China said to probe medical device firms on bribe suspicions

China is probing foreign medical-equipment makers over suspicion that they may have paid bribes or used illegal strategies to achieve market dominance, according to people familiar with the matter. 

PHOTO: REUTERS

5 May7:54 AM

[BEIJING] China is probing foreign medical-equipment makers over suspicion that they may have paid bribes or used illegal strategies to achieve market dominance, according to people familiar with the matter.

Regulators including the State Administration for Industry and Commerce opened the preliminary investigations last year into the Chinese health-care units of General Electric Co, Royal Philips NV and Siemens AG, the people said. The probes don't necessarily mean the companies have done anything wrong, said the people, who asked not to be identified because they weren't authorised to speak publicly on the matter.

The three companies command over 80 per cent of China's market for large medical equipment such as CT and MRI scanners, according to the people. The regulators are looking at whether they achieved dominance via illegal means such as bribing hospitals to use their products. It's yet to be decided if regulators will start a formal investigation, the people say.

The government commerce regulator subsequently issued a statement denying that it has started investigating Siemens for commercial bribery. A Siemens spokesman referred Bloomberg News to the statement, which didn't mention Philips or GE.

Reuters earlier reported the investigation into Munich- based Siemens. The probes started last year after President Xi Jinping in May urged more domestic production of modern medical equipment.

A State Administration for Industry and Commerce branch in Shanghai is looking into Siemens Healthcare's Laboratory Diagnostics marketing and business model, which is common worldwide in the industry, Siemens said earlier via e-mail.

"Contrary to the recent media reports, the probe is neither corruption-related nor related to any personal benefits to individuals," the company said. "Siemens has been working closely and cooperatively with AIC to dispel its concerns and expects to resolve the matter in the near future." The government has stepped up regulatory scrutiny of non- Chinese companies, including Microsoft Corp, Symantec Corp and Qualcomm Inc. That scrutiny has raised concern that China is using the probes to boost native enterprises.

"Philips is not aware of an official investigation on this matter at this time," the Amsterdam-based company said via e- mail. "We are committed to complying with the laws and regulations of the countries in which we operate, and to ethical business practices." A representative for GE couldn't immediately be reached.

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Shale oil drillers plunge after Einhorn slams fracking costs

Money manager David Einhorn slammed the shale drilling industry that ushered in a new era of US oil production as wasteful, expensive and a terrible investment. 

PHOTO: BLOOMBERG

5 May8:02 AM

[CHICAGO] