules for one team then it all breaks down doesn't it.

BARBARA MILLER: The show's presenter, the respected journalist Jeremy Paxman, said Gail Trimble had
still put in a stunning performance.

JEREMY PAXMAN: I don't think it detracts from her performance or indeed any of the performances at
all. It is just very unfortunate but rules are rules.

BARBARA MILLER: Jeremy Paxman described the turn of events as "mildly embarrassing".

ELEANOR HALL: Barbara Miller.