www.gamblingmagazine.com March 15, 2003

On the tiny island of Curacao, 40 miles off the coast of Venezuela, a computer hummed along on Bon Bini Ave. Over the course of three years in the late 1990s, the Caribbean server's Internet connections racked up more than $400 million in sports wagers - on college basketball, professional football and everything in between.

The profits lined the pockets of two Americans, one of whom ran the international gambling ring from Nelsonville, Wis., a one-stop-sign town about 15 miles east of Stevens Point. The federal investigation into the Wisconsin-based online betting service was just the third such case ever prosecuted in the United States. It was the first time the IRS used wiretapping hardware - specially designed at the request of investigators in Wisconsin - to monitor e-mail.

So far, six people have been convicted of federal crimes in connection with the three-year investigation. A seventh, accused of helping the bookies hide their profits in offshore banks, is scheduled for trial in May. Christiansen Capital Advisors, a New York market research firm, estimates that about $6.4 billion will be wagered on athletic competitions this year, much of it via about 1,400 Internet sports betting sites.

About 5 million people get a piece of the Internet action. The men's NCAA basketball tournament, which starts next week, is the second most popular gambling draw after the Super Bowl. Except in Nevada, betting on sports is illegal everywhere in the U.S., including at Indian casinos, according to Daniel J. Graber, assistant U.S. attorney for the Western District of Wisconsin.

Under the federal Wire Act of 1961, using an online sports book (even if the server is in a foreign country) is a felony, since it uses interstate telephone lines. The law is difficult to enforce, however, because it's often impossible to tell who is operating a particular Web site, Graber said.

Unfortunately for Duane Pede, 52, of Amherst Junction, Wis., and Jeff D'Ambrosia, 42, of Henderson, Nev., several coincidences and an intense investigation led the feds to their door. Thomas Manske was on trial for federal drug charges in 1998. He told the jury all those secretive meetings in bars were not to sell drugs but to collect bets. Their interest piqued, the authorities began working their way up the criminal food chain toward Pede and D'Ambrosia.

Meanwhile, the U.S. attorney in St. Louis busted up an Internet gambling ring based there. Two defendants told authorities they were just small fish. Pede had started out in the sports information business, printing scorecards for bookies and giving them the point spreads on various games. D'Ambrosia's business began as a "tout" service - a way for gamblers and bookies to get recommendations on how to bet.

Both enterprises constitute legally protected speech under the First Amendment. Pede and D'Ambrosia eventually ran four tout services. Pede and D'Ambrosia courted trouble when they decided to branch out, starting a gambling service they could advertise to the people who used their other services, authorities say.

"They figured, 'We know all the people calling us are gambling, why don't we market them?" said Graber, who, along with assistant U.S. Attorney Timothy O'Shea, prosecuted the case. The direct mail was easy because Pede also ran a small printing company in Nelsonville, Signature Press, where the two could print all their advertising materials for the new business.

One of those brochures, stamped by a postage meter at Signature Press, fell into the hands of the Portage County Sheriff's Department and was forwarded to Graber. Authorities now had a tenuous link, but the fact that the server was in the Caribbean was problematic. To minimize the government's losses, they bet against each other.

To prove the Americans were in charge, the U.S. attorney's office and the IRS needed help from the FBI. The government often wiretaps telephone calls to gather evidence in an investigation. But IRS agents had never before wiretapped e-mail. The U.S. Postal Inspection Service and the Wisconsin Department of Justice also assisted in the investigation.

The intercepted e-mails were a gold mine that clearly showed Pede and D'Ambrosia troubleshooting and giving instructions to employees of both the tout services and the gambling operation. Pede and D'Ambrosia both pleaded guilty in December 2001 to federal gambling and tax charges and assisted authorities in the prosecution of four co-conspirators.

Both are serving five-year federal prison terms. Each man was fined $100,000; together they were ordered to pay nearly $1.5 million in back taxes. Pede and D'Ambrosia's financial adviser, Florida attorney David Hampton Tedder, has pleaded not guilty to seven federal felonies and is scheduled for trial in May. Authorities believe Tedder helped the Internet bookies hide the rest of their millions.

Authorities say that although this case is coming to a close, it has opened a whole new avenue of prosecutions, proving an Internet gambling ring can be shut down.

news.independent.co.uk Jeremy Warner 15 March 2003

Now let's just get one thing straight. The losses of the past two years, the debacle of the failed merger with CSN of Brazil, the botched announcement of another massive round of UK redundancies, and the almost comical failure of the agreed sale of aluminium assets to Pechiney of France, vetoed at the last moment by the Dutch supervisory board, has got nothing at all to do with the chairman, Sir Brian Moffat. It's easy to see why you might think otherwise, but in fact all these matters are delegated by the board to the chief executive.

