Chaiten volcano means outlook is cloudy and Chile

Chaiten volcano has been throwing out ash for a week now after becoming active for the first time in centuries.

Authorities have ordered an evacuation of a 30-mile radius but around a dozen people have refused to go.

Ash lies 6ins thick on the ground. As well as lava, the 3,280ft volcano is now belching out rocks.

Geologist Luis Lara siad: "That causes more damage."
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Chaiten, 760 miles south of capital Santiago, lay dormant for thousands of years before erupting into life last Friday.

Chaiten volcano means outlook is cloudy and Chile

Chaiten volcano has been throwing out ash for a week now after becoming active for the first time in centuries.

Authorities have ordered an evacuation of a 30-mile radius but around a dozen people have refused to go.

Ash lies 6ins thick on the ground. As well as lava, the 3,280ft volcano is now belching out rocks.

Geologist Luis Lara siad: "That causes more damage."
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Click here to find out more!

Chaiten, 760 miles south of capital Santiago, lay dormant for thousands of years before erupting into life last Friday.

New cyclone forming in Burma area

A second cyclone is forming near Burma, less than two weeks after it was devastated by a killer storm, the United Nations said today.

Amanda Pitt, spokeswoman for the UN humanitarian relief programme, could not say where the landfall would be or when it would become a full-fledged cyclone.

She told reporters that another cyclone was likely, saying: "This is terrible."

She said the information about the possible cyclone came from the Joint Typhoon Warning centre, part of the UN's World Meteorological Centre, who said on its website that there was "potential for the development'' of a storm in the Irrawaddy delta.
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"The circulation centre (of the storm) is currently transiting generally northwestward across the Yangon delta region of Myanmar (Burma)", she said.

"This is always a worry when you have further hazards affecting people," she added, explaining that it "impacts people's ability to survive and cope with what happened to them".

"They are already weak. This is a great problem and impacts on how we can help people,"

The May 2-3 cyclone that pulverised Burma's Irrawaddy delta left more than 60,000 people dead or missing.

The news came hours after the first international aid official allowed into the cyclone-devastated Irrawaddy delta by Burma's military leaders described towns rendered unrecognisable, survivors exposed to pouring rain and local "humanitarian" heroes saving lives.

Soldiers have barred foreign aid workers from reaching cyclone survivors in the areas hardest hit by Cyclone Nargis, but gave access to an International Red Cross representative who returned to Rangoon yesterday.

In contrast, the ruling junta has been blasted by aid agencies for refusing to allow most foreign experts into the delta and not responding adequately to what they say is a spiralling crisis.

Some victims were reportedly getting spoiled or poor-quality food, rather than nutrition-rich biscuits sent by international donors, adding to suspicions that the junta may be misappropriating foreign aid following the May 3 storm that killed more than 34,000 people.

Two million people, mostly poor rice farmers, have been left homeless or are in dire need following the storm, facing disease and starvation.

Yahoo is interested in Microsoft’s offer after getting rejected

Yahoo seemingly made its position absolutely clear — it felt Microsoft’s offer of $31 a share, a 62 percent premium on current prices at the time of the offer, was unfair and undervalued the company. It argued that anything less than $37 a share, or roughly a 91 percent premium on the price at the time, would be unsatisfactory. However, it didn’t take long for Yahoo to apparently start hoping that Microsoft would consider pursuing it again. In a move like something out of a television drama, the company announced only 48 hours after Microsoft dropped its bid that it would be willing to negotiate for a sub $37 price and that it would be happy to reopen talks with Microsoft.

Chairman Roy Bostock indicated that Yahoo’s stubbornness on the $37 dollar price was basically an effort to get a bit more money out of Microsoft and it really didn’t hope to get that much. He told the Wall Street Journal, “Listening to shareholders is very important but you’ll get lots of points of view…we think a fair value for the company is $37. It was not a take-it-or-leave it statement.”

Yahoo is getting blasted by its largest shareholder, Capital Research Global Investors, one of the most respected investment institutions on Wall Street. Gordon Crawford, a portfolio manager with the firm remarked in the WSJ article, “I’m extremely disappointed in Jerry Yang, I think he overplayed a weak hand. And I’m even more disappointed in the independent directors who were not responsive to the needs of independent shareholders.”

Itt appears that the price has dropped to $34, but it remains to be seen if Microsoft shows any interest in the company after it made up its mind to reject it. Microsoft has said it will remain open to offers, but at this point it has to wonder — if Yahoo only took this long to drop the asking price $3, how much longer will it really take for Yahoo to drop $3 more to the original asking price? The only thing that seems sure at this point is that there’s sure to be more drama between the pair.

WHAT WAS GERI HALLIWELL DOING IN A LIFT FOR AN HOUR?

We've heard it all now.

Celebrities are always giving us the runaround as they make excuses for not turning up on time for events.

Is it the diva in them?

Well, Geri Halliwell is the latest star to make a whopping claim why she was late for a book signing.

She got stuck in the lift. For an hour. At Lakeside shopping centre in Essex.

Madness!

Ol' Ginger Spice had to be rescued by firemen when the service elevator broke down. What was she doing in there? That's not the style of a Spice Girl, surely!

She finally made it in WH Smith to sign copies of her book Ugenia Lavender.

Oh well, at least this stunt won't get her any publicity. D'oh!!

GOOD NEWS FOR BRITNEY SPEARS! YAY!

Things just keep getting better for Britney Spears.

The star is on her way to getting back to her healthy self – and now she has won more visitation time with her two sons, Sean Preston, two, and Jayden James, 19 months.

The troubled singer’s ex hubby Kevin Federline still has full custody of the tots but Brit has been allowed more time with the boys in the presence of a court-appointed monitor and her parents.

‘We are pleased with the progress that seems to be coming and cautiously are going down that track. The timeshare is more than it had been. It's a step in the right direction,’ said K-Fed’s lawyer Mark Vincent Kaplan outside Los Angeles Superior Court.

SCARLETT JOHANSSON IS ENGAGED!

Scarlett Johansson and actor boyfriend Ryan Reynolds are thrilled to be engaged, her publicist has said.
The Lost In Translation actress showed off her new engagement ring at the star-studded Metropolitan Museum Costume Institute Gala in New York.
Johansson's publicist Marcel Pariseau confirmed the 23-year-old actress and Definitely Maybe actor Reynolds, 31, were engaged but said they have not yet set a date for the wedding.
"They're both thrilled," Mr Pariseau told showbiz website People.com.
The couple have been dating for more than a year after Reynolds split up with fiance Alanis Morissette in 2006.
Recently, Johansson has starred in The Other Boleyn Girl and The Nanny Diaries while Reynolds is currently filming The Proposal with Sandra Bullock in Boston.

Global Warming Affects World's Largest Freshwater Lake

Russian and American scientists have discovered that the rising temperature of the world's largest lake, located in frigid Siberia, shows that this region is responding strongly to global warming.

Drawing on 60 years of long-term studies of Russia's Lake Baikal, Stephanie Hampton, an ecologist and deputy director of the National Center for Ecological Analysis and Synthesis (NCEAS) in Santa Barbara, Calif., and Marianne Moore, a biologist at Wellesley College in Wellesley, Mass., along with four other scientists, report their results on-line today in the journal Global Change Biology.

"Warming of this isolated but enormous lake is a clear signal that climate change has affected even the most remote corners of our planet," Hampton said.

In their paper, the scientists detail the effects of climate change on Lake Baikal--from warming of its vast waters to reorganization of its microscopic food web.

"The conclusions shown here for this enormous body of freshwater result from careful and repeated sampling over six decades," said Henry Gholz, program director for NCEAS at the National Science Foundation (NSF), which funded the research. "Thanks to the dedication of local scientists, who were also keen observers, coupled with modern synthetic approaches, we can now visualize and appreciate the far-reaching changes occurring in this lake."

Lake Baikal is the grand dame of lakes. In 1996, the United Nations Educational, Scientific and Cultural Organization (UNESCO) declared it a World Heritage site because of its biological diversity. It boasts 2500 plant and animal species, with most, including the freshwater seal, found nowhere else in the world.

The lake contains 20 percent of the world's freshwater, and it is large enough to hold all the water in the United States' Great Lakes. It is the world's deepest lake as well as its oldest; at 25 million years old, it predates the emergence of humans.

In more recent times, it was a dedicated group of humans who made this study possible.

"Our research relies on a 60-year data set, collected in Lake Baikal by three generations of a single family of Siberian scientists," Moore said. "In the 1940s, Mikhail Kozhov began collecting and analyzing water samples in anticipation that this lake could reveal much about how lakes in general function.

