General Electric adds to defence against charges of bogus accounting
By Alwyn Scott NEW YORK (Reuters) - General Electric Co intensified its defence of its accounting practices on Monday after investors questioned it about an unusual research report alleging GE failed to put aside money to cover $29 billion in potential insurance losses and improperly counted profit from subsidiary Baker Hughes . The Boston-based conglomerate's new comments follow the release on Thursday of a 175-page research report https://www.gefraud.com that alleged there was fraud in GE's accounting, renewing concern about the company's financial position. GE has suffered a series of financial losses and taken more than $40 billion in charges and write-offs in recent years
By Alwyn Scott
NEW YORK (Reuters) - General Electric Co
The Boston-based conglomerate's new comments follow the release on Thursday of a 175-page research report https://www.gefraud.com that alleged there was fraud in GE's accounting, renewing concern about the company's financial position. GE has suffered a series of financial losses and taken more than $40 billion in charges and write-offs in recent years.
GE shocked investors in 2017 by saying it would set aside $15 billion for long-term care insurance payouts, one of the largest such amounts ever. A Reuters article in March found that GE's reserves were then in line with other insurers, but some experts said GE would need to set aside $12 billion more because its estimates relied on optimistic assumptions.
For a graphic, click: https://tmsnrt.rs/2EEXWt1
GE's shares fell as much as 15% after financial investigators Harry Markopolos and John McPherson published the report on Thursday, which said GE needed to set aside $29 billion for insurance reserves. The shares recouped much of the decline on Friday. On Monday, GE shares were down 1.6% at $8.64 in afternoon trading.
Also on Monday, Steve Winoker, GE's investor relations chief, said in an email that the amount of GE's long-term care payouts would "play out over decades" and that GE uses "rigorous testing," "sound actuarial analysis" and follows "regulatory and accounting" rules to estimate future payouts.
Addressing the Baker Hughes questions, Winoker said accounting rules require GE to include the subsidiary's results in its earnings reports because it is the majority shareholder.
GE had disclosed in 2018 that its accounting is being investigated by the U.S. Securities and Exchange Commission and the Department of Justice.
Markopolos, best known for raising early alarms about Bernard Madoff, who was arrested in 2008 for running a Ponzi scheme, disclosed in the report that he stood to share in profits from a hedge fund that sold GE shares short before the report came out, a bet that the share price would fall.
GE said it offered the renewed defence on Monday in response to questions from investors about Markopolos' report, but did not say how many questions it received or characterize them.
"Given your follow-up questions, I wanted to lay out our perspective in a bit greater detail," Winoker wrote in the email to investors.
Winoker was a UBS analyst covering GE before being named to the current job in January.
In defending itself last week, GE Chief Executive Officer Larry Culp said Markopolos' report was "market manipulation - pure and simple" - a reference to his potential to profit from short-selling timed to the report. Reuters reported last week that short sales of GE shares rose by about $995 million in the month before Markopolos' report came out, according to S3 Partners, a New York financial analytics firm.
Culp and Leslie Seidman, chair of GE's audit committee, noted Markopolos had not consulted with GE before publishing the report. GE said Culp, Seidman and other GE directors and executives bought shares after the report came out last week.
GE on Monday defended the assumptions it has used to calculate the $15 billion in new insurance reserves it pledged in 2017 to cover policies that pay for long-term assisted living and nursing home care for policy holders.
These policies have pushed some insurers into financial trouble, and even bankruptcy, because the costs have turned out to be much higher than were assumed when the policies were written in the late 1990s and early 2000s.
GE is now only a reinsurer of such coverage and says it has not written new long-term care policies since 2006.
(Reporting by Alwyn Scott in New York; Editing by Matthew Lewis and Nick Zieminski)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.