High & Low Finance: In Japan, a Test of Inflation Targets

“Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation.”

— Ben Bernanke, 2002

Now we may find out if Mr. Bernanke was right. Japan appears to be ready to do whatever it takes to end its long run of falling prices. The Bank of Japan took limited action on Thursday, and more is expected in the new year.

Mr. Bernanke, then a member of the Board of Governors of the Federal Reserve, and now its chairman, gave the speech quoted above at a time when the American economy was stumbling along in a slow recovery and prices, at least as measured by the Consumer Price Index, were declining.

He was arguing that the Fed would not be out of ammunition if it cut nominal interest rates to zero and the economy failed to respond. He has since proved he was right about that. In the speech, he made a passing reference to a phrase used by Milton Friedman, about using a “helicopter drop” of money to fight inflation, which eventually earned him the nickname “Helicopter Ben” from conservatives scandalized by his aggressive action after the financial crisis began.

For two decades, Japan has provided stark evidence that chronic deflation is possible in a modern economy. Prices have fallen steadily despite extraordinarily low interest rates. The economy has stagnated.

This week the Liberal Democratic Party, which had ruled Japan for nearly its entire postwar history until it was swept from power three years ago, won a landslide victory. Shinzo Abe, the prime minister from 2006 to 2007, will get another chance.

Mr. Abe devoted a decent part of his campaign to criticism of the Bank of Japan, the country’s central bank. He wants the bank to pursue inflation, and to effectively print money until it gets it. At one point during the campaign he spoke of a 3 percent inflation target, although he seems to have cut that back to 2 percent.

Either goal, if realized, would be a major change for the country. The inflation index used in calculations of gross domestic product is now 18 percent lower than it was at the end of 1994.

On Thursday, the central bank took a relatively small step in the direction favored by Mr. Abe. It decided to step up its asset purchases and seemed to leave open the possibility that it would adopt the inflation target at a later meeting. Mr. Abe praised the move.

To a significant extent, deflationary expectations are now baked into the Japanese economy. Tiny government bond yields have persisted for many years. Even though the nominal yields are small, the real (after inflation) yields have been respectable because there has been deflation, not inflation. And the competition has not been that great. The stock market has fluctuated, but it remains far below where it was when the Japanese bubble began to deflate in the early 1990s. Real estate losses from that bubble — do you remember when the gardens of the Imperial Palace in Tokyo were supposed to be worth more than the entire state of California? — still have an impact on investor psychology.

Western economists, Mr. Bernanke among them, have long called for Japan to target inflation. Lately, some Chinese economists have been offering similar lectures. But until now, little has happened. The central bank has announced a goal of positive inflation of up to 1 percent, but it is not widely believed, and it has certainly not happened.

As it is, the limited quantitative easing efforts of the Japanese central bank have been viewed as temporary, and as not really changing anything. Whether the new promises of something more significant will be credible remains to be seen.

“At this point, moving to a 2 percent target would not be such a giant step,” said Kenneth Rogoff, a Harvard economist who has suggested inflation targeting in the United States as well as in Japan. “They have to pursue it vigorously until we have inflation expectations firmly higher. No one knows how much they would have to do to accomplish that.”

The Bank of Japan has in the past been hesitant to really try to establish that credibility, for at least two reasons. One is that there is fear that the Japanese government bond market would be disrupted. Another is that it could do severe damage to the central bank’s own balance sheet. It owns a lot of Japanese government bonds whose market value would fall. Conceivably, that could cause the bank to seek a recapitalization from the government, something that would be embarrassing, to say the least.

To establish the credibility, the central bank would have to show a readiness to create credit at a rapid rate. It would probably also need to take steps to hold down the value of the yen, a move that would no doubt cause concern in the United States.

It is, however, very doable, as Switzerland has shown. When the euro zone debt crisis was at its worst, Switzerland became a safe haven for European investors worried that the euro might blow up. That drove up the value of the Swiss franc versus the euro and damaged Switzerland’s ability to compete. The Swiss government responded by announcing that the euro would not be allowed to fall below 1.2 Swiss francs. If necessary, the government would simply sell francs to meet any demand.

That has been necessary, and the Swiss have accumulated a huge portfolio of foreign currency. So, too, could the Japanese if they chose to announce that the dollar would henceforth be worth at least 100 yen, a level not seen since 2009.

Doing so would instantly restore at least some competitiveness to Japanese industry, which has experienced something that would have seemed impossible only a few years ago: Japan has a trade deficit.

Bringing inflation to Japan could make the country’s debt load — now higher than that of any other major country — appear more manageable. One unfortunate result of deflation coupled with perennial recession is that a country’s debt-to-G.D.P. ratio rises even if no more money is borrowed. Measured in yen, the Japanese economy was larger when Mr. Abe left office in 2007 — two years before his party lost power — than it is now.

A stronger recovery in the United States, not to mention avoiding a new Europe-wide downturn, would make it easier for Japan to begin to grow again. But even if that did happen, it would not solve all of Japan’s problems. The country has an aging, shrinking population. It needs more workers, but the Japanese attitude toward immigration makes Arizona look liberal by comparison.

Japan’s economy has been adrift for so long that much of the world takes for granted that it cannot, or at least will not, ever be reformed. Such cynicism has a basis, but it is possible that circumstances have changed. Japanese who seemed content with the way things were now clearly want something different, even if they are not sure what, or how to get it.

Three years ago, the Democratic Party of Japan won a landslide election, only to prove stumbling and incoherent when it tried to govern. Now the voters have turned back to the Liberal Democrats. Whether Mr. Abe will be more competent, and whether he will be able to effectively lead a party that still has competing factions, is far from clear.