It is therefore Tony Pedder who must take the rap for the disaster that Corus has become. Sir Brian has meanwhile dutifully agreed to defer his planned retirement until a replacement is found. Well someone's got to clear up the mess, haven't they? It was Sir Brian's head on a platter that the unions wanted, for it is him they blame for the cost slashing of recent years, but instead they must make do with Mr Pedder, who was in truth just the messenger.

Sir Brian says Corus is committed to soldiering on as a combined Anglo-Dutch affair, and he insists that the financial situation, although serious, is not nearly as bad as the stock market thinks. The balance sheet is still strong, and he's no reason to believe the banks won't roll over their €1.4bn credit facility when it comes up for renewal early next year.

It doesn't look that way from the outside. As Sir Brian confirms, there are further substantial job losses to come, with one of the three remaining integrated steel plants facing possible closure, while what remains will require massive investment to be put on a viable footing again. The balance sheet may look relatively strong at the moment, but it won't long remain so if the company spends at the rate it reckons it has to.

Now that there's no money coming in from Pechiney, do the banks really want to weather those closure costs, or indeed provide further investment funds to an industry which 10 to 20 years from now probably won't be manufacturing in Britain at all? Sir Brian believes the European assets can still be made viable enough to provide a platform for a life-saving deal with one of the up and coming steel makers of the developing world.

But essentially unviable companies cannot for ever keep on merging their way to salvation. Both sides blamed each other when the CSN talks collapsed. The Brazilians have Lula to contend with, but it can be as nothing compared to the challenge now facing Corus. Sir Brian puts as positive a spin on things as he can. Beneath the gruff exterior he must know a good sight better than the stock market just how perilous the company's position has become.

Iraqi oil bonanza

It amazes me how many apparently well informed, business savvy people still believe that next week's war against Iraq is all about oil. Nobody would pretend that regime change in Baghdad won't have consequences for the oil market. Iraq possesses some of the biggest reserves of oil outside Saudi Arabia, and what's more it is potentially very cheap to extract. But although gas-guzzling American consumers might appreciate the prospect of apparently limitless supplies of cheap oil, hardly anyone else does, and that includes the American administration.

Near term, it is in any case quite unlikely that we'll see significantly increased production of oil out of Iraq. For that to happen requires very substantial new investment and it will take some years for this to have a noticeable impact on supply. It also seems to me unlikely that Western oil interests will benefit significantly from the Iraqi oil bonanza. Rather the reverse in fact.

Once Saddam Hussein is removed, the Iraqis won't need Exxon, BP, Shell or anyone else for that matter to help them exploit their oil reserves. The capital markets will be open to them once more, and they'll follow the Middle Eastern habit of raising the money to develop the oil for themselves. Western expertise will be required, of course, but you don't invade a country for a few lousy overseas development contracts.

As for the oil majors, they don't benefit from cheap oil unless they are actually producing it themselves. BP says all its oil development projects have to be commercially robust at $16 a barrel. Much Iraqi oil might cost as little as $1 a barrel to produce and if Iraq's liberation means world oil prices fall permanently to below $20 a barrel, the oil majors are in some difficulty. As indeed is Russia, whose political stability and economic renaissance relies on oil prices of more than $20 a barrel, and Saudi Arabia, whose ability to keep its army of budding Bin Ladens under control depends on oil supported handouts. Cheap oil is not the panacea it might seem. Even George Bush knows that.

Polluting aviation

You have to pay attention these days to spot a new tax in the making. For obvious reasons, the Government doesn't like to trumpet these things, even when the idea of the tax is to help improve the environment. Thus it was that a discussion document – Aviation and the Environment, Using Economic Instruments – was quietly posted on the Treasury and Department of Transport websites yesterday.

"Using economic instruments" doesn't necessarily mean a new tax, the Government insists. That's just one of a number of options for dealing with the aviation industry's disproportionate propensity to pollute. Other instruments might include more regulation, emission trading arrangements, or measures to encourage innovation in cleaner technology. But whatever the Government settles on, it plainly believes the industry incapable of improvement unless given a powerful incentive to do so, which in government speak normally means some form of charge.

As things stand, tax on aircraft fuel is not allowed under international convention, and even if the Government were allowed to impose such a tax unilaterally, it presumably wouldn't do so because of the effect this would have on competitiveness. It's all very well to lead the world in environmentally friendly policies, but no one will thank you for it if it poleaxes the economy in the process. None the less, even the industry – airlines and airports – accepts that if it wants to carry on growing as it has done, it must find ways of reducing emissions.

According to the document, aviation is responsible for 5 per cent of all CO2 emissions in the UK. If nothing is done to correct the position, this would rise to 10 to 12 per cent by 2020. Add in other pollutants, noise and the effect on local air quality, and there are few other industries that come remotely close in terms of adverse environmental impact.

The Government already imposes an industry specific tax on aviation – passenger duty – but this is just a revenue raising device; it's got nothing to do with the environment. Simply increasing the tax might help fill the Treasury's coffers, but it wouldn't unless raised to a level where it actually began to reduce the amount of aviation taking place have any effect on emissions.

