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MAY 29, 2006
Edited by Harry Maurer The Immigration Watch President George W. Bush used his bully pulpit on May 15, making a speech from the Oval Office on immigration that called for up to 6,000 National Guard troops to help police the Mexican border. The President is doing his best to win over GOP conservatives hostile to a new guest worker program and a path to citizenship for illegals living in the U.S. The question now is whether Bush will also engage in the Lyndon Johnson-style arm-twisting that's probably needed to forge a compromise between the crackdown crowd and business and liberals who insist that it's impossible to kick out 12 million people. The Senate is pondering a bill that will have to be reconciled with a security-minded one passed by the House, and BusinessWeek has learned that it will likely include a broad crackdown on employers who hire illegals. Repeat violators could even face jail terms. See "Huddled Masses, Tricky Politics" 
Static Over Phone Calls The other issue that has Washington in a tizzy, of course, is domestic security vs. the right to privacy -- and this one could cost telcos plenty. USA Today reported on May 11 that after September 11 the NSA began collecting data on calls made in the U.S. and that phone companies have turned over tens of millions of records. BellSouth (BLS ) and Verizon (VZ ) deny some of the allegations, while AT&T (T ) simply says it respects customer privacy and complies with all relevant laws. Class actions were filed at fiber-optic speed, some seeking billions in damages.   Boeing Pays A Biggie Apparently, $615 million means never having to say you're sorry. Boeing (BA ) on May 15 said it will fork over the largest fine ever by a government contractor to settle procurement scandals that had shot holes in its reputation, cost it billions in lost defense business, and forced several senior executives out of their jobs -- some into the federal hoosegow. But Boeing admits no wrongdoing as a company, and Justice Dept. lawyers agreed that employees committed illegal acts without authority and against policy. Inflation In The Wind Who cares about one-tenth of a percent? Wall Street, that's who. When the Consumer Price Index for April came in on May 17, the Street freaked because the number ticked up by 0.6% instead of the expected 0.5%. The flighty energy and food component accounted for half the rise, but core inflation jumped 0.3% for the second month in a row. That sent the Dow down 214 points for the day because investors figure it might lead the Fed to keep turning the rate screws in June. Who'll Land Univision? The bidding for Univision (UVN ) is getting muy caliente. The broadcaster, which controls the nation's largest Spanish-language TV and radio networks, looks enticing to two groups of private equity funds that could offer $12 billion-plus. The first was organized by Mexican TV operator Televisa, which owns 11.4% of Univision. Among its partners is a fund led by Microsoft Chairman Bill Gates. Now another group has surfaced. It includes Thomas H. Lee Partners and Texas Pacific Group. So far, so-called strategic buyers, such as News Corp. (NWS ), Disney (DIS ), and CBS (CBS ), have shied away from the hefty price tag. The Yuan Inches Up China's fat trade surplus, on track to top its record $102 billion for 2005, continues to outrage U.S. lawmakers itching to slap sanctions on the mainland for not letting its currency appreciate. While the U.S. global trade deficit shrank surprisingly in March, the nation rang up an eye-popping $201.6 billion deficit with China last year. Beijing seems to be listening: On May 15 the yuan breached the 8-to-the-dollar mark for the first time in 12 years. But it will have to rise a lot more to take the heat off. See "Controlling China's Runaway Growth" eBay Dodges A Bullet -- For Now The Supreme Court on May 15 took a swat at "patent trolls" that hoard patents in order to extract licensing fees, but it didn't strike them dead. Instead, in eBay v. MercExchange, the unanimous Supremes said that a company found to have infringed a patent shouldn't be slapped with an automatic injunction. EBay (EBAY ) isn't off the hook, however. The case now heads back to a district court judge to decide whether the auction behemoth must disable its infringing "Buy It Now" button -- or pay MercExchange to use the patent that drives it. See "A Tepid Triumph for eBay" Metals Mania It may be time to broaden the definition of precious metals. Swiss mining giant Xstrata offered $14.6 billion cash on May 17 for the 80% it doesn't already own of Falconbridge (FAL ), a producer of copper, nickel, and zinc. The bid came four days after Inco (N ) -- North America's biggest nickel miner -- hiked its friendly offer for Toronto-based Falconbridge to $17.5 billion. Inco, also in Toronto, raised its price after another Canadian nickel player, Teck Cominco, announced a $15.35 billion bid for Inco itself. With so-called base metals being valued more like gold these days, hardly anyone in the mining biz thinks the prospecting is over. Good Morning, Vietnam The talks lasted nearly as long as the Vietnam War, but after a decade, Washington and Hanoi shook hands on May 13 on trade and investment issues, paving the way for Vietnam's entry into the WTO before yearend. That means quota-free garment exports for Vietnam and easier access to its 84 million consumers for foreign banks, retailers, and farm products. Congress and Vietnamese lawmakers are expected to O.K. the accord in time for President Bush's visit to the Asia-Pacific Economic Cooperation summit in Hanoi in November. Adi髎, Occidental? Ecuador, the ninth-largest supplier of oil to the U.S., seems to be joining Bolivia and Venezuela in the nationalist parade. On May 15 it canceled a contract with Occidental Petroleum (OXY ), putting into question the company's nearly $1 billion investment there. Occidental has been Ecuador's largest private energy producer and taxpayer but has been squabbling with the state in recent years over taxes and the transfer of rights to Canada's EnCana (ECA ). Oxy says it is reviewing its legal options. Exits Of The Week The endgame may be close at hand. On May 16, Milberg Weiss Bershad & Schulman partners David Bershad and Steven Schulman left on leaves of absence as indictments against them in an alleged kickback scheme appeared imminent. A six-year Justice Dept. fraud investigation threatens to deliver a fatal blow to the law firm, the nation's most prolific filer of shareholder class actions. But the bane of Wall Street refuses to roll over for prosecutors. Milberg has countered Justice demands for a $100 million fine with an offer of less than half that amount. And the firm has flatly refused to turn over confidential communications with its lawyers as part of a deal to sidestep criminal charges that could put it out of business. Milberg recently hired legal gun Viet Dinh, a former U.S. Assistant Attorney General and Bush White House insider, to handle final negotiations with the feds. It looks like Mel Weiss, who helped found the practice 41 years ago, still has some fight left in him.
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