Still, investors are taking heart. Japanese stocks leapt on the news of the election results, while the yen weakened. For now, at least, there is reason to hope that something important was changed by this election.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Read More..

U.S. Makes Arrest in Olympus Accounting Scandal

Federal agents arrested a former bank executive in Los Angeles on Thursday in connection with the accounting scandal that erupted last year at Olympus, the Japanese camera and medical equipment maker.

Prosecutors in New York said that the executive, Chan Ming Fon, received more than $10 million from Olympus for assisting in its accounting fraud.

The Federal Bureau of Investigation said Mr. Chan, 50, was a citizen of Taiwan living in Singapore. He was charged with conspiracy to commit wire fraud, with a maximum potential penalty of 20 years in prison. His lawyer was not disclosed.

“As alleged, Chan Ming Fon was handsomely paid to play an international shell game with hundreds of millions of dollars of assets in order to allow Olympus to keep a massive accounting fraud going for years,” said Preet Bharara, the United States attorney in Manhattan, in a news release.

The authorities did not identify the financial institutions with which Mr. Chan was affiliated.

In February, the Japanese authorities arrested seven people in connection with the accounting missteps at Olympus, including Tsuyoshi Kikukawa, the company’s former chairman. Mr. Chan was not among those seven.

The company has admitted that executives set up a scheme to cover up $1.7 billion in losses. The illicit maneuvers came to light after Olympus fired Michael C. Woodford, its British chief executive, in October 2011. Soon after, Mr. Woodford made allegations of accounting misdeeds at Olympus.

The Olympus scandal rocked the Japanese corporate sector. The case is being watched closely to gauge how serious the Japanese authorities will be in their pursuit of white-collar crime. The men arrested in February could each serve up to 10 years if found guilty.

The allegations against Mr. Chan could shed more light on Olympus’s elaborate accounting ruses. The company hid losses sustained in the 1990s, later masking them with inflated acquisitions and payments through shadowy overseas funds.

Mr. Chan was a principal at a fund that received large payments from Olympus, according to the F.B.I. The bureau contends that Mr. Chan told Olympus’s auditors in 2009 that the fund held hundreds of millions of dollars on behalf of Olympus, in the form of conservative investments like Japanese government bonds. The complaint says, however, that the money had been passed on to an entity controlled by Olympus to pay off a loan.

In the complaint, the F.B.I. said that Mr. Chan “acknowledged that it was wrong to assist Olympus in deceiving its auditor.”

Read More..

Four State Department Officials Resign After Benghazi Report

WASHINGTON — Four State Department officials were removed from their posts on Wednesday after an independent panel criticized the “grossly inadequate” security  at a diplomatic compound in Benghazi that was attacked on Sept. 11, leading to the deaths of Ambassador J. Christopher Stevens and three other Americans.

Eric Boswell, the assistant secretary of state for diplomatic security, resigned. Charlene Lamb, the deputy assistant secretary responsible for embassy security, and another official in the diplomatic security office whom officials would not identify were relieved of their duties. So was Raymond Maxwell, a deputy assistant secretary who had responsibility for the North Africa region. The four officials, a State Department spokeswoman said, "have been placed on administrative leave pending further action." 

The report by the independent panel has criticized officials in State’s bureau for Diplomatic Security displaying a "lack of proactive leadership." It also said that some in the Bureau of Near Eastern Affairs "showed a lack of ownership of Benghazi’s security issues." 

The report did not criticize more senior officials, including Patrick F. Kennedy, the under secretary for management, who has vigorously defended the State Department’s decision-making on Benghazi to the Congress and Secretary of State Hillary Rodham Clinton.

At a news conference at the State Department on Wednesday, Thomas R. Pickering, a former ambassador who led the independent review, said that most of the blame should fall on officials in the two bureaus.

“We fixed it at the assistant secretary level, which is, in our view, the appropriate place to look, where the decision-making in fact takes place, where, if you like, the rubber hits the road,” said Mr. Pickering, who did not identify the officials.

At the same time, the report that Mr. Pickering oversaw suggested that there was a culture of “husbanding resources” at senior levels of the State Department that contributed to the security deficiencies in Benghazi. Without identifying Mr. Kennedy or other senior officials, the report said that attitude “had the effect of conditioning a few State Department managers to favor restricting the use of resources as a general orientation.”

Two deputy secretaries of state, William J. Burns and Thomas R. Nides, are scheduled to testify to Congressional committees on Thursday. The question of whether senior officials at the State Department should be held accountable is likely to be raised by lawmakers at the hearing.

“The board severely critiques a handful of individuals, and they have been held accountable,” said Representative Ed Royce, Republican of California, who is the incoming chairman of the House Foreign Affairs Committee. “The degree that others bear responsibility warrants Congressional review, given the report’s rather sweeping indictment. And the Foreign Affairs Committee must hear from Secretary Clinton concerning her role, which this report didn’t address.”

Mrs. Clinton, in a letter to Congress, outlined a number of steps the department is taking to improve security, including hiring hundreds of additional Marine guards for high-risk embassies and consulates around the world.

In an apparent gesture of support for the American diplomatic corps, President Obama praised the State Department’s personnel, whom he said often worked "at great risk," at a diplomatic reception at the State Department tonight.

Another issue, which might be raised and which was largely skirted by the independent panel, concerns what role the American military should play in protecting diplomats abroad.

The Pentagon had no forces that could be readily sent to Benghazi when the crisis unfolded. The closest AC-130 gunship was in Afghanistan. There are no armed drones thought to be within range of Libya. There was no Marine expeditionary unit — a large seaborne force with its own helicopters — in the Mediterranean Sea. The Africa Command, whose area of operation includes North Africa, also did not have on hand its own force able to respond rapidly to emergencies — a Commanders’ In-Extremis Force, or C.I.F. Every other regional combatant command had one at the time.