"Ultimately, his daughter Olga Kozhova continued the program, followed by her daughter, who is also a co-author of today's paper: Lyubov Izmest'eva."

The decades-long research effort survived the reign of Stalin, the fall of the Soviet Union, and other social and financial upheavals in the region.

Data collection continued through every season, in an environment where winter temperatures drop to -50 degrees F.

The data on Lake Baikal reveal "significant warming of surface waters and long-term changes in the food web of the world's largest, most ancient lake," write the researchers in their paper. "Increases in water temperature (1.21degreesC since 1946), chlorophyll a (300 percent since 1979), and an influential group of zooplankton grazers (335 percent since 1946) have important implications for nutrient cycling and food web dynamics."

The scientists conclude that the lake now joins other large lakes, including Superior, Tanganyika and Tahoe, in showing warming trends.

"But," they note, "temperature changes in Lake Baikal are particularly significant as a signal of long-term regional warming.

"This lake was expected to be among those most resistant to climate change, due to its tremendous volume and unique water circulation."

The research paper is the result of a collaboration involving six Siberian and American scientists, who were assisted by student translators from Wellesley College.

In addition to Hampton and Moore, the paper's contributors are Izmest'eva, director of the Scientific Research Institute of Biology, Irkutsk State University, Irkutsk, Russia; Stephen L. Katz, recently of the Northwest Fisheries Science Center, NOAA Fisheries, Seattle, Wash.; Brian Dennis of the departments of statistics and fish and wildlife resources, University of Idaho, Moscow, Idaho; and Eugene A. Silow of the Scientific Research Institute of Biology, Irkutsk State University, Irkutsk, Russia.

U.S. Economic Problems Have Worldwide Effect

The high default rate among U.S. homeowners is not simply a domestic problem. There are distinct indications the housing crisis is also having an impact on world financial markets.

Markets in Frankfurt and Tokyo have been jolted by news of the severity of the U.S. housing slump. As a result, housing prices in America could decline further, worsening the crisis. In addition, because of a decrease in the value of investments, American consumers may be led to spend less on both domestic and imported items.

As one economist noted, the declines in world stock markets could result in a significant decrease in consumer wealth, which could also have an effect on spending.
Americans who hold mutual funds may see a noticeable decline in the value of their funds. It's unclear at the present time whether the decrease is a passing fad or a long-term trend.

The volatility in the markets makes it more difficult for both businesses and individual consumers to obtain both loans and cash. If businesses are unable to obtain loans, they may have to cut expenses through layoffs.

The situation is reminiscent of what occurred in the 1980s, when hundreds of savings and loan institutions folded. However, thanks to a U.S. government bail out, the savings and loan crisis did not have a worldwide impact.

In the 21st century, however, globalization has changed the face of financial markets, meaning that financial sectors around the globe are more interdependent than they used to be. This means that what goes on in American households can have a negative impact on businesses and financial institutions on foreign shores.
Experts are now predicting that the U.S. housing market could experience a turnaround in 2008. However, that will be too late for many homeowners who have already been forced to give up their homes in the wake of spikes in the rates on their adjustable rate mortgages.

$1 billion investment needed to take on World of Warcraft - Kotick

CEO admits MMOs could be "an insurmountable product category" for publishers

Speaking at an investor meeting, Activision CEO Bobby Kotick has said that he thinks it would take an investment of half a billion to a billion dollars to take on World of Warcraft - and even then, success isn't guaranteed.

"We don't think that even if we made the USD 500 million or billion-dollar investment to get a product out [to compete with WOW] that we would even be successful doing it," he said.

Late last year, Activision took a different route, merging with Warcraft owners Vivendi to create Activision Blizzard.

"When we first started looking at it, it appeared to us like a game in an insurmountable product category... EA, Microsoft, Sony and scores of venture capital investments had been put to work unsuccessfully in trying to develop massively multiplayer games as a product opportunity," Kotick said.

"When you... Look at all the money that's already gone to these businesses that have failed, there didn't seem a likelihood that even a well-managed company like Activision would have the prospect for profit any time soon in this category."

Kotick also paid tribute to the talent at WOW developers Blizzard. "They have a model that is very well-developed, they have a very keen understanding of their audiences, and they're just scratching the surface of opportunity in a lot of areas... These guys are among the best in the world of game development."

Kotick was speaking at the Goldman Sachs Technology Investment Symposium 2008 Conference on Tuesday this week.

Microsoft and Yahoo rejected Steam, says Valve

GamesIndustry.biz has learnt that Valve approached Microsoft and Yahoo - among others - to build Steam before deciding to develop it themselves.

Speaking in an interview, Valve's VP of marketing Doug Lombardi, described how the developer tried to convince other companies to build the gaming platform but was repeatedly rejected.

"You know, we went around to Yahoo, Microsoft...and anybody who seemed like a likely candidate to build something like Steam," he explained.

"We basically had our feature list that we wanted. We wanted auto-updating, we wanted better anti-piracy, better anti-cheat, and selling the games over the wire was something we came up with later.

"We went around to everybody and asked 'Are you guys doing anything like this?' And everyone was like 'That's a million miles in the future...We can't help you.'"

Steam now serves as a digital distribution platform selling over 300 titles and hosts a gaming community with over 14 million accounts.

More banks join Vivendi loan

Vivendi's approved loan of EUR 3.5 billion for the deals including the Activision Blizzard merger and the acquisition of telecoms company Neuf Cegetel, announced earlier in the week, has had its backing syndicate expanded.

According to a Reuters report the initial move was underwritten by Bookrunners Societe Generale, HSBC, Royal Bank of Scotland and Fortis Bank.

Those four have now been joined in the syndicate by Bank of America, Barclays, Credit Mutuel-CIC and Natixis, with further expansion of the syndicate expected shortly.

The loan includes a bridge of EUR 1.5 billion to cover the Neuf Cegetel deal, with the remaining EUR 2 billion acting as a revolving credit facility, and adds to the company's existing cash and credit resources.

The Activision Blizzard deal will have to be cleared by competition authorities before it can be finalised, although no complications are expected and completion should go through in the summer of 2008.

Secret News - Microsoft's Paul Allen's yacht is venue for Brad and Angelina's wedding SOON!

Confidentially agreement? WHAT confidentialty agreeent?!
A member of staff on Paul Allen's Yacht in the South of France has been in touch about the wedding of Brad Pitt and Angelina Jolie...

The stewardess, who has bravely cast aside the confidentiality agreement she was made to sign has revelaed to us that Octopus, the yacht owned by former Microsoft owner Paul Allen is the venue for Brad and Angelina's wedding, which is due to take place "within a month".

The pair recently setup base in France, wth the reason being widely reported that Angelina wanted to have her twins in France as a tribute to her French mother who died recently.

This news gives a more timely reason for being there - the babies aren't due for a while yet.

You want more timely news? I'm writing this in my underwear. True story.

Many people plan to rein in their spending

According to research carried out by MoneyExpert many consumers may be looking to rein in their spending, as the credit crunch continues to affect household finances.

The report shows that millions of people may be set to cutback on their spending in a bid to try and bring their finances under control.

The report shows that over the coming year around 57% of consumers will be cutting back on their spending levels, which means that one in every six of us will be trying to tighten up on our spending. Many are planning to cut back on basics, with around 23% of consumers looking to cut back on the amount that they spend on food.

There are also other areas in which consumers plan to rein in their spending, with 31% of consumers looking to cut back on the amount that they spend on clothes, and 32% looking to reduce the amount that they spend on going out and entertainment.

Many had also decided not to move house or purchase a new car because of the costs involved.

One official involved in the research said: ‘The credit crunch is moving on from being something that just affects bankers to having real effects on real people in the real economy.’

He added: ‘There is however a risk that we could talk ourselves into a recession by panicking unnecessarily. Certainly anyone who is struggling financially should be taking action but that has always been the case. There are still plenty of good deals out there and people with good credit records still have plenty of choice.’

Credit unions offer affordable alternative for loan seekers

Many of the consumers that are seeking loans from banks and larger lenders may have been disappointed recently, as the credit crunch as resulted in many lenders hiking up the cost of borrowing considerably, and many others tightening their lending criteria and making it far more difficult for the average person to get the finance that they need.

All sectors of the finance industry have been affected. However, some industry officials have said that credit unions could prove to be an excellent alternative for those struggling to secure finance.

Lucia Webster, Head of Membership Services at the Association of British Credit Unions (ABCUL) said: “Credit unions offer a great alternative to money shops and payday loans for people needing small loans over relatively short periods. Credit unions charge no more than two per cent on the reducing balance of a loan and many charge just one per cent, which would mean that £1,000 taken out for a month and paid back weekly would accrue just £5.76 in interest at one per cent.”

