Wall Street Journal số ra ngày 27/2/2014

VOL. XXXII NO. 20

THURSDAY, FEBRUARY 27, 2014

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PERSONAL JOURNAL 29

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EUROPE EDITION

WSJ.com

A Look at ‘Magical Tux,’

Mt. Gox’s Geek-in-Chief

TOKYO—Mark Karpelès ar￾rived in Japan in June 2009

with his cat and his hard

drives.

Less than five years later,

the Frenchman faces accusa￾tions his company has lost

hundreds of thousands of dol￾lars for customers of his bit￾coin exchange, Mt. Gox,

where all transactions have

been halted and users remain

unable to access their money.

Mr. Karpelès describes

himself on his LinkedIn pro￾file as primarily “a technical

geek.” His profile cites “a long

experience in company cre￾ation,” but the snowballing

popularity of bitcoin and the

resulting growth in Mt. Gox’s

customer base appear to have

raised challenges that were

more than the company, un￾der the 28-year-old from a

suburb of Dijon, in eastern

France, could handle.

On Wednesday, a day after

Mt. Gox shut down, dealing

the most severe blow yet to

the bitcoin world, Mr.

Karpelès issued a terse state￾ment on the exchange’s web￾site. “I am still in Japan, and

working very hard with the

support of different parties to

find a solution to our recent

issues,” the statement said.

Those who have followed

Mr. Karpelès’s rise and fall

close up describe him as soft￾spoken and mild-mannered—

“geeky but kind,” as one per￾son who knows him put it.

They also say he isatalented

software developer.

Computers have indeed

been part of Mr. Karpelès’s

life since he was very young,

according to a 2007 French

documentary. His comments

in the film together with a

charting of his online pres￾ence—he has blogged under

the handle “Magical Tux” and

posted on Facebook, LinkedIn

and Twitter—paint a portrait

of an inquisitive mind.

“I can’t imagine a life

without computers,” he said

in the documentary, which

mentions Mr. Karpelès but fo￾Please turn to page 26

BY ELEANOR WARNOCK

AND TAKASHI MOCHIZUKI

 Currency trader FXCM

agrees to fines, refunds…. 24

 Japanese regulators will

examine bitcoin........................ 26

LinkedIn CEO Jeff

Weiner wants to build a

global bazaar for

finding work, recruiting

talent and sector news

Interview .............. 20

PBOC is steering the

yuan lower to gain

more trading flexibility

News Analysis......... 2

Wireless firms near

European consolidation

Heard .................... 32

Inside

$1.75 (C/V) - KES 250 - NAI 375 - £1.70

FRACAS IN CRIMEA: Pro-Russian protesters, right, clash with pro-Ukraine Crimean Tatars in front ofalocal government building in

Simferopol, Crimea, on Wednesday. The Kiev uprising has fueled talk of separatism in the region. Related articles on pages 6, 7 and 15.

Associated Press

Credit Suisse

ConcedesTax

Misconduct

Credit Suisse Group AG

Chief Executive Brady Dougan

told lawmakers the bank “re￾grets very deeply” having

aided American tax evasion,

but said the misconduct was

mostly limited to a small

group of employees at Swit￾zerland’s second-largest bank.

In an often tense hearing,

Mr. Dougan faced repeated

questioning from Sen. Carl

Levin (D., Mich.), chairman of

the U.S. Senate’s Permanent

Subcommittee on Investiga￾tions, on the scope of the

bank’s activities to recruit U.S.

customers and why the bank

appears to be relying on Swiss

secrecy laws to avoid sharing

information about those ac￾counts with U.S. authorities.

Mr. Dougan, a normally re￾served American, mostly

maintained a calm demeanor

during the hearing despite of￾ten brusque queries from Mr.

Levin. At one point the CEO

stopped short and blinked in

surprise after being cut off by

the subcommittee chairman.

“You’re not cooperating

with us, hiding behind a [bank

secrecy] law which applies in

Switzerland, but which

doesn't apply here, and yet

you want to do business here,”

Mr. Levin said.

Mr. Dougan said Credit Su￾isse is limited by those Swiss

laws from providing data—in￾cluding client names—to the

U.S. Justice Department. The

Justice Department has been

investigating the bank, which

may agree to a significant set￾tlement this year, since 2011.

The CEO added the bank’s

past help to U.S. clients seek￾ing to hide assets was mostly

provided by a core group of

between 10 and 15 bankers

that “went to great lengths to

disguise their bad conduct.”

The testimony came a day

after the subcommittee said

the Swiss bank, second in size

only to UBS AG in terms of as￾sets, aggressively sought to

Please turn to page 24

BY JOHN LETZING

AND ALAN ZIBEL

RussiaFlexes asUkraineRegroups

MOSCOW—President Vladi￾mir Putin ordered surprise

military exercises for 150,000

troops in Russia, including

some based about 300 kilo￾meters from Ukraine, where

the ouster of the president

has leftapolitical vacuum.

The test of combat readi￾ness applies to ground, air de￾fense and tank units as well

as Russia’s Northern and Bal￾tic fleets. It is among the larg￾est such exercises the country

has undertaken in recent

years, and comes amid rising

displeasure in Moscow with

developments in Ukraine.