The Defense Department has repeatedly declined to say whether the Africa Command requested that any of these forces be on hand during the anniversary of the Sept. 11, 2001, terrorist attacks. Nor has it said whether Defense Secretary Leon E. Panetta or Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff, gave any thought to moving forces in the region as a precaution.

The unclassified version of the Benghazi report concluded that “there simply was not enough time given the speed of the attacks for armed U.S. military assets to have made a difference.” But the report did not address whether it would have been prudent to station quick-reaction forces in the region or whether the United States would have been in a position to quickly respond militarily had Ambassador Stevens been kidnapped and the crisis dragged on, as was initially feared.

The United States military’s best-trained team to extract diplomats under fire — Delta Force commandos — was half a world away, in Fort Bragg, N.C. “What this report shows is that we need a fundamental rethink of the problem,” said one senior Pentagon official who has spent considerable time examining the issue of protecting American diplomats since the attack in September. “It’s not the military’s job to protect diplomats; it’s the host government’s. But in the absence of a real government, we never asked the question, ‘So how do we do this?’ ”

But as the military budget declines, some ranking officers are wary about taking on new commitments, even ones that involve protecting Americans.

“It is not reasonable nor feasible to tether U.S. forces at the ready to respond to protect every high-risk post in the world,” Mike Mullen, the retired admiral and former chairman of the Joint Chiefs of Staff, who served as vice chairman of the independent review, said Wednesday.

David E. Sanger contributed reporting.

Read More..

State of the Art: Android Cameras From Nikon and Samsung Go Beyond Cellphones - Review

60 Seconds With Pogue: Android Cameras:
David Pogue reviews the Nikon Coolpix S800C and the Samsung Galaxy Camera.

“Android camera.” Wow, that has a weird ring, doesn’t it? You just don’t think of a camera as having an operating system. It’s like saying “Windows toaster” or “Unix jump rope.”

But yes, that’s what it has come to. Ever since cellphone cameras got good enough for everyday snapshots, camera sales have been dropping. For millions of people, the ability to share a fresh photo wirelessly — Facebook, Twitter, e-mail, text message — is so tempting, they’re willing to sacrifice a lot of real-camera goodness.

That’s an awfully big convenience/photo-quality swap. A real camera teems with compelling features that most phones lack: optical zoom, big sensor, image stabilization, removable memory cards, removable batteries and decent ergonomics. (A four-inch, featureless glass slab is not exactly optimally shaped for a hand-held photographic instrument.)

But the camera makers aren’t taking the cellphone invasion lying down. New models from Nikon and Samsung are obvious graduates of the “if you can’t beat ’em, join ’em” school. The Nikon Coolpix S800C ($300) and Samsung’s Galaxy Camera ($500 from AT&T, $550 from Verizon) are fascinating hybrids. They merge elements of the cellphone and the camera into something entirely new and — if these flawed 1.0 versions are any indication — very promising.

From the back, you could mistake both of these cameras for Android phones. The big black multitouch screen is filled with app icons. Yes, app icons. These cameras can run Angry Birds, Flipboard, Instapaper, Pandora, Firefox, The New York Times, GPS navigation programs and so on. You download and run them exactly the same way. (That’s right, a GPS function. “What’s the address, honey? I’ll plug it into my camera.”)

But the real reason you’d want an Android camera is wirelessness. Now you can take a real photo with a real camera — and post it or send it online instantly. You eliminate the whole “get home and transfer it to the computer” step.

And as long as your camera can get online, why stop there? These cameras also do a fine job of handling Web surfing, e-mail, YouTube videos, Facebook feeds and other online tasks. Well, as fine a job as a phone could do, anyway.

You can even make Skype video calls, although you won’t be able to see your conversation partner; the lens has to be pointing toward you.

Both cameras get online using Wi-Fi hot spots. The Samsung model can also get online over the cellular networks, just like a phone, so you can upload almost anywhere.

Of course, there’s a price for that luxury. Verizon charges at least $30 a month if you don’t have a Verizon plan, or $5 if you have a Verizon Share Everything plan. AT&T charges $50 a month or more for the camera alone, or $10 more if you already have a Mobile Share plan.

If you have a choice, Verizon is the way to go. Not only is $5 a month much more realistic than $10 a month, but Verizon’s 4G LTE network is far faster than AT&T’s 4G network. That’s an important consideration, since what you’ll mostly be doing with your 4G cellular camera is uploading big photo files. (Wow. Did I just write “4G cellular camera?”)

These cameras offer a second big attraction, though: freedom of photo software. The Android store overflows with photography apps. Mix and match. Take a shot with one app, crop, degrade and post it with Instagram.

Just beware that most of them are intended for cellphones, so they don’t recognize these actual cameras’ optical zoom controls. Some of the photo-editing apps can’t handle these cameras’ big 16-megapixel files, either. Unfortunately, you won’t really know until you pay the $1.50 or $4 to download these apps.

E-mail: pogue@nytimes.com

Read More..

Amgen Workers Helped U.S. in Aranesp Marketing Inquiry

“I hope no one is taping this,” the Amgen manager remarked at a company sales meeting in 2005.

The manager then boasted of how she had given a $10,000 unrestricted grant to a pet project of a doctor who was an adviser to the local Medicare contractor. In turn, she said, the doctor would help persuade the contractor to provide reimbursement for an unapproved use of Amgen’s anemia drug, Aranesp.

Someone, it turned out, was taping it. Jill Osiecki, a longtime sales representative at Amgen, was wearing a recording device under her clothes, transmitting the proceedings to agents of the Department of Health and Human Services.

The result of Ms. Osiecki’s undercover work, and information provided by other whistle-blowers, led to Amgen’s agreement this week to pay $762 million to settle federal investigations regarding the marketing of some of its top-selling drugs.

Judge Sterling Johnson Jr. of Federal District Court in Brooklyn accepted the settlement on Wednesday, clearing the way for 10 whistle-blower lawsuits to be unsealed.

Amgen, the world’s largest biotechnology company, will pay $150 million in criminal penalties after pleading guilty to one misdemeanor count of marketing Aranesp for unapproved uses and in unapproved doses.

The rest of the money — $612 million — will go to settle civil false claims lawsuits filed by the federal government, states and whistle-blowers. These contain accusations that go well beyond the off-label marketing of Aranesp.

They include off-label marketing of other drugs like Enbrel for psoriasis and Neulasta, which increases the levels of white blood cells. Amgen is also accused of offering kickbacks to doctors and clinics to induce them to use its drugs. These reportedly came as cash, rebates, free samples, educational and research grants, dinners and travel, and other inducements. The government also accused the company of knowingly misreporting the prices of some of its drugs.

Except for those in the criminal count, Amgen denied the other accusations, though it did issue a statement on Wednesday acknowledging the settlement.

“The government raised important concerns in the criminal prosecution,” Cynthia M. Patton, chief compliance officer at Amgen, said in the statement. “Amgen acknowledges that mistakes were made, and we did not live up to our standards.”

Ms. Osiecki, 52, was one of the main whistle-blowers and will be entitled to a share of the settlement. The amount each whistle-blower will receive has not been determined or is being kept confidential, their lawyers said.

Ms. Osiecki worked as a sales representative for Merck for nine years before joining Amgen in 1990, soon after the biotechnology company won regulatory approval for its first product. The company, based outside Los Angeles, had “good science, good products, strong ethics,” Ms. Osiecki said in an interview.

But, she said, the corporate culture changed starting around 2000. That was when new management came in and Aranesp was approved, setting up a fierce marketing battle with Johnson & Johnson and its rival anemia drug, Procrit.

“It was more important to make your numbers than to follow the rules,” said Ms. Osiecki, who was based in Milwaukee and sold Aranesp.

In August 2004, with her concerns mounting, Ms. Osiecki called the Office of Inspector General of the Department of Health and Human Services and left a message. Within days, she was called back, and she went to see an agent, who persuaded her to secretly record meetings. She did that 13 times over about 15 months, mainly sales meetings.

Aranesp is used mainly in a hospital, clinic or physician’s office. It is bought by the medical practice, which can make a profit if the patient and insurers pay more for the use of the drug than the practice paid.

Ms. Osiecki said Amgen “marketed the spread,” trying to make it more profitable for doctors to use Aranesp rather than Procrit.

Such financial inducements could also spur greater overall use of a drug and can violate anti-kickback laws, said Ms. Osiecki’s lawyer, Brian P. Kenney of Kenney & McCafferty in Blue Bell, Pa.

Ms. Osiecki said the first sales meeting at which she wore the recording device, wrapped around her midriff under baggy clothes, was in October 2004 in a Milwaukee hotel. She could look down from the meeting room and see the car parked across the street containing the agent with the receiving device. She said she was not particularly nervous.

The speaker was a pharmacist from an oncology practice going through the numbers on how his practice could make a million dollars more a year using Aranesp rather than Procrit.

Ms. Osiecki said Amgen was careful to cover up such marketing. Spreadsheets showing doctors how much more money they could make using Aranesp were “homemade bread,” meaning they were created by each sales representative, not by the company. And representatives were told not to leave the presentations behind after showing them to doctors.

Her 107-page complaint, filed in late 2004, contains many other accusations.

Other whistle-blowers made other accusations. Kassie Westmoreland, a former sales representative, said Amgen overfilled vials of Aranesp, essentially providing free drugs to doctors. They could then bill Medicare or private insurers for the use of that drug, making an extra profit.

“Amgen was offering a kickback in the form of extra product subsidized by the taxpayers,” said Robert M. Thomas Jr., one of Ms. Westmoreland’s lawyers.

Elena Ferrante and Marc Engelman, both former sales representatives, contended that Amgen promoted Enbrel’s off-label use for mild psoriasis when the drug was approved only for moderate or severe cases of the disease.

Lydia Cotz, one of their lawyers, said the two refused to go along with the off-label marketing. They are now pursuing wrongful termination claims against Amgen in arbitration proceedings that Amgen requires be kept confidential, she said.

“It’s been a very long heroic journey for my clients,” she said.

Ms. Osiecki is now also a former Amgen sales representative. She said that she was fired in December 2005 after she let slip that she had retained a company voice mail message that she thought provided evidence of illegal activity. Leaving the pharmaceutical industry, she moved to Amelia Island, Fla. She now works for a small business.

Mosi Secret and Barry Meier contributed reporting.

Read More..

Amgen Workers Helped U.S. in Aranesp Marketing Inquiry

“I hope no one is taping this,” the Amgen manager remarked at a company sales meeting in 2005.

The manager then boasted of how she had given a $10,000 unrestricted grant to a pet project of a doctor who was an adviser to the local Medicare contractor. In turn, she said, the doctor would help persuade the contractor to provide reimbursement for an unapproved use of Amgen’s anemia drug, Aranesp.

Someone, it turned out, was taping it. Jill Osiecki, a longtime sales representative at Amgen, was wearing a recording device under her clothes, transmitting the proceedings to agents of the Department of Health and Human Services.