She added: “I would recommend that anyone needing a small loan first looks to their own bank or building society or credit union for a loan, rather than using doorstep lenders or money shops, if they want a good deal. Credit unions are not as well known in Great Britain as they should be but they are basically financial co-operatives which aim to get the best deal for their members. In the US and Ireland, for example, credit unions are very much mainstream financial institutions with millions of members.”

Credit unions are growing in popularity as well as in the range of services available, and offer loans, savings facilities, advice, and a variety of other financial products.

JT joins Madge for NYC gig

Ananova:
JT joins Madge for NYC gig

Madonna was joined by Justin Timberlake for a live unveiling of tracks from her new album in New York last night (April 30).

Madonna

Some fans had waited for days outside Manhattan's Roseland club and were eventually treated to a 40-minute set of songs from new LP Hard candy and older hits.

According to Rolling Stone, she told the crowd: "Even though I've made what seems like 100 records, every time I put one out it's like the first time and the best time."

Timberlake hit the stage for his collaboration with the Queen Of Pop on current UK No 1 single, 4 Minutes, while Hung Up, Music and new songs including Give It 2 Me and Miles Away got an airing.

Hard Candy, Madonna's 11th studio album, is released May 5.

World's biggest portrait- China

A Chinese company is printing what is believed to be the world's biggest photograph for Mother's Day.

The world's biggest photo - of a smiling mother's face - being printed in sections /Lu Feng

The Chongqing city-based firm says the portrait of a mum's smiling face will be bigger than a football pitch at 9,000 sq metres.

The project is costing more than £70,000 - and it took three months to find the right woman to pose for the photo.

Director Mr Li, who has already lodged a bid to get into Chinese record books, said: "We wanted to find the perfect mother's smile in this city."

The Chongqing Changhong Printing Company, which says it is their biggest ever order, is working round the clock to finish the picture in time for May 11 when Mother's Day is celebrated in China.

"Usually we only stock two tonnes of inkjet paper, but this deal needs 4.4 tonnes, so we had to buy extra," company manager Mr Shen told the Chongqing Business Daily.

It is much too big to print in one piece so the picture is being printed on rolls of paper which will be put together to make up the giant portrait.

"The printer has been working around the clock for the last 20 days and we still have ten to go," added Mr Shen.

Balancing act!!

Ananova:
Balancing act

It may look like the most dangerous motorbike in the world but this new invention is actually the latest form of green transport.

An 18-year-old inventor has come up with the Uno which he says could be the future of green transport /Rex

The electric Uno is the brainchild of 18-year-old Canadian Ben Gulak who spent several years developing the bike, which is controlled entirely by body movements.

The machine actually has two wheels, side-by-side, and uses gyroscopic technology to stay upright. It moves in the direction the rider leans - and the more you lean, the faster you go.

Ben claims that the bike could help beat pollution and he was inspired to design it after visiting China and seeing all the smog there.

He says: "The bike is fairly easy to ride, but takes a bit of getting used to because you have to learn to trust it."

The top speed on the current prototype is 25mph, but this could be increased with the use of a bigger motor.

The Uno weighs just 58kg and has a range of 2.5 hours once it is charged from the mains. Ben is seeking investors to help him put it into full production.

Search for Britons on missing plane

Rescuers are searching for four Britons missing after their plane disappeared off the coast of Brazil.

The Foreign Office confirmed that Alan Kempson, Sean Woodall, Ricky Every and Nigel Hodges were on board.

According to reports, the Britons are businessmen who are involved in the tourist industry and own hotels and apartments in Brazil's tropical Bahia region.

The search was launched after the twin-engine Cessna 310 in which they were travelling lost contact with air-traffic controllers minutes before it was due to land in the coastal city of Ilheus on Friday night.

A Foreign Office spokeswoman said: "I can confirm that there were four passengers, all four of whom were British, and two pilots."

The spokeswoman added that next of kin had been informed, and that no other details about the men are available. It is understood that three of the four do not live in the UK.

A number of aircraft were sent to look for the plane after it disappeared off the Atlantic coast. Brazilian authorities were also reportedly investigating eyewitnesses who said they saw a plane crash.

The flight was operated by Aero Star, a small charter firm based in Salvador, Bahia's state capital.

Ellen Duarte, business manager for Aero Star, said the Cessna made its final contact with the Ilheus control tower at 5.43pm local time (2143 BST) as it flew south from Salvador. "It was flying perfectly," Ms Duarte said. "The pilot said he was making a visual approach to the airport, and that was the last we heard."

Brazil's coastguard and three Aero Star helicopters searched for signs of a crash, but found nothing, she said. Bahia state police and air rescue have also joined the search.

Mansion United! Cristiano Ronaldo's girlfriend moves in

LOVE-STRUCK Cristiano Ronaldo will make girlfriend Nereida Gallardoa his next home fixture... moving her into his £4million house in posh Alderley Edge, Cheshire.

And Nereida, 24, should fit into the mansion beautifully—they've both got an impressive top floor.

SEE MORE PICS OF TOPLESS WAGS HERE

She will set up home with the Man U ace, 23, this summer. It means she can trade her £6-an-hour job at a Majorcan nursing home for the life of a WAG.

He's already bought her a £28,000 Mercedes with monogrammed seats. A pal said: "They are smitten. It's serious."

Davina McCall quits Big Brother to be an actress

BIG BROTHER House, this is Davina —I've decided to McCall it a day. Please do not swear.

The reality TV presenting queen will quit Channel 4's BB hit to launch a serious acting career, we can reveal.

The chirpy host, who has been evicting celeb wannabes since 2000, will dramatically reinvent herself when the ninth series ends in September.

Mum-of-three Davina, 40, has ditched her previous management to kick-start the turnaround, which will begin with a serious acting role in a major TV drama.

Her new agent is Michael Foster, the man behind Billie Piper's transformation from bubblegum pop kid to top British actress.

A source close to Davina told us: "She has finally realised the time is right to move on.
Bored

"After doing so many series of Big Brother, she's become seriously bored.

"She's very excited and convinced that Michael can turn her into a serious actor."

In recent months, even Channel 4 has refused to give Davina—who also stars in a TV hair dye ad— work outside of Big Brother. It was rumoured that bosses also believe the best of her presenting career is behind her.

So last month, Davina decided to cut ties with her long-time agent John Noel. He's her closest link to Big Brother and has also shepherded the careers of Dermot O'Leary and Russell Brand.

She has made one attempt to move into acting before—flop ITV sitcom Sam's Game in 2001. It was canned

Last night, a Channel 4 insider confirmed: "Davina has had to make some very hard choices. There is an understanding at Big Brother that it's very unlikely she'll be back.

"How many times can she keep on saying, ‘Big Brother House, this is Davina. You are live on Channel 4. Please do not swear.'? This really is make or break time for her."

POLICE are to quiz Sir Bob Geldof’s daughter Peaches after she was filmed buying DRUGS from Amy Winehouse’s alleged dealer.

Peaches, —who has always denied using cocaine like her tragic mum Paula Yates—was found by cops on the SAME video in which Winehouse, 24, was caught snorting crack.

As the secret video camera whirrs, she hands a drugs pusher up to £190 and says: “I’m going to need Valium tomorrow after this.”

It is the moment the 19-year-old celeb is seen for the first time chillingly plunging headlong into the dark world that engulfed her mother.

Peaches is to be QUIZZED by POLICE this week over the shock scenes.

And the video footage will come as a hammer blow to Peaches’ dad Sir Bob who has said he would “go f*****g ballistic” if his daughter sets off down the same drugs road that killed her mum.

Detectives found the clip of Peaches on a PC memory stick containing the Winehouse scenes which hit the headlines in January.

Cops had seized it from couple Jonny Blagrove and Cara Burton as part of their investigation into what police suspect is a celebrity drugs empire run by the pair.

We can reveal the unpublished footage shows Blagrove and Burton in a car heading off for a meeting with Peaches.

See photos of Peaches Geldof party girl
The secret camera picks up the couple talking to the beauty, who is clutching £140 in her hand. Then Blagrove tells her the deal will cost her £190.

Peaches is seen agreeing to this—and then telling the couple she will need Valium the next day. It’s common practice for drug takers to use the tranquilliser to help them “come down” from a drugs binge.

The News of the World has discovered the Peaches footage was shot THE DAY BEFORE Blagrove filmed Winehouse smoking crack in a set-up at her home.

TRAGIC: Drugs killed mum Paula
Tormented Amy, 24, is seen taking hit after hit of the deadly drug after a 19-minute binge in which she snorted powdered ecstasy and cocaine.