Also on Wednesday, pro￾test leaders named a “govern￾ment of national unity,” to re￾place the ousted Russia￾backed President Viktor

Yanukovych, whose where￾abouts remains unknown.

Since pro-Western protest￾ers in Ukraine overthrew Mr.

Yanukovych last weekend,

Russia has recalled its ambas￾Please turn to page 7

BY LUKAS I. ALPERT

Copyright©2013, Oracle and/or its af filiates. All rights reserved.

Oracle Cloud

Applications

More Enterprise SaaS Applications

Than Any Other Cloud Services Provider

ERP

Financials

Procurement

Projects

Supply Chain

HCM

Human Capital

Recruiting

Talent

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32 | Thursday, February 27, 2014 THE WALL STREET JOURNAL.

HEARD ON THE STREET

Email: [email protected] FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

ChinaCars

FindBalm

InFrench

Partner

Coming to the aid of a

downtrodden French car

company today will help

China’s No. 2 auto maker pre￾pare for an uncertain tomor￾row.

Investors watched ner￾vously as Dongfeng Motor

spent $1.1 billion fora14%

stake in PSA Peugeot Cit￾roën, matching an invest￾ment by the French state.

Dongfeng’s Hong Kong-listed

shares have fallen 6% since

official news of the deal last

week.

But in exchange for the

cash, Dongfeng has actually

extracted key benefits, espe￾cially cooperation with the

more experienced French car

maker on research and devel￾opment. Dongfeng, which

runs a joint venture with Peu￾geot in China, now can access

technology such as an inno￾vative drivetrain that uses

compressed air to save on

fuel.

That is important because

Dongfeng is playing catch-up

on this front. It has invested

less than the typical global

car maker in R&D, acting

more likeacontract manufac￾turer, assembling cars based

on the technology developed

by its main joint-venture

partners Peugeot, Nissan,

Honda and, soon, Renault.

This strategy has worked

because rules restrict foreign

car makers from owning

more than 50% of ventures in

China, giving locals leverage

to share profits without in￾vesting big on technology and

design.

Yet this regulation may

not last. A Chinese commerce

ministry official said last year

that reviewing the 50% rule

should be on policy makers’

agenda, meaning the locals

and their products could have

to compete head-to-head with

the foreign makers at some

point. Dongfeng has just

bought itself insurance

against this.

Meanwhile, with $4 billion

in cash on its balance sheet

as of last June earning mea￾sly interest, making a bet on

Peugeot seems worth the risk

for Dongfeng.

Investors, however, aren’t

giving it credit.

At 6.2 times forward earn￾ings, its stock is the cheapest

of all Hong Kong-listed car

makers. And Dongfeng’s in￾vestment will yield consider￾able returns should Europe’s

car cycle turn positive, as

many expect.

What at first blush seems

likearisky French adventure

may just turn out to be a

profitable affair.

—Abheek Bhattacharya

U.K. May Lift Rates First

It isn’t a race, and there

are no prizes for winning. But

the Bank of England looks like

it will be first out of the

blocks among its major global

peers in raising interest rates.

On the face of it, that

might be surprising, The U.K.

has been a laggard in the re￾covery from the global finan￾cial crisis. Even now, the level

of gross domestic product is

1.4% below its 2008 peak in

real terms. But the economy

finally appears to have

bounced back decisively in

2013, and shows few signs of

flagging.

For the BOE’s peers, the

picture is more nuanced. The

U.S. Federal Reserve is still

extricating itself from its

bond-purchase program. Far

from tightening policy, it is

still supplying stimulus, albeit

at lower levels. The Bank of

Japan is engaged in a her￾culean effort to boost infla￾tion. And the European Cen￾tral Bank may yet be forced to

loosen policy, although its

main strategy appears to be

simply to buy time for disin￾flationary pressures to abate.

True, the BOE has been ag￾gressive in efforts to push

back against expectations of

rising rates. Policy makers

have been keen to emphasize

that they don’t want to take

any chances with a recovery

that could falter without solid

foundations.

But the latest crop of U.K.

GDP data, which provide more

information on the sources of

demand, should help put

some fears to rest. Both net

trade and investment made

positive contributions to

growth of 0.7% in the fourth

quarter. In particular, busi￾ness investment—for so long

the missing piece of the puz￾zle—rose 2.4% on the quarter

and 8.5% on the year. Revi￾sions to previous figures show

that business investment has

been rising for four consecu￾tive quarters, BNP Paribas

notes, an outcome that

chimes much better with sur￾veys of business activity and

confidence.

The net trade contribution,

however, was less impressive,

due to a fall in imports rather

than burgeoning exports. The

U.K. continues to runalarge

trade deficit. Still, if this pic￾ture can be continued, it

points toamore sustainable

growth picture.

Survey data such as the

purchasing managers’ indexes

have suggested a strong start

to 2014, although poor

weather may yet hurt first￾quarter growth. And the grad￾ual recovery in Europe may

help boost the U.K. further

given that the euro zone is

such an important trade part￾ner.

All of that appears to be

emboldening some members

of the BOE’s Monetary Policy

Committee: Martin Weale last

week was the first to put a

time frame on the first rate

increase, suggesting it could

come in spring 2015. Some

economists even expect an in￾crease this year, on the basis

that slack in the economy is

smaller than the BOE as￾sumes.

True, inflation is quiescent

at present. But the risk is that

holding rates low for too long

causes capital to be misallo￾cated and stokes further

problems in the housing mar￾ket. An emergency setting for

monetary policy is increas￾ingly looking at odds with the

state of the U.K. economy.

—Richard Barley

Look Out for Mobile-Deal Strings

Consolidation among cell￾phone operators remains the

plat du jour in Europe. The

Continent’s antitrust watch￾dog is expected to rule on

proposed takeovers in Ger￾many and Ireland this spring;

other markets such as Italy

look ripe for deals. But elimi￾nating a competitor may not

always have the desired effect

of more stable prices.

Regulators faceatough

balancing act. On the one

hand, taking out a competitor

so prices can rise should help

operators justify much￾needed investment; Europe

badly trails the U.S. and Asia

in its rollout of fourth-genera￾tion wireless networks. But

regulators also have a duty to

ensure operators don’t grow

merely at the expense of

higher prices and lesser-qual￾ity services for consumers.

For investors in European

wireless operators, that

makes the key uncertainty

what kind of remedies regula￾tors might impose to permit

more deals.

So far, the test case is Aus￾tria. Hutchison 3G Austria

bought Orange Austria in De￾cember 2012, reducing the

number of mobile operators

in the country from four to

three. One remedy was to re￾serve spectrum foranew en￾trant. But the price of wire￾less services in Austria is the

lowest in Europe, which

meant the offer didn’t garner

any interest. Prices have since

started to rise after increases

kicked in in October.

Germany could prove dif￾ferent. The European regula￾tor is expected to approve

Telefónica Deutschland’s

takeover of E-Plus, bringing

together the two smallest

German operators by sub￾scribers. In theory, remedies

could be lighter because Ger￾many already has a low con￾centration of mobile-operator

brands: Mobile operators and

other service providers that

don’t own their own wireless

networks, so-called virtual

network operators, have a

20% share of the German

market, the highest in Europe,

notes Citigroup.

But if Germany is forced to

seek a new entrant, there

could be takers. Germany is

Europe’s biggest market by

mobile subscriptions and data

prices are high. T-Mobile

Austria charges €17 ($23.37)

while T-Mobile Germany

charges €96 for the same type

of smartphone plan, according

to a report last May from con￾sultants Rewheel. Like Aus￾tria, Germany also might de￾mand that an acquirer offer

better access terms for virtual

operators. So far, these ha￾ven’t taken off in Austria. But

in Germany, if access terms

are set low enough and are

open to all virtual operators,

the potential for price cuts is

high, says Citigroup.

The European telecom sec￾tor has seen valuation multi￾ples increase by more than

25% over the past year on

hopes that consolidation will

bring gains. The sector now is

valued at 5.7 times forecast

2014 earnings before interest,

taxes, depreciation and amor￾tization.

Acquirers such as

Telefónica Deutschland will

see the benefit of large cost

savings. But if remedies im￾posed by regulators work to

keep prices down, investors

might not reap the same gains

elsewhere. —Renée Schultes

Call Waiting

German mobile-operator

market share by subscribers

Source: Citigroup The Wall Street Journal

*As of June 2013

Telefónica Deutschland/E-Plus

T-Mobile

Vodafone

E-Plus

Telefónica Deutschland

38%

33%

29%

21%

17%

(combined)

The taper—and taper

talk—hurt. For the first time

since the financial crisis, the

balance sheets of U.S. banks

ended the year with an ag￾gregate unrealized loss on

so-called available-for-sale

securities, according to the

Federal Deposit Insurance

Corp.’s latest quarterly bank￾ing profile Wednesday.

Banks began 2013 show￾ing unrealized gains of more

than $35 billion on these se￾curities. Taper talk from the

Federal Reserve, which

pushed long-term bond

yields higher, eroded those

gains to just $907 million by

the end of the third quarter.

The banks ended the fourth

quarter showing unrealized

losses of $8.1 billion.

While the reappearance

of this particular ghost of

the financial crisis isn’t ex￾actly welcome, it shouldn’t

strike horror in investors.

This time, the unrealized

losses are driven by rising

interest rates rather than

credit impairment and fears

of default. As the bonds

held in the portfolios ma￾ture, the losses will reverse.

Some losses do run

deeper than others.

OVERHEARD

The CaseAgainst

PaloAlto’s Stock

The outcomes of patent-in￾fringement lawsuits are noto￾riously difficult to predict.

But for investors in Palo Alto

Networks, they could be even

costlier to ignore.

How much they are ignor￾ing it is a good question. The

company’s share price jumped

nearly 23% over roughly a

two-week period, between

some favorable pretrial deci￾sions in a case brought by ri￾val Juniper Networks and

the start of the trial this Mon￾day. The stock got another

4.3% lift that day after Palo

Alto posted its fiscal second￾quarter results, which in￾cluded a 46% jump in revenue

from the same period last

year and an upbeat outlook.

This particular case has a

twist in that it involves the

co-founder of Palo Alto, who

is listed as an inventor on

several of the patents at issue

in the case. Nir Zuk was the

chief technology officer at

NetScreen Technologies until

it was acquired by Juniper in

2004 for about $4 billion. He

stayed with Juniper for about

a year before leaving the com￾pany to get Palo Alto up and

running.

Juniper claims Mr. Zuk in￾corporated its technology into

Palo Alto’s products, which

Palo Alto denies. Palo Alto

also hit back with its own pat￾ent-infringement suit against

Juniper last year. In the trial

that began Monday, Juniper is

seeking an injunction on the

products in question. Palo

Alto said in its quarterly filing

this week that it doesn't be￾lievealoss is “probable.”

But there isarange of

possible outcomes to the case

that are short of a “loss” that

may not be fully factored into

Palo Alto’s generous valua￾tion.

For example, the company

could end up paying a royalty

to Juniper for use of the tech￾nology. Palo Alto is still a rel￾atively small firm, with reve￾nue projected to hit about

$573 million for the current

fiscal year, against a market

capitalization of almost 10

times that.

Walter Pritchard of Citi￾group has a $49 price target

on Palo Alto based in part on

a projected 2% royalty rate

stemming from the case; that

price target is more than 30%

below Palo Alto’s current

market value.

Trading at about 135 times

forward earnings, Palo Alto’s

shares already are baking in

strong business growth with

few hazards on the road

ahead. Court cases, though,

have a certain knack for cre￾ating surprise potholes.

—Dan Gallagher

There and Back

U.K. quarterly GDP, cumulative

change from 2008 peak

The Wall Street Journal

Source: Office for National Statistics

0

–8

–6

–4

–2

%

’08 ’09 ’10 ’11 ’12 ’13

The Bank of England

Bloomberg News

The key uncertainty

is what kind of

remedies regulators

might take to permit

more consolidation.

2 | Thursday, February 27, 2014 AM IM UK SW FR IT SP TK BR PL IS AE GR THE WALL STREET JOURNAL.

PAGE TWO

BEIJING—China’s central bank

engineered the recent decline in

the country’s currency to shake

out speculators as it prepares to

allowawider trading range for

the tightly tethered yuan,

according to people familiar with

the central bank’s thinking.

In the past week, the People’s

Bank of China has been guiding

the yuan lower against the dollar.

It has done so by setting a weaker

benchmark against which the

yuan can trade. It has also

intervened in the currency market

by directing state-owned Chinese

banks to buy dollars, according to

traders.

The moves brought the yuan,

also known as the renminbi, to its

weakest level in seven months and

represent a reversal of the

practice for most of last year,

when the central bank kept

pushing the yuan higher against

the dollar, even as the currencies

in other emerging-market

countries tumbled. Money has

been pouring into China—

sometimes, analysts have said, by

circumventing currency controls—

to take advantage of the

seemingly unstoppable rise.

By guiding the yuan weaker,

the PBOC intends to thwart short￾term speculators betting on a

continued rise and to introduce

greater two-way volatility into its

trading. “The PBOC is testing the

market as it prepares to widen the

yuan’s trading band,” said one of

the people familiar with the

bank’s thinking.

While it is a short-term move,

making the yuan behave more like

a market-driven currency fits into

a broader plan to restructure the

economy so that it is less

dependent on investment and

exports.

Though increasingly important

in international trade, the yuan

isn’t freely convertible. The

central bank sets the value,

permitting the yuan to fluctuate

within a controlled range against

the dollar. Currently, the PBOC

allows investors to push the

yuan’s value 1% in either direction

from that set rate in daily trading.

Many analysts and economists

expect the central bank to expand

that range this year by allowing

the currency to move up or down

by 2% daily. The last time the

band was widened was in April

2012, when it was increased to 1%

from 0.5%.

Surging inflows of capital have

been complicating Beijing’s efforts

to manage the economy,

contributing to soaring property

prices and injecting excess cash

into the financial system. The

central bank and commercial

banks bought nearly $45 billion

worth of foreign exchange in

December, the fifth consecutive

month of net purchases.Aweaker

yuan could also help exporters,

whose goods would be cheaper in

the U.S. and other foreign

markets.

The PBOC decided to tamp

down expectations for one-way

appreciation in the yuan and curb

speculative trading during a two￾day currency-policy meeting that

ended Feb. 18, the people said.

At the meeting,adeputy

governor, Hu Xiaolian, called for

greater efforts to prevent risks

from cross-border capital flows

and joined other officials in

expressing concern about “hot

money” inflows, according to a

PBOC statement issued after the

meeting. The PBOC also decided

to expand the yuan’s trading band

this year in an “orderly” manner,

the statement said, as it moves

toward making the yuan a freer

currency. On Feb. 19, the day after

the meeting, the yuan started its

recent slide, falling to the lowest

level in almost two months.

The yuan ended at 6.1248 per

dollar on Wednesday in mainland

trading, barely changed from the

closing of 6.1266 Tuesday. The

currency has fallen 1.2% against

the dollar since the beginning of

this year,adramatic move for a

currency that often barely budges

and that gained 2.9% in 2013.

The slide added to jitters

among investors already anxious

about a slowing Chinese economy

and touched off concerns about a

selloff of yuan in offshore

markets. Chinese officials sought

to calm nerves Wednesday.

“The movement in renminbi is

due to an adjustment of trading

strategy by main market

participants,” China’s foreign￾exchange regulator said in the

government’s first comments,

published on the regulator’s

website.

“The yuan fluctuations are

normal compared to volatility in

developed and emerging market

currencies,” the regulator said.

“Don’t read too much into them.”

Following the comments, the yuan

reversed course and strengthened

slightly.

PBOC officials have said in the

past that the yuan is nearing its

fair-market value, or “equilibrium

level,” meaning the chances of any

drastic movements in the

currency are limited.

Widening the trading range

won’t eliminate the PBOC’s grip

on the currency, because the

central bank will still maintain the

daily reference rate for the yuan.

Nonetheless, the potential change

would be an important step

toward establishing a market￾based exchange-rate system, in

which the yuan would move up

and down just like any other

major currency. The exchange-rate

reform is part of China’s plan to

overhaul its financial sector,

elevate the country’s status in the

international monetary system

and someday, according to some

Chinese officials, rival the U.S.

dollar as the de facto global

currency.

A freer yuan may also help

China deflect foreign complaints

about its currency policies. The

U.S. and others have pressed

Beijing for years to relax its hold

on the yuan, allowing it to rise in

value and boost Chinese consumer

demand.

China has long resisted calls

forafree float, preferring a

gradual approach out of concern

that drastic measures would

destabilize its capital markets or

hurt the country’s powerful export

market.

A move to widen the yuan’s

trading range would come as

China’s juggernaut economic

machine is slowing down, leading

to questions of whether leaders

might try to stimulate growth and

help struggling companies.

The yuan “has appreciated all

these years and probably won’t go

too much higher from now on,”

said Du Hanbing, who runs a

business in the southern city of

Shenzhen that makes embossing

machines and sells them in the

U.S. and Canada. “I’m more

concerned about foreign demand

and my customers’ ability to pay

me these days.”

—Liyan Qi and Wynne Wang

contributed to this article.

PBOC Has Guided Yuan

Down for Broader Range

BY LINGLING WEI

In the Band

China’s currency

is tethered to a

trading range

set by the

central bank.

Source: Thomson

Reuters Eikon

The Wall Street Journal

Note: Inverted scale

to show the weakness

of the yuan

How many yuan

one dollar buys

6.25

6.00yuan

6.05

6.10

6.15

6.20

Jan.

2013 ’14

Dec. Feb.

Daily high

Trading

band

Daily high

and low

represent

dollar

strength

Daily low

iii

Business & Finance

n Airbus Group NV, embold￾ened by strong financial results

and an order backlog, is turn￾ing its back on its longtime Eu￾ropean backers and will rely

less on government support. 17

n The popularity of “The Lego

Movie” may be coming at just

the right time for the Danish

toy maker, as the company is

expected to report an abrupt

slowdown in its U.S. business

for 2013. 17

n Anheuser-Busch InBev is

taking its cost-cutting knife to

Grupo Modelo SAB, the Mexi￾can brewer it acquired control

of last year. 19

n Westfield Group, one of the

world’s biggest owners of

shopping malls, said it may list

in the U.S. or London after a

planned breakup of its global

mall empire. 19

n Citigroup Inc., which owes

its survival to the U.S. govern￾ment, has spent the years since

the 2008 financial crisis qui￾etly building an army of veter￾ans in top Washington jobs. 25

n China and global companies

are taking new steps to fulfill

the country’s ambitions for

electric cars, as it remains well

behind its target to roll out

low-emission vehicles. 23

n Singapore is pulling out all

the stops to build its own ver￾sion of Silicon Valley as it at￾tempts to createastartup hub

for Southeast Asia. 22

iii

World-Wide

n Rome’s strained finances

are forcing the city to confront

unpalatable choices—such as

cutting public services or rais￾ing taxes—to gain time as it

searches for ways to close a

yawning budget gap. 4

n Syrian government forces

ambushed and killed dozens of

rebels in a Damascus suburb,

saying the rebels were part of

a new offensive to squeeze the

capital. 10

n Hezbollah vowed to retaliate

for an Israeli airstrike that hit

one of its bases near Lebanon’s

frontier with Syria. 10

n Germany’s constitutional

court struck down a 3%

threshold for political parties

to be elected to the European

Parliament. 4

n Administration lawyers

have presented the White

House with options for restruc￾turing the NSA’s phone-surveil￾lance program, from ditching

the controversial collection al￾together to running it through

the telephone companies. 8

n U.S. authorities are investi￾gating the flow of funds from

Gabon to the U.S. to determine

whether any assets are trace￾able to public corruption in the

central African country. 9

n The former editor in chief

of Ming Pao, a prominent Hong

Kong newspaper, was stabbed

and has been hospitalized, po￾lice said. 11

What’s News—

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Beijing Smog Alarm

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THE WALL STREET JOURNAL. Thursday, February 27, 2014 | 31

OFF THE WALL

Try Plowing Through Six-Month Winters

A

irports in much of the

world get occasional snow,

and North America has

takenabeating this season. But in

Nordic countries, where winter can

last six months and airplane deic￾ing starts in August, skill at oper￾ating through sleet, snow and

frost is vital for business and is a

point of pride.

Stockholm’s Arlanda Airport

setsagoal of never succumbing to

winter. “That’s also the sport of

it,” says Arlanda operations head

Lena Rökaas.

Her team spends months con￾ducting off-season drills. But when

her squad’s big day came in De￾cember, the Swedish manager wor￾ried she and her colleagues

wouldn’t be able to handle what

was coming at them.

Undaunted, her crew headed

out in tight formation as if “get￾ting ready for battle,” Ms. Rökaas

says. They plowed relentlessly

ahead and protected a perfect 50-

year record: Arlanda stayed open

despite getting

socked by more

than a third of a

meter of snow.

Swedish crews

wax nostalgic

about a 1968 bliz￾zard when Arlanda

was the only West￾ern European air￾port operating and

arriving planes parked on one of

its two runways. “It’salovely

story,” says Arlanda spokeswoman

Susanne Rundström.

Nordics call it “snowhow,” a

mix of massive machines, finely

honed plowing patterns and con￾stant practice.

“We consider ourselves almost

world champions,” says Heini No￾ronen-Juhola, vice president for

aviation and safety at Helsinki￾Vantaa Airport. Helsinki has devel￾oped more than 20 clearing rou￾tines, each linked to specific

weather conditions. Ms. Noronen￾Juhola considers the playbook “our

big secret.”

As at other Nordic airports,

Helsinki’s 120 maintenance people

spend summers choreographing

equipment. They usually clean tar￾macs with diagonal rows of vehi￾cles, sometimes referred to as a

conga line. Each machine shoves

snow to the vehicle behind it and

ultimately off the edge of the run￾way. Drivers follow their maneu￾vers precisely so air controllers,

who also know the routines, can

time arriving and departing flights

down to the minute.

“It’s like dancing,” says Ms. No￾ronen-Juhola.

In winter, her crews work

round-the-clock shifts, like fire￾fighters, and hustle at the first

sight of snow. Helsinki airport last

closed in 2003, for 30 minutes, be￾cause of snow and air-traffic-con￾trol problems. Like other Nordic

airports, it frequently cuts capac￾ity and cancels some flights.

Another Nordic secret: pushing

producers for absurdly powerful

equipment. Oslo Airport runs two

of the world’s largest self-pro￾pelled snowblowers, built by Nor￾wegian airport-equipment maker

Øveraasen AS. Only two other of

the TV2000 units operate at air￾ports; they, too, are in Norway.

The 2,000-horsepower ma￾chines can shoot 10,000 tons of

snow an hour more than 45 meters

from the tarmac. “It’s like throw￾ing a car every second,” says Hen￾ning Bråtebæk, operations director

at Oslo Airport.

Helsinki Airport pushed Finnish

snow specialist Vammas in the

1990s to develop some of the first

machines able to plow, sweep and

blow snow simultaneously. Several

of these machines can clear a run￾way in about 10

minutes,ajob that

a generation ago

took half an hour.

Back then, run￾way clearing re￾quired many differ￾ent machines.

Opening scenes of

the 1970 disaster

film “Airport”

show assorted tractor-size vehicles

tackling a blizzard, including some

that spit fire to melt ice.

Today, all-in-one cleaners are

about as long as a locomotive.

Most have two mighty engines,

one for motion and the other to

sweep and blow. They can run for

hours without stopping—and Nor￾dics keep going.

“They don’t go for breaks—

there’s big pride in that,” says Ms.

Rökaas in Stockholm of her driv￾ers, who mainly use Swiss snow

equipment from Aebi Schmidt

Holding AG. “Someone goes out

and gives them coffee.”

The machines can run for so

long that producers have to worry

about drivers’ comfort. Vammas

boasts that its cabs are so cozy,

with their heated seats, frost-resis￾tant windows, stereo speakers and

vibration-free suspension, that op￾erators are comfortable in T-shirts.

Over the past decade, combina￾tion machines have caught on at

airports across Canada and the

U.S. Afteracrippling winter storm

in 2011, frequently sweltering Dal￾las-Fort Worth Airport bought 10

Vammas machines for about $1

million each. Vammas was ac￾quired by Fortbrand Services Inc.

of Plainview, N.Y., in 2010. It manu￾factures Vammas machines in Fin￾land and in the U.S.

“They look very cool,” says air￾port spokesman David Magaña.

When snow was forecast in De￾cember, the airport prepared to

unleash its yellow monsters. Un￾fortunately, what arrived was sleet

that landed and froze, creating “a

hockey rink from here to Tennes￾see,” says Mr. Magaña. With snow￾plows offering little help against

ice, nearly 90% of flights were can￾celed foraday.

Still, versatile Nordic machines

have been so popular that other

big vehicle makers have jumped in.

American truck maker Oshkosh

Corp., based in wintry Wisconsin,

touts its new multifunction ma￾chine as “a rolling 81,000-pound

Swiss Army Knife.” Product man￾ager Les Crook boasts that its joy￾stick control, covered in buttons

for each function, “is just like a

Game Boy.”

Not to be outdone, Øveraasen

last year unveiled a new product

line with the curvy lines of a

sports car and cabs that rise like a

cherry-picker to give drivers

greater visibility. “The futuristic

design is a real eye-catcher,” says

an Øveraasen brochure. Bård Eker,

whose industrial-design firm Øver￾aasen hired for the new line, says

his company refrained from mak￾ing the look too futuristic for fear

of scaring off customers.

While big equipment helps get

the job done, veterans say quality

snow time is critical. Oslo Airport,

for example, gets hit on average

60 days each winter. “We getalot

of practice,” says Mr. Bråtebæk.

But this year, as the U.S. has ex￾perienced a Nordic winter, North￾ern Europe has been unusually

warm. That worries Ms. Rökaas in

Stockholm. “The worst thing for

these people is when there is no

snow,” she says of drivers, who

she fears might get bored and

quit.

As for the future, officials are

counting on snow and dreaming

up new ways to prepare.

“We would love to havearoof

on the airport,” says Ms. Noronen￾Juhola in Helsinki. “It’sagreat

idea.”

BY DANIEL MICHAELS

Online>>

Watchavideo on Nordic ‘snowhow’

at WSJ.com/OffTheWall.

Øveraasen plow

A long line of snow plows clears the runway at Stockholm’s Arlanda Airport, where airport crews take pride in their 50-year record of keeping the airport open despite long and snowy winters.

Agence France-Presse/Getty Images

THE WALL STREET JOURNAL. Thursday, February 27, 2014 | 3

NEWS

NATO Ministers Warn Afghans on Exit

BRUSSELS—A meeting of allied

defense ministers opened Wednes￾day with a renewed warning to Af￾ghanistan that the North Atlantic

Treaty Organization would with￾draw its forces by the end of the

year without a signed security

agreement, along with a promise to

help Ukraine pursue democratic

overhauls.

NATO Secretary-General Anders

Fogh Rasmussen said the alliance is

ready to establish a training mission

to advise the Afghan security forces

after the end of 2014, but said with￾out a legal framework to protect

troops, international forces would

leave.

Afghan President Hamid Karzai

has so far declined to sign a bilat￾eral security agreement with the

U.S. Such an accord is a prerequisite

for NATO to agree on a status-of￾forces pact with the alliance that

would offer legal protections to in￾ternational troops serving in Af￾ghanistan.

“Our preferred option is to stay,

with a training mission to advise,

assist, train the Afghan forces,” Mr.

Rasmussen said. “If we don’t get the

legal framework we will have to

withdraw everything.”

Mr. Rasmussen’s remarks, and

his frustration, echoed the message

from President Barack Obama and

other U.S. officials on Tuesday.

U.S. officials said they would

seek to conclude the security agree￾ment with Mr. Karzai’s successor

and meanwhile step up planning for

a possible withdrawal from the

country.

“Time is of the essence,” Mr.

Rasmussen said. “It appears Mr.

Karzai isn’t ready to sign the secu￾rity agreement.”

Mr. Rasmussen said NATO would

continue its negotiations with the

next Afghan president. Afghan elec￾tions are scheduled for April, al￾though a runoff could mean the vot￾ing results aren’t settled for months

more.

NATO ministers are also set to

discuss the situation in Ukraine,

where street protests drove the pro￾Russian government from power.

Ukrainian officials are due to at￾tend the summit and discuss the se￾curity situation.

“Ukraine is a close and long￾standing partner to NATO. And

NATO is a sincere friend of Ukraine.

We stand ready to continue assist￾ing Ukraine in its democratic re￾forms,” Mr. Rasmussen said.

He said restarting membership

talks would be up to Ukraine, but

signaled that the alliance was in no

hurry to expand further. “I think

there are more urgent priorities to

address right now,” he added.

NATO has discussed membership

for Ukraine, but hasn’t invited it to

become a member, amid reserva￾tions among some allies. Former

President Viktor Yanukovych said in

2010, soon after he took office, that

Ukraine wouldn’t pursue NATO

membership.

The defense ministerial meeting

is scheduled to last two days.

BY JULIAN E. BARNES

Sold e x clusiv ely i n Louis V u itton s t o r e s and o n louisvuitton.com.

D o wnloa d t h e Loui s V uitton pass app t o r e v e a l e x clusiv e c ontent.

30 | Thursday, February 27, 2014 THE WALL STREET JOURNAL.

HEARD ON

THE FIELD

SPORTS

Cricket’s Big Three Hog the Crease

ICC Restructuring Gives Leading Nations Even More Say Over Running of Game

The restructuring approved at

the International Cricket Council

board meeting in Singapore on Feb.

8 made it abundantly clear who is in

charge of world cricket: the England

and Wales Cricket Board, Cricket

Australia and the Board of Control

for Cricket in India.

The plan, which is almost certain

to be rubber-stamped at a full board

meeting in June, hands over wide￾reaching powers to two subcommit￾tees, the Executive Committee and

the Financial and Commercial Af￾fairs Committee, which include rep￾resentatives of the Big Three.

Each one will also feature two

other representatives from the re￾maining seven national associations,

and their decisions still have to be

ratified by the main ICC board. But

two, of course, is not enough to vote

down three; while the chances of the

main board stamping on measures

proposed by the Big Three are un￾likely—particularly given that BCCI

President N Srinivasan just became

ICC chairman.

The Pakistan Cricket Board and

Sri Lanka Cricket, traditionally two

of the BCCI’s closer allies, were the

only boards to abstain in Singapore,

while previously skeptical boards in￾cluding Cricket South Africa and the

Bangladesh Cricket Board were won

over with concessions.

As well as the altered committee

structure, the proposed World Test

Championship involving the top four

teams has been ditched and replaced

with a reprieved Champions Trophy.