The result of Ms. Osiecki’s undercover work, and information provided by other whistle-blowers, led to Amgen’s agreement this week to pay $762 million to settle federal investigations regarding the marketing of some of its top-selling drugs.

Judge Sterling Johnson Jr. of Federal District Court in Brooklyn accepted the settlement on Wednesday, clearing the way for 10 whistle-blower lawsuits to be unsealed.

Amgen, the world’s largest biotechnology company, will pay $150 million in criminal penalties after pleading guilty to one misdemeanor count of marketing Aranesp for unapproved uses and in unapproved doses.

The rest of the money — $612 million — will go to settle civil false claims lawsuits filed by the federal government, states and whistle-blowers. These contain accusations that go well beyond the off-label marketing of Aranesp.

They include off-label marketing of other drugs like Enbrel for psoriasis and Neulasta, which increases the levels of white blood cells. Amgen is also accused of offering kickbacks to doctors and clinics to induce them to use its drugs. These reportedly came as cash, rebates, free samples, educational and research grants, dinners and travel, and other inducements. The government also accused the company of knowingly misreporting the prices of some of its drugs.

Except for those in the criminal count, Amgen denied the other accusations, though it did issue a statement on Wednesday acknowledging the settlement.

“The government raised important concerns in the criminal prosecution,” Cynthia M. Patton, chief compliance officer at Amgen, said in the statement. “Amgen acknowledges that mistakes were made, and we did not live up to our standards.”

Ms. Osiecki, 52, was one of the main whistle-blowers and will be entitled to a share of the settlement. The amount each whistle-blower will receive has not been determined or is being kept confidential, their lawyers said.

Ms. Osiecki worked as a sales representative for Merck for nine years before joining Amgen in 1990, soon after the biotechnology company won regulatory approval for its first product. The company, based outside Los Angeles, had “good science, good products, strong ethics,” Ms. Osiecki said in an interview.

But, she said, the corporate culture changed starting around 2000. That was when new management came in and Aranesp was approved, setting up a fierce marketing battle with Johnson & Johnson and its rival anemia drug, Procrit.

“It was more important to make your numbers than to follow the rules,” said Ms. Osiecki, who was based in Milwaukee and sold Aranesp.

In August 2004, with her concerns mounting, Ms. Osiecki called the Office of Inspector General of the Department of Health and Human Services and left a message. Within days, she was called back, and she went to see an agent, who persuaded her to secretly record meetings. She did that 13 times over about 15 months, mainly sales meetings.

Aranesp is used mainly in a hospital, clinic or physician’s office. It is bought by the medical practice, which can make a profit if the patient and insurers pay more for the use of the drug than the practice paid.

Ms. Osiecki said Amgen “marketed the spread,” trying to make it more profitable for doctors to use Aranesp rather than Procrit.

Such financial inducements could also spur greater overall use of a drug and can violate anti-kickback laws, said Ms. Osiecki’s lawyer, Brian P. Kenney of Kenney & McCafferty in Blue Bell, Pa.

Ms. Osiecki said the first sales meeting at which she wore the recording device, wrapped around her midriff under baggy clothes, was in October 2004 in a Milwaukee hotel. She could look down from the meeting room and see the car parked across the street containing the agent with the receiving device. She said she was not particularly nervous.

The speaker was a pharmacist from an oncology practice going through the numbers on how his practice could make a million dollars more a year using Aranesp rather than Procrit.

Ms. Osiecki said Amgen was careful to cover up such marketing. Spreadsheets showing doctors how much more money they could make using Aranesp were “homemade bread,” meaning they were created by each sales representative, not by the company. And representatives were told not to leave the presentations behind after showing them to doctors.

Her 107-page complaint, filed in late 2004, contains many other accusations.

Other whistle-blowers made other accusations. Kassie Westmoreland, a former sales representative, said Amgen overfilled vials of Aranesp, essentially providing free drugs to doctors. They could then bill Medicare or private insurers for the use of that drug, making an extra profit.

“Amgen was offering a kickback in the form of extra product subsidized by the taxpayers,” said Robert M. Thomas Jr., one of Ms. Westmoreland’s lawyers.

Elena Ferrante and Marc Engelman, both former sales representatives, contended that Amgen promoted Enbrel’s off-label use for mild psoriasis when the drug was approved only for moderate or severe cases of the disease.

Lydia Cotz, one of their lawyers, said the two refused to go along with the off-label marketing. They are now pursuing wrongful termination claims against Amgen in arbitration proceedings that Amgen requires be kept confidential, she said.

“It’s been a very long heroic journey for my clients,” she said.

Ms. Osiecki is now also a former Amgen sales representative. She said that she was fired in December 2005 after she let slip that she had retained a company voice mail message that she thought provided evidence of illegal activity. Leaving the pharmaceutical industry, she moved to Amelia Island, Fla. She now works for a small business.

Mosi Secret and Barry Meier contributed reporting.

Read More..

Adding to Rules for Online Privacy

In a move intended to give parents greater control over data collected about their children online, federal regulators on Wednesday broadened longstanding privacy safeguards covering children’s mobile apps and Web sites. Members of the Federal Trade Commission said they updated the rules to keep pace with the growing use of mobile phones and tablets by children.

The regulations also reflect innovations like voice recognition technology, global positioning systems and behavior-based online advertising, or ads tailored to an individual Internet user.

Regulators had not significantly changed the original rule, based on the Children’s Online Privacy Protection Act of 1998, or Coppa. That rule required operators of Web sites directed at children under 13 to notify parents and obtain their permission before collecting or sharing personal information — like first and last names, phone numbers, home addresses or e-mail addresses — from children.

The intent of that was to give parents control over entities seeking to collect information about their children so that parents could, among other things, prevent unwanted contact by strangers.

The new rule, unveiled at a news conference in Washington, significantly expands the types of companies required to obtain parental permission before knowingly collecting personal details from children, as well as the types of information that will require parental consent to collect.

Jon D. Leibowitz, the chairman of the trade commission, described the rule revision as a major advance for children’s privacy. “Congress enacted Coppa in the desktop era and we live in an era of smartphones and mobile marketing,” Mr. Leibowitz said. “This is a landmark update of a seminal piece of legislation.”

The agency’s expanded privacy protections for children also represent the first step in a larger effort by a few regulators and legislators to give adult consumers some rights to control data collected about them.

“The Coppa rule revisions which we are announcing today are a critical piece in our overall approach to how we deal with consumer privacy in this technological age,” said Julie Brill, a member of the commission.

Industry analysts said the new rule represented a partial victory for Web site operators, app developers and advertising networks because regulators watered down some of their original proposals to which companies like Apple, Facebook, Google and Twitter had objected. Apple and Google, for example, opposed proposals that suggested they would be responsible for the data collected by children’s apps sold in their app stores. Regulators have now clarified that general-interest app stores would not be held liable for that.

Yet, few companies lent any support to the commission at its news conference; Viacom and Disney sent representatives, but other companies were absent.

“What we’ve got here is an expansion of Coppa that some in the industry would say has gone too far,” said Alan Friel, a lawyer who leads the media and technology practice at the firm of Edwards Wildman Palmer. “But the F.T.C. has provided exceptions that continue to allow internal use of a child’s data, including one-time use of contact information for facilitating promotions and send-a-friend e-mails.”

In an era of widespread photo sharing, video chatting and location-based apps, the revised children’s privacy rule makes clear that companies must obtain parental consent before collecting certain details that could be used to identify, contact or locate a child. These include photos, video and audio as well as the location of a child’s mobile device.

While the new rule strengthens such safeguards, it could also disrupt online advertising. Web sites and online advertising networks often use persistent identification systems — like a cookie in a person’s browser, the unique serial number on a mobile phone, or the I.P. address of a computer — to collect information about a user’s online activities and tailor ads for that person.

The new rule expands the definition of personal information to include persistent IDs if they are used to show a child behavior-based ads. It also requires third parties like ad networks and social networks that know they are operating on children’s sites to notify and obtain consent from parents before collecting such personal information. And it makes children’s sites responsible for notifying parents about data collection by third parties integrated into their services.

Collecting data to show children contextual ads based on the content of a site or app, however, will not require parental consent. “The only limit we place is on behavioral advertising,” Mr. Leibowitz said. “Until and unless you get parental consent, you may not track children to create massive profiles” for behavior-based ads.

Stuart P. Ingis, a lawyer representing several marketing associations, said that reputable online marketers did not knowingly profile children to show them behavior-based ads. He added that industry guidelines prohibited the practice.

He agreed with regulators that privacy protections for children online needed to keep pace with new technologies. But he said he was concerned that the restrictions on cookie-based identifiers might cause some children’s sites to reduce their use of ad networks to avoid having to notify parents about data collection by those services.

“There might be overreaction that would limit just general third-party collection of data, which is very useful to businesses and consumers,” said Mr. Ingis, who represents the Direct Marketing Association and the Association of National Advertisers.

The revised rule also clarifies requirements for sites that are not primarily directed at young children but whose audience may include them, like a Disney family site, for example. Those sites can now screen visitors by age, but they will be required to obtain permission from a parent to collect personal data about children under 13.

Children’s advocates generally welcomed the strengthened protections.

“Clearly, this is a major step forward, but the devil is in the details,” said Jeffrey Chester, the executive director of the Center for Digital Democracy, an advocacy group in Washington.

Read More..

Russia Sends Warships Toward Syria for Possible Evacuation

MOSCOW — Russia sent warships to the eastern Mediterranean Sea on Tuesday, the Defense Ministry announced, in what appeared to be preparation for a possible evacuation of Russian citizens from Syria.

Russian officials began formulating plans during the summer for an evacuation, but have delayed announcements, analysts say, to avoid signaling a loss of confidence in President Bashar al-Assad, a longtime strategic ally. Moscow staunchly opposes international intervention in Syria and has blocked United Nations Security Council resolutions meant to force Mr. Assad from power. Officials have repeatedly said that Russia’s position has not changed.

However, Moscow has signaled in recent days that it sees Mr. Assad’s forces losing ground, and that it is beginning to prepare for a chaotic transition period. One immediate concern is the large number of Russian citizens scattered across Syria, as a result of decades of intermarriage and longstanding economic ties.

Late on Monday, Russian diplomats said that two Russian citizens had been kidnapped by an armed group. The two Russians, evidently workers in a privately owned steel factory, were seized as they traveled on a road between Homs and Tartus and were held for ransom. An Italian citizen, Mario Belluomo, was abducted with them, the Italian Foreign Ministry said.

Then on Tuesday, the Russian Defense Ministry announced that a flotilla of five ships — a destroyer, a tugboat, a tanker and two large landing vessels — was being sent from Baltiysk, a port in the Baltic Sea, to relieve ships that have been near Syria for months. At typical cruising speeds for such vessels, the ships would arrive on station around the beginning of January.

A naval official, speaking on the condition of anonymity as is customary, told the Interfax news service that the ships were “on their way to the coast of Syria for possible participation in the evacuation of Russian citizens” to a Russian port on the Black Sea. The official said that the mission had been planned swiftly but under total secrecy, and that the timeline for the ships’ return to port “depends on the development of the situation in Syria.”