Cops believe scruffy Londoner Blagrove and his girlfriend wanted to use the Peaches video in a different sting. A source said: “Someone had tried to delete the footage from the stick but officers were able to recover it.”

As well as the Peaches scenes they also uncovered another TWO HOURS of footage of Winehouse.

They then arrested Blagrove and Burton and found a long list of names and numbers of their alleged celebrity clients after searching the couple’s east London home.

The couple were bailed and are set to return to the police station for further questioning this month.
Police have already quizzed Winehouse in a two-hour interview in February over the video and grilled her about her connections with Blagrove.

Now detectives want to hear Peaches’ version of events.

A police source said: “She will be interviewed some time this week and asked to explain what is happening in the video and why she is handing money over to the couple.

“It is all part of a large investigation into alleged drugs dealing.”

The existence of the secret video will come as a shock to Peaches, who did not know she was being targeted by the cunning pair.

Despite her many claims to be clean-living, rumours have been rife that the party girl has indulged in drugs. Her mum Paula died from a heroin overdose in 2000 aged 40 after the suicide of her INXS star lover Michael Hutchence.

Peaches has often been likened to her tragic TV presenter mother in her prime—inheriting her sexy looks and outrageous fashion sense.

She has even followed a similar career path to wild party-loving Paula, who started out as a music journalist before fronting smash Eighties TV pop series The Tube and shows on British people’s sex lives.

LATEST: Peaches with Faris Badwan
Proud Peaches has also produced and written TV documentaries for Sky One about teen sex and angst problems. She has reported for ITV1’s Tonight With Trevor McDonald and is about to front a show on a satellite TV channel.

Last year the teen beauty mirrored her mother’s modelling success. when she made her catwalk debut for PPQ at London Fashion Week, before landing a deal as the face of the Australian fashion line Dotti.

Like her mother, Peaches also loves the company of controversial musicians. Paula hung out with Duran Duran, Spandau Ballet and Sir Bob’s Boomtown Rats in her youth.

The tattooed beauty is also a regular at the capital’s indie clubs, enjoying close friendships with bands like The Horrors and Towers Of London. She is now dating Horrors frontman Faris Badwan. Yates started dating Live Aid creator Geldof when she was 17.

Peaches loves being compared to her mother—but has always insisted the comparison ends when it comes to the drugs problems that killed her.

On her TV show Teenage Mind she once said: “Teenagers today have nothing to rebel against. They are rebelling in taking drugs and drinking and partying and not really changing anything.

“They’re not really making a mark on society and I think that’s wrong.”

But in April 2006 at just 17 Peaches—who rakes in £200,000 a year working with friend Fifi Brow as a DJ-ing duo known as Trash Pussies—was pictured at a garage party using a “bullet”, a makeshift device usually used to inhale cocaine.

She denied the allegations, claiming: “That’s a picture of someone lighting up a roll-up cigarette. But the perspective is that it looks like something else. It was just pathetic.

“I’ve never done coke. My friends do drugs but I would never use them. This is really upsetting for me.

“I’m not stupid. Why would I do that in front of a camera, for a start? I’ve spoken to Dad and he’s very upset, but he’s supporting me.”

Leaving club with pal Nick Grimshaw
Her 55-year-old father stood by her, insisting: “If she went off the track I would go f*****g ballistic. She’s a pain in the a*** sometimes like all kids, but she’s all right. She is a 17-year-old girl who did well in her AS-levels.

“She is allowed to go to no more parties than other kids. If I honestly thought she was doing anything I should be concerned about, I would go f*****g berserk.”

Like her famous dad, Peaches’ mouth has landed her in trouble and feuds with a string of stars, including Kelly Osbourne and Lily Allen. Former druggie Osbourne reckons she is “fame-hungry” after a series of run-ins at London nightspots.

And furious singer Allen spat at Peaches at last year’s V Festival, when the DJ labelled her a “c***head.” But revelations of her drugs probe will plunge her into the deepest trouble she’s been in so far in her wild young life.

Last night the News of the World confronted the man who trapped Peaches on video at his home in east London—close to the home of druggie Pete Doherty.

Rugged Blagrove is good friends with Amy Winehouse’s jailed husband Blake Fielder-Civil.

Blagrove parades around the area in skinny tight jeans and vest tops whenever he leaves his house to run errands in the neighbourhood.

A source said: "Jonny is very much a man-about-town. When he walks he has a swagger which lets everyone know how brash he is.”

When we asked if he sold drugs to Peaches he wasn’t so brash. He said: “No, no, no. That is absolute rubbish, absolute garbage.

“I don't know where you got your information from. If that gets printed I’ll have something to say about it.

"You've got to make sure the facts are right and backed up. Believe me mate, I know the game.”

He added: “I'm denying all fact, to be honest.”

When asked if he and his girlfriend had been arrested he said: "No, no, no. That is absolute bulls***t.”

A spokesman for Scotland Yard later told us: “A 34-year-old man and a 22-year-old woman were both arrested on March 4, 2008, and have been bailed to return for further questioning to a date in May.

“The 34-year-old man was arrested in connection with an investigation into the supply of a controlled drug.

“The 22-year-old woman was arrested on suspicion of conspiracy to supply Class A drugs and money laundering.”

Crunch time for Serbs in EU vs Kosovo election

BELGRADE (Reuters) - The final week of campaigning began for Serbia's most crucial election in the post-Slobodan Milosevic era, with every sign that divisions over the country's future course are deepening.

The coalition that toppled the late strongman is now fragmented, divided over allegiance to the West or Russia, and calling each other traitors and liars.

The balance of power shifted to the nationalists since Prime Minister Vojislav Kostunica, who beat Milosevic in 2000 as a pro-Western moderate, became increasingly hardline over the secession of Kosovo with U.S. and European Union backing.

"Our principles are for the survival of Kosovo in Serbia, for the survival of Serbia itself," he said this week, accusing his erstwhile allies, the pro-Western Democratic Party, of treason for signing a pre-membership pact with Brussels.

"Now when they're trying to take away a piece of the country's territory, when its heart is being ripped out and a pact with the EU offered in return, one can't deny that this election will determine Serbia's destiny."

His campaign around the slogan of "Uphold Serbia" echoes 19th century romantic nationalism and the introspection and paranoia of the 1990s. 'Yankee Go Home' leaflets show how far the party has strayed from its pro-Western roots.

It has been striking similar notes as the nationalist Radicals, whose platform of Serbian dignity and a non-aligned path between East and West have made it the strongest single party for the last five years.

Their main common position is over Kosovo: Radical leader Tomislav Nikolic has said Serbia should not "sell itself" and join the EU until it gets back its cherished province, cradle of its Orthodox faith.

"We can work together as friends, but hands off our territory," Nikolic said in a campaign speech. "If you think Kosovo must be independent, forget Serbia as the place where you'll make money".

COALITION

The convergence between Kostunica and Nikolic has Serbs forecasting a coalition, making the Democrats the only party that hold up the tide of new nationalism and a shift away from Europe and towards Moscow, Serbia's main backer over Kosovo.

Totally sidelined by Kostunica during the eight months of their fragile government and playing second fiddle to his rhetoric on Kosovo, they are now fighting back.

Their campaign includes grainy gray footage of poverty and isolation during the Milosevic years, and a technicolor alternative version of a prosperous 'European Serbia' of well-dressed young people with perfect smiles and big plans.

"We need to tie our little boat to the big European ship," deputy PM Bozidar Djelic of the Democrats said on Tuesday while signing the accord with the EU. "I'm a Serb patriot and I'm convinced today is a truly patriotic day."

The pact was offered by Brussels explicitly to boost the Democrats. It will remain mostly symbolic until Serbia fulfils conditions for ratification by arresting war crimes fugitives from the Yugoslav wars, and then starts to reap the benefits.

Slogans aside, polls show that to clinch a majority and prevent the Radicals from coming to power, the Democrats may need a helping hand from a party of the past.

Serbian media are speculating that the Democrats have done the math and swallowed their pride, and are already making overtures to the Socialists, the once-dominant party of Milosevic.

Iran says will not bow to Western pressure

TEHRAN (Reuters) - Iran will not give up its rights in the face of Western pressure, its supreme leader said on Sunday, two days after major powers said they would make a new offer to convince Tehran to halt its nuclear plans.

Ayatollah Ali Khamenei did not explicitly mention Iran's nuclear activities, which Western powers suspect are aimed at making bombs, but Iranian officials have repeatedly ruled out halting the programme which they say is a national right.

State television said Khamenei cited "some recent threats by arrogant powers", a reference to the Islamic Republic's Western foes. The United States has recently repeated it wants diplomacy to end the nuclear row but will not rule out military action.