The industry favours a system of emission trading, but there are key drawbacks. One is that it might act as a disincentive to new competition. The other would be the practical impossibility of policing it. My own view is that aviation pollution is likely in the end to prove self correcting anyway. Whatever the Government does about it in the meantime seems set to do harm than good. Fuel is one of aviation's biggest single costs, so there is already a big incentive to use more efficient, cleaner technologies.

Experience with the Climate Change Levy, a well meaning but muddled piece of government intervention which penalises companies for the amount of energy they use rather than the pollution they produce, shows how difficult it is to produce effective public policy remedies in this arena. But don't take my word for it. Just ask Lord Marshall of Knightsbridge, who was responsible for proposing it. He also happens to be chairman of British Airways. Would he propose something similar for aviation? I don't think so.

jeremy.warner@independent.co.uk

www.alertnet.org 14 Mar 2003 23:50 By Axel Bugge

BRASILIA, Brazil, March 14 (Reuters) - Brazil's military presence in the massive Amazon needs to be beefed up with soldiers and aircraft to guard a region "where there are operations by clandestine forces," Defense Minister Jose Viegas said on Friday.

Viegas said the 24,000 soldiers based in Brazil's Amazon jungle -- an area of 1.54 million square miles (4.1 million sq km) which is larger than western Europe -- need to be increased "to give preventive protection to our empty spaces."

"We have airspace that needs to be guarded, it is a region where there is some instability, where there are operations by clandestine forces," Viegas said in an interview with Reuters.

"In this sense, Brazil's military presence is insufficient because we need a robust presence along rivers, the access points to our neighbors, the capacity for quick movement of ground forces and an air presence compatible with the necessity of surveillance," he said.

Latin America's largest country has long worked to clamp down on drug and arms traffickers, illegal loggers and miners operating in its Amazon. Brazil's Amazon borders on seven countries, including war-torn Colombia.

Troops have been gradually transferred to the Amazon from the south -- where Brazil traditionally had its greatest military presence because of regional rivalry with neighboring Argentina.

Viegas said these transfers would continue "gradually, to the extent that we have the resources."

The minister -- who was Brazil's ambassador to Russia under the previous government before joining the Cabinet of new center-left President Luiz Inacio Lula da Silva -- said he was not worried about Colombian Marxist rebels in the Amazon.

He said incursions by the Revolutionary Armed Forces of Colombia -- known as FARC -- into Brazil were infrequent. "There were one or two episodes in recent years," he said. "The FARC have no interest in getting close to us."

Colombia's President Alvaro Uribe visited Brazil last week, when Lula pledged "total solidarity" with Colombia's fight against rebels and drug trafficking. The FARC denies smuggling drugs but admits to "taxing" coca -- the raw material used to make cocaine.

Brazil is a major market for Colombia's cocaine, much of it smuggled through the Amazon.

Turning to the so-called triple frontier region of Brazil, Argentina and Paraguay, Viegas said "there is no proof, or evidence of actions, by terrorists in the region."

"We have worries about terrorist acts, the same worries that any country should have," he said. "But we do not consider ourselves targets, nor actors, nor do we shelter (terrorist) actors."

pennlive.com The Associated Press 3/15/03 8:10 PM

CARACAS, Venezuela (AP) -- Venezuela's crude oil production has surpassed 3 million barrels a day -- approaching levels that made it the world's fifth-largest exporter before a crippling national strike, the state oil monopoly's president said Saturday.

But government officials say work still needs to be done before the industry fully recovers from the failed two-month walkout aimed at forcing President Hugo Chavez to resign or call early elections.

The strike, which ended last month, was strongest in the oil industry, the source of half of government revenues and 80 percent of export earnings.

"The task now that we have reached that level is to maintain and stabilize production," said Ali Rodriguez, president of Petroleos de Venezuela S.A.

Oil executives fired for participating in the strike dispute the government figures, saying daily production is at 2.1 million barrels.

Before the strike, the South American country was a main exporter to the United States, producing 3.2 million barrels a day. Oil production dropped to 200,000 barrels a day at the height of the walkout, costing the country $6 billion. Several refineries also were damaged by being shut down for so long.

Energy and Mines Minister Rafael Ramirez said Friday that Venezuela reached an agreement with the Organization of Petroleum Exporting Countries allowing it to produce above its crude oil output quota of 2.8 million barrels a day to make up for the lost revenue. Venezuela is an OPEC member.

www.forbes.com Reuters, 03.14.03, 6:01 PM ET

WASHINGTON, March 14 (Reuters) - The International Monetary Fund on Friday gave Brazilian President Luiz Inacio Lula da Silva its strongest endorsement yet, approving a $4.1 billion payment under the nation's $31.4 billion loan. The approval of the payment, the first since Lula took office in January, affirms the IMF's support of the new president's economic policies. Brazil won the massive bailout last September to allay investors' fears that, if Lula were elected president, he might abandon economic reforms.