Aleksandr I. Shumilin, a regional analyst and a foreign correspondent, said Russian leaders had avoided openly taking steps toward evacuation until now, to avoid signaling that Russia was scaling back its support for Mr. Assad, but that they also risked public anger if Russians became targets of violence in Syria.

“It appears that some break has taken place, but whether that means a change of policy, or a modification of policy, that’s hard to say,” said Mr. Shumilin, who is head of the Middle East conflict analysis center at the Russian Academy of Science’s Institute for Canada and the United States. “The decision-makers are now concentrating on humanitarian questions, the protection of Russian citizens.”

The Syrian rebels have been moving aggressively around the capital, Damascus, in recent weeks, and Mr. Assad’s forces have responded by firing with Scud missiles. On Tuesday, Syrian fighter jets bombed the Palestinian refugee camp of Yarmouk for the second time this week, seeking to drive back rebel forces that had moved in, The Associated Press reported.

Iran, Syria’s last ally in its region, appeared to remain firmly committed to Mr. Assad. On Tuesday, Deputy Foreign Minister Hossein Amir Abdollahianof Iran told reporters in Moscow, “The Syrian Army and the state machine are working smoothly.”

A planned visit by the president of Iran, Mahmoud Ahmadinejad, to Ankara, the capital of Turkey, was suddenly canceled on Monday amid tensions between Iran and Turkey over NATO’s decision to deploy Patriot antimissile batteries on the Turkish border with Syria.

Iranian leaders, politicians and commanders of the Islamic Revolutionary Guards Corps have denounced NATO’s decision on Dec. 4 to send six batteries of American, German and Dutch Patriot systems to intercept any Scud missiles that the embattled Syrian government may launch toward Turkey.

Iran fears that NATO will use the batteries, which are staffed by about 1,000 soldiers and can also be used against aircraft, to set up a no-fly zone and create a rebel safe haven in northern Syria.

Iran’s top general, Hassan Firouzabadi, said at a meeting of senior commanders on Saturday that the deployment was part of a Western plan to start a “world war,” and that Iran’s own ambitious missile program was the real target.

“They signify concerns over Iran’s missiles and the presence of Russia for defending Syria,” he said. “The sensible people in America, Turkey and Europe must prevent this situation from getting out of control.”

The mobile Patriot systems could technically be used to intercept Iranian as well as Syrian missiles. They are effective against missiles at a range of about 12 miles, and against aircraft up to 100 miles.

Iran has threatened to fire missiles at Israel if its nuclear installations come under attack.

On Tuesday, Iran’s defense minister, Brig. Gen. Ahmad Vahidi, said Israel was the winner in the Syrian conflict, because it was witnessing the destruction of an enemy — the Assad government — while the Syrian people were being “manipulated” by “terrorists.”

Turkey’s foreign minister, Ahmet Davutoglu, urged Iran to use its political clout with Damascus to end the violence in Syria, instead of making statements about the Patriot systems.

“Turkey and NATO have stressed over and over again that this system is solely for defensive purposes,” Mr. Davutoglu told reporters. “Turkey has the right to do what it wants in order to protect its territory. It is time for Iran to give a clear message to the Syrian regime.”

Ellen Barry reported from Moscow, and Thomas Erdbrink from Tehran.

Read More..

F.T.C. Opens an Inquiry Into Data Brokers

It’s getting tougher to be a data broker.

Companies that collect, analyze and sell billions of details about the activities of consumers for marketing purposes have increasingly found themselves under government scrutiny this year.

The latest salvo comes from the Federal Trade Commission, which said on Tuesday that it had opened an inquiry into the practices of nine companies that collect and resell or analyze consumer data.

The agency issued 15-page administrative subpoenas to the information resellers. The orders require each company to provide extensive details about how it collects consumer data and how it uses, stores, analyzes and shares that data. The agency also asked for information about whether the company allows consumers to see and correct the records held about them.

After it reviews this information, the agency plans to issue a report to advise lawmakers on whether more regulation is needed; data brokers are currently largely unregulated.

The F.T.C.’s inquiry seeks far more comprehensive details than similar investigations this year in Congress. And executives at the companies may be more forthcoming about their practices with regulators because, unlike Congressional inquiries that often make their results public, the F.T.C. keeps the specifics it gathers confidential.

The subpoenas went to, among other companies, Acxiom of Little Rock, Ark., one of the world’s largest information resellers, which manages customer databases for major banks, automakers and retailers; eBureau, a company in St. Cloud, Minn., which, on behalf of clients like credit card companies, lenders, insurers and educational institutions, evaluates and scores online consumers in the market for those companies’ products; Intelius, a company in Bellevue, Wash., which offers people-search look-up services and background checks; and Peek-You, a company that analyzes social media sentiment.

“We are going to get a huge amount of data,” David C. Vladeck, the director of the Bureau of Consumer Protection at the F.T.C., said in a phone interview on Tuesday. “We are going to get answers.”

In an e-mail, Jennifer Barrett Glasgow, the chief privacy officer of Acxiom, said the company had not yet received the F.T.C.’s letter, but was looking forward to cooperating with the inquiry. “We consider this request as an avenue to promote a better understanding of why what we do is vital for the American economy as it creates enormous value for people and businesses while respecting and protecting consumers’ interests,” she wrote.

Gordon Meyer, the chief executive of eBureau, wrote in an e-mail that the consumer scoring company “welcomes the opportunity to describe, to the F.T.C., its practices and the benefits we provide to businesses as well as consumers.”