"We will not allow the arrogant ones to step on the right of this nation," he said in a speech in the southern province of Fars. "Threatening the Iranian nation will not make it retreat."

"This nation has chosen its path towards perfection, honour, complete independence ... and no threat can persuade (it) to stop its path," Khamenei, Iran's top authority, told the crowd.

The five permanent members of the U.N. Security Council -- the United States, France, Britain, China and Russia -- and Germany met in London on Friday and said they would offer new incentives to encourage Iran to halt nuclear work.

The offer, whose details have not been made public, is based on a package of economic and political benefits laid out by the six big powers in June 2006 but so far spurned by Iran.

Iranian officials have in recent weeks again rejected any suspension of the atomic work in exchange for trade and other incentives offered to the world's fourth-largest oil producer.

Iran says it wants only to make fuel for power plants. The enrichment process, if desired, can also be used to make material for bombs.

The U.N. Security Council has imposed three rounds of limited sanctions on Iran for failing to heed the demand to suspend enrichment work.

Analysts say windfall gains from oil exports are helping Iran cushion the sanctions impact, even though Western companies have become more wary of investing in the country.

The incentives offered to Iran in 2006 included civil nuclear cooperation and wider trade in civil aircraft, energy, high technology and agriculture, if Tehran suspended uranium enrichment and negotiated with the six world powers.

A European diplomat has said the heart of the previous offer -- helping Iran develop civil nuclear power -- remained. Foreign Secretary David Miliband said details would be revealed by the six only to Iran's government.

Iran discussed its own package of proposals with a visiting Russian official last week about how to resolve the nuclear row. It has not given details about those plans.

UK soldier killed by mine in Afghanistan

LONDON (Reuters) - A British soldier died and four others were wounded in a mine blast in the southern Afghan province of Helmand, the Ministry of Defence said on Saturday.

The Household Cavalry Regiment soldier had been on patrol in the Nowzad area of northern Helmand on Friday when the vehicle he was travelling in hit a mine.

He was evacuated to the NATO-led International Security Assistance Force (ISAF) medical facilities at Camp Bastion, but was pronounced dead on arrival.

Three other Household Cavalry Regiment soldiers as well as an Afghan national were injured in the blast.

The death brings to 95 the number of British soldiers killed in Afghanistan since the overthrow of the Taliban in late 2001.

Britain, a major troop contributor to the NATO force fighting Taliban and al Qaeda insurgents, has about 7,800 troops in Afghanistan, mostly in Helmand.

The province is a largely desert area cut in two by a river valley flanked by lush, fertile land that produces nearly half the world's opium.

Cyclone batters Myanmar

YANGON (Reuters) - A tropical cyclone packing winds of 120 mph (190 km/h) slammed into Yangon on Saturday, ripping off roofs, felling trees and power lines and raising fears of major casualties in military-ruled Myanmar's main city.

The Internet, land, mobile and satellite phone connections were down and the authorities were forced to close the one airport serving the sprawling city of 5 million people.

A U.N. official in neighbouring Thailand said U.N. staff had managed to contact a colleague in the former Burmese capital in the afternoon as the eye of the storm passed overhead.

"A lot of roofs from well-constructed buildings have been blown off. That would lead you to believe that less well-constructed buildings will have taken a really big whack," Tony Craig, regional emergency coordinator for the World Food Programme (WFP), told Reuters in Bangkok.

The Thailand-based Federation of Trade Unions, Burma said the ruling military junta had declared states of emergency in five affected provinces, most of them in the low-lying floodplains of the Irrawaddy delta.

It was impossible to contact anybody inside Myanmar to confirm the report. A spokesman for Britain's Department for International Development (DFID), which has an office with 10 staff, said the ministry had not been able to establish the extent of damage because of poor communications.

The spokesman said its 10 staff, both British and locals were safe.

The electricity supply in Yangon -- hit-and-miss at the best of times in one of Asia's poorest countries -- failed after Cyclone Nargis started to lash the former capital on Friday evening.

China condemns Dalai Lama ahead of talks

SHENZHEN, China (Reuters) - Beijing called the Dalai Lama a criminal on Saturday, as representatives of the exiled Buddhist leader gathered for a meeting on Sunday in China to discuss the most serious unrest in Tibet for nearly two decades.

The condemnation suggested the government was in no mood to compromise following riots and protests in Tibet which have shaken China's preparations for the Beijing Olympics and stoked Western criticism of its rule in the mountain region.

"Patriotic people of Tibet strongly condemn and vehemently denounce the litany of crimes committed by the 14th Dalai Lama and his followers," said the official Tibet Daily, according to the region's official news website (www.chinatibetnews.com).

Chhime Chhoekyapa, a senior aide to the Dalai Lama, said the venue for the meeting was Shenzhen, a southern town across the border from Hong Kong. Security was tight outside the state guesthouse where the talks were expected to be held.

"We can't have great expectations" about the talks, he told Reuters in Dharamsala, the Indian headquarters of the Tibetan government-in-exile.

There have been six rounds of dialogue between China and the Dalai Lama's envoys since 2002 with no breakthrough.

Xinhua news agency said the talks would begin on Sunday.

"It is hoped that through contact and consultation, the Dalai side will take credible moves to stop activities aimed at splitting China, stop plotting and inciting violence and stop disrupting and sabotaging the Beijing Olympic Games so as to create conditions for talks," it quoted a central government department official as saying.

U.S. rocket strike near Baghdad hospital wounds 20

BAGHDAD (Reuters) - The U.S. military fired rockets at a target near a major hospital in eastern Baghdad on Saturday, wounding 20 people and damaging several ambulances, the head of the hospital said.

No patients were wounded at the hospital in the Sadr City stronghold of anti-American Shi'ite cleric Moqtada al-Sadr, but 20 people at the scene of the blasts had been hurt, said Dr. Wi'am al-Jawahiri, manager of al-Sadr hospital.

Jawahiri said windows at the hospital were shattered when three missiles hit what the U.S. military in Iraq called a militant "command and control" centre around 10 a.m.

"While I believe the target was not the hospital, we could have been informed before they did such a thing. At least we could have taken some precautions," Jawahiri told Reuters.

The U.S. military said precision-guided munitions were used to destroy the militant facility in Sadr City, where U.S. and Iraqi forces have been battling Shi'ite gunmen loyal to Sadr for several weeks as part of a big government crackdown on militias.

Such weapons could either be rockets fired from launchers on the ground or helicopters.

Colonel Jerry O'Hara, a U.S. military spokesman in Baghdad, said the operation was "time sensitive" and targeted a "command and control" centre that was used to plan attacks against the Iraqi people as well as Iraqi and U.S. security forces.

"We take great care to prevent any collateral damage and will continue to do so. We don't target civilians and regret any casualties," O'Hara said.

Exclusive: student loans u-turn

Government changes position on student loans - selling-on only the least risky to the private sector, Channel 4 News can reveal.

The government has changed its position on the sale of student loans - and will now only sell on the least risky to the private sector.

In an echo of Northern Rock, the government appeared today to be planning to nationalise the risk while privatising the gains.

The £6bn sale of student loans is part of the government's efforts to boost public finances.

''We want to engage initially in loans where we can demonstrate a good track record of graduates repaying."
Bill Rammell, higher education minister

When announcing plans in the autumn, higher education minister Bill Rammell promised "a genuine transfer of risk from the public accounts to the private sector".

He has since said: "'We want to engage initially in loans where we can demonstrate a good track record of graduates repaying."

A government education spokesperson insisted they would not be cherry-picking the loans to sell off.

However, Rob Wilson, the shadow higher education minister, told Channel 4 News:

"We will vote against this if we cannot ensure there is full value for money for the tax payer. And the implications of us voting against this would mean that if this bill falls there would be a huge hole in the government's spending review."

Student Finance Centre

Changes to the Student Loans Company Telephone Numbers

The use of the 0800 telephone number by the Student Loans Company for Student Support will be discontinued from 31st March 2008

Advice on Student Finance Services is wide and varied, often dependent on where you are in the academic cycle, and by where you are domiciled. SLC has therefore specific numbers designed to ensure your enquiry is directed to the best service agent for responding to the call.

These numbers are:

Applications for Student Finance

For students living in England at the time of their application 0845 607 7577

For students living in Wales at the time of their application 0845 602 8845

For students living in N Ireland at the time of their application 0845 600 0662

For students living in the EU at the time of their application 0141 243 3570

For students living in Scotland at the time of their application (SAAS) 0845 111 1711

Queries on Student Finance Payments

All enquiries regarding payments of Statutory Support (loans, grants etc), irrespective of domicile,
should be made to SLC on 0845 026 2019

Queries on Repayment of Loans

All UK enquiries regarding repayment of loans should be made to 0870 240 6298

Overseas repayment enquiries should be made to 0141 243 3660

No student loan without ID card, says government

Students will be "blackmailed" into holding identity cards in order to apply for student loans, the Tories have warned.

According to Home Office documents leaked to the Conservative party last night, those applying for student loans will be forced to hold identity cards to get the funding from 2010.

Anyone aged 16 or over will be expected to obtain a card - costing up to £100 - to open a bank account or apply for a student loan.

The document says: "We should issue ID cards to young people to assist them as they open their first bank account, take out a student loan, etc."

The government had planned to start issuing the ID cards to people applying for a passport from 2010, but confidential documents confirm that the scheme will be delayed to at least 2012.

The biometric cards are due to be introduced for foreign nationals later this year, with the first expected to be issued to UK citizens on a voluntary basis from 2009.

From next year, they will also be issued to people in "positions of trust" such as airport workers.

The revelations have led to concerns that the government is planning to collect the fingerprints and other biometric details of more than two million young people entering higher education each year by stealth.

Shadow immigration minister Damian Green called the plans "straightforward blackmail" to bolster "a failing policy".

"This is an outrageous plan. The government has seen its ID cards proposals stagger from shambles to shambles. They are clearly trying to introduce them by stealth."

Student loans for prisoners loophole plugged

Student support payments to prisoners, which have topped £500,000, were last week suspended by the government in what the Tories called the "latest in a long line of Labour fiascos".

The universities secretary, John Denham, said the payments, which have been going on for the last 10 years, were "unjustifiable".

Today the minister will lay down amendments to the education regulations - which will outline who is eligible for student support, and the method by which students can access it - to ensure offenders no longer receive loans and grants for maintenance while they study at university.

According to preliminary investigations by the government, 250 prisoners have received up to £250,000 in maintenance grants since 1998 - of that £120,000 was paid out last year. An additional £250,000 of loans was paid out by the Student Loans Company (SLC) over the last 10 years.

Student loans must be paid back by students once they are earning annual salaries of at least £15,000. Grants, which are given to students from low-income backgrounds, are non-repayable.

Setting out his amendments, Denham said: "It has been brought to ministers' attention that there is a long-established but unjustifiable provision in the student support regulations that has allowed prisoners on full-time courses in higher education to receive financial support in the form of loans and grants for maintenance.

"Payments properly made under the student support regulations will have been in compliance with the law. However, I do not believe that it has ever been the intention of parliament that prisoners, who are accommodated at public expense, should receive any additional form of financial support for maintenance. Nor do I believe that it is an appropriate use of public money."

The shadow universities secretary, David Willetts, said: "Students struggling to make ends meet will rightly be outraged.

"Prisoners are getting taxpayers' money to help with food and rent, when they're already being fed and housed at the taxpayers' expense. Prisoners should be encouraged to learn and train whilst serving their sentence, but not with grants designed to help students with their living costs.

"It is right that the minister has finally stopped the abuse. But how was it allowed to carry on for so long?"

The Liberal Democrat universities spokesman, Stephen Williams, added: "No wonder students are on the breadline when the money meant to support them is being paid to serving criminals."

Denham said payments to prisoners had now been suspended and the regulations would come into force at the end of the month.

Around 590 prisoners currently study on part-time distance learning courses, usually provided by the Open University, but a small number study full-time at higher education institutions while on day release.

Universities, colleges and prison governors will be told to inform the SLC when a prisoner begins a full-time course to ensure they do not receive any more payments. Governors have also been told to inform prisoners they can no longer apply for maintenance grants.

The SLC has been told to review all current and past applications to check they were legal and assess full costs.

Women take longer to repay student loans

Women graduates face 16 years of student debt while men can expect to settle the bill for their education within 11 years, according to new figures which suggest the gender pay gap is keeping a generation of women in debt for longer.

The figures, based on government projections for students who started university last year, prompted calls from student groups for the government to address the inequality in the major review of student funding planned for 2009.

Women take longer to pay off bills because of the pay gap - estimated to be up to 20% - and because they are more likely to take time out to look after children.

The higher education minister, Bill Rammell, revealed the five-year repayment gap in an answer to a parliamentary question tabled by the Conservatives.

"We estimate that a male student who entered higher education in 2006-07 will take an average of 11 years to repay their student loan. We estimate that this will be 16 years for a female," he said.

"The calculations are based on assumptions about graduate lifetime earnings, derived from the British Household Panel Survey and the Labour Force Survey. The calculations take account of earnings growth due to career progression, gender, age and periods spent unemployed for other reasons such as having children."

He added: "Separate analysis of the benefits of higher education estimates that over the working life, the average net graduate earnings premium is comfortably over £100,000 in today's valuation."

David Willetts, the shadow higher education minister, said: "This shows that women get a raw deal in the labour market. Women's earnings are more intermittent and still lower than men's. This year interest rates on loans doubled from 2.4% to 4.8% and this shows that those debts hit women the most."

Interest on student loans is linked to the retail price index and this year's increase reflected rises in the cost of living.

Kat Stark, women's officer at the National Union of Students, said: "Women are taking longer than men to pay off their student loans because they are paid less, not because they are taking time off to have children. Within three years of graduating, over 40% of men are earning over £25,000, compared to just over a quarter of women. The pay gap is not a new problem - the government knew when it introduced the tuition fees system that female graduates would end up saddled with debt to a worse extent than their male counterparts. In the run-up to the 2009 review of higher education funding, the government should consider whether they wish to perpetuate this injustice."

Rammell said: "Employers appreciate the highly developed skills and talents that all graduates bring to their businesses and are willing to pay accordingly. Both male and female graduates can expect to earn considerably more over their careers than those workers without a degree. We are committed to ensure that everyone in our society has equal access to high quality education ... and to the clear opportunities that this brings."

Student loan payment 'con' denied

Last Updated: Tuesday, 24 April 2007, 12:35 GMT 13:35 UK
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Student loan payment 'con' denied
Lecture hall
Students loan interest rates are linked to inflation
The government has denied claims that graduates are being overcharged in the way they pay back their student loans.

More than 62,000 people have signed a petition on the Downing Street website which says - wrongly - that interest repayments are being miscalculated.

It assumes borrowers are being charged interest on their loan for the whole year despite paying it off in monthly instalments through their salaries.

Number 10 says interest is calculated daily with payments taken into account.

It also insists that the government is not gaining any extra income from the way the system is set up.


The SLC is careful to ensure no borrower pays any additional interest as a result of this delay
Downing Street statement

One of those who complained to the BBC News website, Sam Murray from Norwich, believed the petition had brought to light "the way in which the government is earning twice the interest on monies borrowed by students, and that students have to pay back more than they should".

"I believe that by getting the media involved in this scam that more people will understand our anger and vote to change this method of payments."

A government statement placed on the petition website said the confusion had arisen from the fact that the Student Loan Company updates borrowers' accounts annually.

This is because the exact details of individual repayments, which are collected by HM Revenue and Customs from employers, are received only when firms send in their tax returns after the end of each year, it says.

Once the repayment information has been collected, it is sent to the Student Loans Company who issue new individual statements showing repayments and the amounts outstanding.

But Downing Street insists: "The SLC is careful to ensure no borrower pays any additional interest as a result of this delay.

"The total annual repayment received from each borrower is credited to their account as 12 equal monthly payments in the year they were made, and the interest on the remaining balance is calculated on a daily basis each month to match."

The petitioners had thought that the money from the payments had been earning interest for the government.

Timing

But Downing Street added: "We can assure you that the government does not gain any extra income nor does any borrower pay too much interest.

"It is also worth adding that interest paid on student loans reflects inflation, and is not a commercial rate of interest like those charged for bank loans."

The Student Loans Company (SLC) said in a statement that it was important to understand that no money passes to it from HM Revenue and Customs.

All it received was the information about repayments made by individual borrowers, once that was available, to allow it to issue them with annual statements.

It added: "All interest is calculated accordingly to match the timing of these repayments to ensure that borrowers pay the right amount and not too much.

"So even if there is a delay in their repayment details reaching SLC the borrower does not pay any additional interest."

The statement reiterated Downing Street's claim that the government does not earn interest on the repayments it receives through salaries from employers.

US home loan woes threaten debt crisis

A leading fund manager has warned the continued collapse of the US sub-prime mortgage market is likely to lead to a "massive" rate of defaults in certain parts of the CDO market.

Francois Bartholemy, a senior fund manager at F&C Partners, believes the market, once famously described as "toxic waste", will be severely impacted by the current problems in the US.

The CDO - or collateralised debt obligation - market is worth more than £2,000bn globally.
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A CDO is basically a pool of different types of debt which is sliced into portions of -varying risk and return to appeal to a broad range of investors.

Typically investors tend to be traditional institutions such as fund managers, as well as hedge funds.

They are a key part of the investment cycle, as they are commonly used by investment banks to slice and repackage balance sheet risk.

A series of defaults in the CDO sector could have a knock-on effect for other parts of the market - and trigger serious losses in certain quarters.

Mr Bartholemy warns: "Given the amount of sub-prime loans issued last year, and that a lot of that ended up in the CDO market, it could have a large impact.

"I think there will be a -massive rate of default of CDOs which have invested in sub-prime mortgages."

He believes that certain parts of the market could be in danger: "We think the CDO market has been used as a depository for weak credit, in fact the weakest credit.

"Not all CDOs are bad, but bad credits do tend to end up in CDOs. In particular, in the US sub-prime mortgages have found a home in the CDO market."

He also warned that although the risk is present, it may take some time to trickle through and create defaults.

"Part of the market is not reflecting what is going on in sub-prime in the US. There are a lot of good CDOs - particularly those that invest in European corporates - but those who are not aware of the structure may end up owning things that they do not understand."

He also predicts that the sub-prime problem is likely to worsen as US home-owners begin to be faced with higher rates: "The 2006 vintage of sub-prime mortgages have not yet adjusted to interest rates," he says, because most such mortgages tend to start with a low introductory rate which is subsequently increased.

"But even before that adjustment has been made, they're already experiencing levels of default that are unprecedented - with 5pc-10pc late payment of interest. And that's before interest rates ratched up, so expect late payment to go up a lot more."

The US sub-prime mortgage crisis has already had a serious impact on both sides of the Atlantic, hitting banks such as HSBC hard, and leading to the -collapse of a number of sub-prime specialists such as New Century Financial, which was once the second largest sub-prime lender in America.

A growing number of British CDOs are emerging - including ones set up by CVC and Permira, although there is no suggestion that they are exposed to the sub-prime fall-out.

Sir Howard Davies, when he was chairman of the Financial Services Authority, once described CDOs as "toxic waste," prophesying the growing concern in the market for such complicated debt instruments.

Frog From Hell' Fossil Turns up in Madagascar

Fossil hunters digging in Madagascar have discovered a 70 million-year-old, 10 pound ancestor of the horned frog. Over twice as large as its modern-day descendants, the "slightly squashed beach-ball" shaped creature probably lunched on small lizards and baby dinosaurs, and has earned the charming nicknames "frog from hell" and "Beelzebufo," reports the Daily Telegraph.

Modern horned frogs are natives of South America, and so the discovery lends further credence to the hotly debated theory that Madagascar, India and South America formed one enormous landmass until the Late Cretaceous period. "It also suggests that the initial spread of such beasts began earlier than recent estimates," one researcher said.

Iran-Europe gas deals anger Washington

The US and its allies are worried that the sanctions regime against Tehran is under threat from a possible new wave of European investment in Iran’s strategically important gas sector.

Tehran has already concluded gas deals with Chinese and Malaysian companies – ending a protracted lull in investment in its energy sector – and has alarmed Washington by reaching an agreement with a Swiss group.

Half of east Europe migrants go home

Half the central and eastern European nationals who came to work in Britain in the four years since EU enlargement have returned home, according to new research suggesting that fears of an ever-expanding migrant population are unfounded.

About 1m workers from eight accession countries – the so-called A8 – have arrived in Britain since 2004, a respected think-tank said on Wednesday, a far bigger inflow than the government initially expected.
EDITOR’S CHOICE
Migrants ‘lower reading results’ - Apr-30
Foreign-born dominate UK’s rich list - Apr-27
Ministers and police split on migration cash - Apr-18
Judge attacks changes to migration rules - Apr-09
Editorial comment: Migration debate gains momentum - Apr-01
Poles go home to greener pastures - Apr-01

But the Institute for Public Policy Research estimated that half this group had already left Britain, with the current population of A8, Bulgarian and Romanian nationals numbering about 665,000 – an increase of 550,000 since early 2004.

“The myth has been that everyone who’s ever arrived is still here ... but the perception is higher than the reality,” said Danny Sriskandarajah, one of the report’s authors.

Britain does not count people in and out of its borders, as some countries do. The IPPR study addresses the crucial question of how many migrants from the latest influx have returned home, the answer to which is vital to determining the long-term impact EU enlargement will have on Britain’s labour force and on policy for non-EU migrants.

The IPPR based its estimates on a survey of Poles, now the largest group of foreign nationals in Britain, who had returned to Poland after a stay of three months or more, using its findings alongside a range of administrative and survey data. It stressed the limitations of all these sources, but said it was clear that current patterns of mobility and migration were very different from those of past waves of migration to Britain, when most settled.

Mr Sriskandarajah said he expected the UK population of accession country nationals to stabilise “very soon”. He said numbers of new arrivals would fall consistently in the next few years as job prospects in Poland improved relative to Britain and as other EU countries loosened labour market restrictions.

But while the report confounds perceptions that all accession migrants will stay in Britain, it also suggests recent speculation that Poles are streaming out of the UK may be overstated. The survey the IPPR conducted in Poland suggests some migrants will continue to travel back and forth for short stays or seasonal work.

Mr Sriskandarajah predicted those who chose to stay in Britain permanently were “likely to be those who are the most successful”, including those who found it easier to run a business in this country.

He argued policy needed to adapt to more transitory patterns of migration, adding that if arrivals did slow dramatically some employers could find it hard to fill low-skilled vacancies now closed to non-EU migrants.

The IPPR also highlighted the extent to which the latest migrants had spread across Britain, with Poles registered in every local authority and large numbers working in Scotland, Northern Ireland, the east and south west, regions that had previously attracted very few migrants.

EU to create new diplomatic service

Whether practical politics or pipe dream, the European Union’s common foreign policy is set to move into sharper focus next year with the creation of a new EU diplomatic service.

Assuming that all 27 member-states ratify the bloc’s Lisbon treaty on institutional reform by January 1, the EU will acquire a so-called External Action Service uniting officials in Brussels with diplomats from national foreign ministries.

The service is unlikely to be fully staffed from day one, but hopes are high in Brussels that it will reduce the duplication of effort and multiplicity of voices that characterises EU foreign policy at present.

For the service’s supporters, such as Alex Stubb, Finland’s new foreign minister, it is high time, too. “If we play our cards right, we’ll become one of the world’s great actors,” Mr Stubb, a former European parliament member and expert on EU institutions, told the Financial Times.

“We are already a superpower in trade, a superpower in aid, but in foreign and security policy we haven’t reached the level we should be at. I firmly believe we should seize the moment.

“The only time we’re taken seriously is when we speak with a common voice. There’s still a mentality in some countries to break up the EU by calling on individual national capitals.”

China, Russia and the US are often seen as exploiting the EU’s disunity in this manner. But some experts say that on the 2003 US-led invasion of Iraq, and recognition of Kosovo’s secession from Serbia, the EU suffered from serious divisions in the first place.

The External Action Service is a hot topic in Brussels because numerous officials from the European Commission and the secretariat of the European Council, which represents national governments, will be expected to join the new outfit.

Yet many sensitive questions – such as the service’s budget, staff numbers, administrative structure and reporting lines – have yet to be decided. Indeed, it is not entirely clear under the new arrangements what an EU mission in a foreign country will be called. “Delegation” or “representation” sounds too bureaucratic to some ears, but “embassy”, for some, is a word that should be reserved strictly for a sovereign state.

Mr Stubb is impatient with such distinctions. “All over the world there will be EU embassies. The name issue is not important, but they need to be called something people understand.”

The service will work under the EU’s high representative for foreign policy, currently Javier Solana of Spain, who took the job in 1999 and may remain in office until at least late 2009.

Mr Stubb said Mr Solana, or his successor, would be a stronger figure from next year, thanks partly to the External Action Service.

“Javier Solana has used his instruments well and has established his role on the world scene, but the new instruments will be even more useful,” Mr Stubb ­predicted. One will be the EU’s new identity, under the Lisbon treaty, as a “legal personality”, enabling it to sign certain international agreements without ratification by all 27 member-states.

The high representative will also gain extra weight by serving as a Commission vice-president and by chairing EU foreign ministers’ meetings. However, money will be vital. The EU’s common foreign and security policy is set to receive €243m ($378m, £191m) in funds next year, up from €200m this year but far below the billions spent on foreign aid, agriculture and help for poorer EU regions.

Euro shows signs of end to bull run

Speculation that the euro’s seven-year bull run was coming to an end intensified on Thursday as the single currency fell to five-week lows against the dollar and the pound.

Many economists are reaching the view that eurozone growth has slowed to the point where the European Central Bank will have to cut interest rates or risk stunting economic growth.
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“Within the space of one week, the outlook for the eurozone has worsened significantly,” said Carsten Brzeski at ING Capital Markets. “Sound economic fundamentals are melting away.”

Recent eurozone data have been disappointing, with German business sentiment, measured by the Ifo institute, in April recording its biggest monthly fall since September 2001, while eurozone purchasing managers’ indexes have also fallen.

The European Central Bank has so far maintained a hawkish stance on interest rates.

As the Federal Reserve has slashed its main interest rate by 3.25 percentage points to 2 per cent since the start of the market turmoil last summer, and the Bank of England cut its main lending rate by 0.75 per cent to 5 per cent, the ECB has kept its official interest rate on hold at 4 per cent.

The diverging interest rate paths between the three central banks have given investors a reason to keep buying the euro, pushing it nearly 70 per cent higher against the dollar since 2001 and up almost 30 per cent against the pound.

Last month the euro reached an all-time high of $1.6018 against the dollar and a record high of £0.8097 against the pound. But it has since fallen 3.6 per cent, on Wednesday hitting $1.5438 against the dollar and £0.7802 against the pound, its weakest level since March 25.

Romania faces $100m corruption suit

A British company is suing the Romanian state for $100m in a high-level corruption case involving a former prime minister, airport and airline duty-free concession contracts and an audio tape recording of alleged demands for a $2.5m bribe.
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The case, expected to be heard at an international ­tribunal in Washington this year, will cast a rare light on the sometimes murky world of Romania’s public sector contracts and judicial institutions.

It comes at a time when Romania, which joined the European Union last year, faces heavy criticism from Brussels over its record in fighting corruption and implementing judicial reform.

Like neighbouring Bulgaria, which faces additional accusations over organised crime, Romania could lose EU aid if it fails to take effective action.

“As highlighted by this and other cases, high political corruption is still present in Romania and the anti-corruption prosecutors are under strong pressure from the current political class,” said Monica Macovei, who was Romania’s minister of justice from 2005 to 2007.

In the EU’s doghouse

Romania, and neighbouring Bulgaria, are on the rack in the European Union over their alleged failure to fight corruption and implement judicial reforms. Bulgaria faces further complaints over its record in dealing with rampant organised crime.

The European Commission is due next month to deliver its latest progress report on both countries and it is unlikely to make happy reading in either Bucharest or Sofia. Under rules agreed when Romania and Bulgaria joined the EU in January 2007, the two states are being watched by Brussels in line with “safeguard” clauses that run until the end of 2009.

The Commission could next month recommend sanctions, which might include delaying EU aid or permitting other EU states to stop recognising Romanian and Bulgarian court judgments. However, some member states doubt whether such measures would work.

Bucharest has created a new National Integrity Agency, with powers to punish civil servants for financial wrong-doing. But its effectiveness has yet to be tested.

The case involves Eastern Duty Free (EDF), a UK-based duty-free operator with other operations in Laos, Vietnam and the Philippines, which is taking legal action at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID).

It is claiming $100m (€75m, £51m) in damages for the loss of two contracts for duty-free sales at Bucharest Otopeni airport and on Tarom, Romania’s national airline.

EDF alleges that in 2001-02 it was approached by officials working for Adrian Nastase, prime minister in 2000-04, demanding a $2.5m bribe to retain contracts it had originally won in 1992 and 1996.

When the company refused to pay, it claims it was forced out of the business. Mr Nastase’s government passed an emergency ordinance, which can override contracts, temporarily banning duty-free retail and later gave EDF’s contracts to a number of Romanian companies.

Rick Weil, EDF’s managing director, says he went to Bucharest in August 2001 to meet Sorin Tesu, Mr Nastase’s chief of staff. Mr Tesu chose the novel venue of the Hilton hotel car park for their meeting.

In Mr Weil’s statement to the DNA, Romania’s anti-corruption agency, in 2006 he says: “[Tesu] told me he was meeting with me in the name of his ‘chef’ or chief.

“He explained that he had good news on how I could ensure the continuation of EDF’s venture in Romania. He said that others had contributed $2.5m to Prime Minister Nastase’s campaign, for which they had been promised the duty-free business at Otopeni airport.

“However, this money could be refunded to them if I paid $2.5m to Mr Tesu on behalf of his ‘chief’.’’

EDF refused to pay, creating an impasse.

Two months later, on October 20, Marco Katz, then an EDF director, says he visited Mr Nastase’s counsellor Liana Iacob searching for ways to resolve the problem.

On a tape-recording that EDF will assert was made at that meeting and which has recently come to light, she tells Mr Katz in Romanian: “I was at the government, it was a government meeting and I had with him [Sorin Tesu] a discussion and I asked him to stay away from this issue and I told him: ‘Well. Do you let me solve this issue? I promise you that I will give also money to you but not in the manner you want to proceed. The money will go directly to the premier [prime minister] in the proportion of 95 per cent and from those [remaining] 5 per cent I will give to you those five. But it is not possible to do how you want, with these kind of things. You know, they don’t want to give money. They don’t want to give.’ And I asked him to let me resolve this issue, to not interfere in any way in this matter, that I will discuss [missing words] that I will ... ”

At the end of the tape she again solicits the bribe as the solution to EDF’s problems: “I know very clearly that without money this will not be done. OK? Because I told you from the beginning and I repeat to you that they took some money.”

EDF says this refers to the supposed need for the $2.5m to reimburse a campaign contributor who has paid that amount in order to take over EDF’s contracts. This campaign contributor was not among the companies that eventually took over EDF’s contracts.

The tape will be submitted to the Washington tribunal.

In a statement to the DNA in 2006, Ms Iacob accepted that she had met Mr Katz at her home in autumn 2001, but disputed his account of their conversation.

“Mr Katz came to my house uninvited, without me having given my address, which displeased me ... I have never requested money from Mr Katz, nor have I received anything from him ... ” she said.

The Financial Times asked both Mr Nastase and Ms Iacob to comment on the tape.

Mr Nastase said: “No comment.” Ms Iacob said: “We’ve got nothing to talk [about] on this matter, the media have already covered this issue in an exaggerated manner.

“There are prosecutors’ decisions that show I’m innocent. Goodbye.”

As Ms Iacob said, the DNA did indeed look at the case in 2002 but decided not to pursue criminal investigations, citing lack of evidence of criminal behaviour. After EDF appealed against this decision, it was upheld on the same grounds in 2006.

EDF’s lawyers last week deposited the new audio evidence with the DNA and again requested the reopening of the file in light of this evidence. The DNA said it was mandatory policy not to comment on evidence.

In an affidavit signed with EDF on Wednesday, Mr Katz confirmed: “The voice on the audio recording is his voice [and] the audio recording is a recording of a meeting held with Ms Liana Iacob on October 19 2001 at her private residence.”

Darryl Lew, of White & Case, a Washington law firm that is Romania’s international counsel in the case, said: “The only appropriate forum for us to discuss issues related to this case is before the ICSID arbitration tribunal.”

Christoph Liebscher, of Wolf Theiss, EDF’s lawyers, said: “We have submitted this new evidence [to ICSID] as it fully supports the claimant’s claim and confirms the content of the other evidence we have submitted so far.” Mr Liebscher added: “The visitor [on the tape recording] is Marco Katz and EDF confirms that it is in fact Mr Katz’s voice on the recording.”

Mr Nastase has been subject to a number of DNA investigations and indictments. In November 2006 he was sent for trial on bribery charges relating to the unlawful importation of 12 containers of Chinese consumer goods. In May 2007 he was again sent to trial, for bribing an official from the National Office for Preventing and Combating Money Laundering. In September, a third case was opened involving alleged bribery and trafficking in influence.

The three cases have been shelved pending parliamentary debates on the extent of legal immunity enjoyed by MPs, including Mr Nastase. His spokeswoman said: “At this stage, Mr Nastase has no penal case with DNA.”

Ms Macovei blames political interference in cases involving senior politicians, saying: “The DNA prosecutors were never afraid to investigate. But the constitutional and supreme court were appointed mostly by PSD [Mr Nastase’s party], so I believe they acted outrageously, gave clearly political decisions and lack independence. They want to protect the political powers that put them in their positions.”

While ICSID’s judgments will not change the face of Romanian justice, the verdicts could make embarrassing reading for Bucharest at a time when it is under Brussels’ microscope.

Additional reporting by Catalin Prisacariu in Bucharest