The idea of two-tier Test cricket has

also been shelved, with a route cre￾ated for associate nations to poten￾tially become Test-playing nations

on a promotion and relegation basis.

And last to be thrown on the scrap

heap is the Future Tours Program—

which was bound to happen once

boards started ignoring it—replaced

with legally binding bilateral series

agreements.

The new rules also give the Big

Threealarger slice of the game’s

global revenues. On the face of it,

that sounds fair enough: they, in

particular India, are the game’s most

lucrative markets, contributing its

big-spending audiences.

Getting the power to decide al￾most everything about the game

based on any financial metric, how￾ever, isn’t fair enough at all. Of

course money will tend to equal

power, but this implies that a team

or nation’s contribution to a sport is

solely about how much revenue it

generates. It’sareductive definition

of sport that misses the whole point

of the enterprise, and risks reducing

cricket to just another commodity.

The intangibles with a sport like

cricket are bigger and more impor￾tant than with almost any other

product, but ruthless and single￾minded pursuit of short-term finan￾cial gain could accidentally strangle

the goose that lays the golden egg.

Top-level international cricket

doesn’t have many teams, but it has

shrewdly maximized its resources by

forcing those teams to all play each

other, based on the FTP, keeping the

smaller nations competitive with a

decent share of the financial spoils

and making for more rewarding in￾ternational competition. Now, the

big, rich teams would be free to just

play each other all the time.

The Big Three claim—and other

boards such as the West Indies

Cricket Board have supported their

view—that the new proposals will

benefit everyone financially, reason￾ing that everyone’s slice of the pie

grows if the pie itself keeps growing

at the rate it has thanks to media￾rights deals.

This presupposes that the recent

spike in cricket’s popularity, fed al￾most entirely by India, will continue.

But while benefiting financially

might be great foracricket board,

it’s not much use to the fans if it

comes, as it currently sometimes

does for certain boards, at the cost

of its best players actually playing

for the country. Potentially shorn of

players, games and revenue, they

risk withering away, at which point

the already small number of teams

playing at the highest level will be

reduced even further.

Only a couple of things are cer￾tain in all this. One is that for the

immediate future, the Big Three, and

in particular India, will continue to

get richer. In growing their power,

which is in fact a formalization of

something that’s been happening for

a while, they have secured their own

short-term financial bounty. What

happens in the longer term, and

what happens to the other boards,

remains to be seen.

The other is that cricket has put

itself decidedly on the wrong side of

history where governance is con￾cerned.

Two years ago, a report by for￾mer Lord Chief Justice of England

and Wales Lord Woolf, commis￾sioned by the ICC, proposed moving

in entirely the opposite direction,

toward best-practice modern stan￾dards of corporate governance and

transparency. With its new struc￾ture, described by Woolf as “a really

alarming position for the future of

cricket,” the ICC has decided to go

the other way, thereby creating an

uncertain future for itself.

BY RICHARD LORD

Bangladesh’s Anamul Haque watches India captain Virat Kohli bowl in Wednesday’s Asia Cup match in Fatullah. Kohli scored a century as India won by six wickets.

Leading From the Rear:

South Korea’s Other Title

Afterarespectable 14 podium

appearances in Vancouver’s 2010

Winter Olympics, South Korea’s

outlook was bright going into the

2014 Games. The Koreans weren’t

able to live up to expectations,

earning only eight medals in Sochi,

but they were the best in the

world in one unfortunate category:

finishing last.

For the third consecutive Olym￾pics, The Wall Street Journal

awarded lead, tin and zinc medals

to the three worst performers to

completeagiven event (based on

time or score of last-place finishers

in every Olympic event; no disquali￾fications or nonfinishers were

counted). South Korean Olympians

finished in the bottom three places

in an astounding 19 different

events, more often than any other

participating country.

Canada came in second with 16

medals, with the U.S. (15) earning

the third most not-so-precious

medals. Since the U.S. and Canada

have large Olympic delegations, it

isn’t entirely surprising to see such

large pools of Olympians finish all

over the field of competition: These

two countries earned 28 and 25

real medals, respectively, in Sochi.

Poland has no such excuse. De￾spite its much smaller Olympic del￾egation, Poland finished with 14 of

our dubious medals, while taking

home only six real ones.

—Ryan Wallerson

New Bannister Trophy

Will Honor Historic Mile

The 60th anniversary of Roger

Bannister breaking the four-minute

mile will be marked with races over

the distance in London.

The 84-year-old Bannister will

be patron of the May 24 event

that will see 30 races finishing in

front of Buckingham Palace.

The winner of the senior men’s

race will be awarded the new Sir

Roger Bannister trophy, and there

will be runs for children, families,

seniors and wheelchair athletes.

“The mile has a wonderful sym￾metry as a race, neither too short

nor too long,” Bannister said on

Wednesday. “And I’m looking for￾ward very much to being involved

with this event.”

In an achievement that stands

as one of the seminal moments in

track history, Bannister covered

four laps on a cinder track in 3

minutes, 59.4 seconds on May 6,

1954, in the English city of Oxford.

At the time, many thought the feat

was an impossible one.

—Associated Press

HEARD ON

THE PITCH

Associated Press

Miler Roger Bannister hits the

tape to beat4minutes in 1954.

BCCI PresidentNSrinivasan

Getty Images; Reuters (above)