Representatives of other companies did not return e-mails seeking comment.

Companies and organizations in the United States spend more than $2 billion a year on third-party data about individuals, according to a report last year on personal identity management from Forrester Research, a market research firm. That figure does not include spending on market research and customer data analytics, the report said.

Industry representatives argue that their practices benefit consumers. Data brokers, they say, collect information about individuals’ purchasing histories, estimated salaries, property ownership, family size, leisure pursuits — and sometimes also their race or ethnicity, age, gender, health concerns, online browsing history and social networks — to help marketers tailor pitches to a person’s demonstrated tastes. When these bespoke ad systems work properly, the companies argue, marketers can identify male Southern Californians who surf and show them ads for board shorts even as they avoid sending coupons for ski vacations to people who prefer Alaskan cruises.

But, as consumers conduct more of their personal and commercial lives online, that type of data collection has been steadily increasing, fueled by new online surveillance techniques and more sophisticated analytics. Some companies, for example, have compiled several thousand different pieces of information on a majority of adults in the United States. Regulators say they are concerned that such comprehensive data collection could be used to profile, score or segment consumers, with the potential to unfairly limit the kinds of financial, insurance, health, education or other marketing offers certain consumers receive.

Mr. Vladeck of the F.T.C. offered one possibility he worried about: a hypothetical consumer who buys a deep-fat fryer online may get typecast by data broker systems as a health risk, and then is passed over for marketing pitches for insurance or other services.

Read More..

Attackers in Pakistan Kill Anti-Polio Workers

Rizwan Tabassum/Agence France-Presse — Getty Images

A Pakistani mother mourned her daughter, who was killed on Tuesday in an attack on health workers participating in a drive to eradicate polio from Pakistan.

ISLAMABAD, Pakistan — Gunmen shot dead five female health workers who were immunizing children against polio on Tuesday, causing the Pakistani government to suspend vaccinations in two cities and dealing a fresh setback to an eradication campaign dogged by Taliban resistance in a country that is one of the disease’s last global strongholds.

“It is a blow, no doubt,” said Shahnaz Wazir Ali, an adviser on polio to Prime Minister Raja Pervez Ashraf. “Never before have female health workers been targeted like this in Pakistan. Clearly there will have to be more and better arrangements for security.”

No group claimed responsibility for the attacks, but most suspicion focused on the Pakistani Taliban, which has previously blocked polio vaccinators and complained that the United States is using the program as a cover for espionage.

The killings were a serious reversal for the multibillion-dollar global polio immunization effort, which over the past quarter century has reduced the number of endemic countries from 120 to just three: Pakistan, Afghanistan and Nigeria.

Nonetheless, United Nations officials insisted that the drive would be revived after a period for investigation and regrouping, as it had been after previous attacks on vaccinators here, in Afghanistan and elsewhere.

Pakistan has made solid gains against polio, with 56 new recorded cases of the diseases in 2012, compared with 192 at the same point last year, according to the government. Worldwide, cases of death and paralysis from polio have been reduced to less than 1,000 last year, from 350,000 worldwide in 1988.

But the campaign here has been deeply shaken by Taliban threats and intimidation, though several officials said Tuesday that they had never seen such a focused and deadly attack before.

Insurgents have long been suspicious of polio vaccinators, seeing them as potential spies. But that greatly intensified after the C.I.A. used a vaccination team headed by a local doctor, Shakil Afridi, to visit Osama bin Laden’s compound in Abbottabad, reportedly in an attempt to obtain DNA proof that the Bin Laden family was there before an American commando raid attacked it in May 2011.

In North Waziristan, one prominent warlord has banned polio vaccinations until the United States ceases drone strikes in the area.

Most new infections in Pakistan occur in the tribal belt and adjoining Khyber-Pakhtunkhwa Province — some of the most remote areas of the country, and also those with the strongest militant presence. People fleeing fighting in those areas have also spread the disease to Karachi, the country’s largest city, where the disease has been making a worrisome comeback in recent years.

After Tuesday’s attacks, witnesses described violence that was both disciplined and well coordinated. Five attacks occurred within an hour in different Karachi neighborhoods. In several cases, the killers traveled in pairs on motorcycle, opening fire on female health workers as they administered polio drops or moved between houses in crowded neighborhoods.

Of the five victims, three were teenagers, and some had been shot in the head, a senior government official said. Two male health workers were also wounded by gunfire; early reports incorrectly stated that one of them had died, the official said.

In Peshawar, the capital of Khyber-Pakhtunkhwa Province, gunmen opened fire on two sisters participating in the polio vaccination program, killing one of them. It was unclear whether that shooting was directly linked to the Karachi attacks.

In remote parts of the northwest, the Taliban threat is exacerbated by the government’s crumbling writ. In Bannu, on the edge of the tribal belt, one polio worker, Noor Khan, said he quit work on Tuesday once news of the attacks in Karachi and Peshawar filtered in. “We were told to stop immediately,” he said by phone.

Still, the Pakistani government has engaged considerable political and financial capital in fighting polio. President Asif Ali Zardari and his daughter Aseefa have been at the forefront of immunization drives. With the help of international donors, including the Bill and Melinda Gates Foundation, they have mounted a huge vaccination campaign aimed at up to 35 million children younger than 5, usually in three-day bursts that can involve 225,000 health workers.

The plan seeks to have every child in Pakistan immunized at least four times per year, although in the hardest-hit areas one child could be reached as many as 12 times in a year.

Declan Walsh reported from Islamabad, and Donald G. McNeil Jr. from New York. Salman Masood contributed reporting from Islamabad, and Zia ur-Rehman from Karachi, Pakistan.

Read More..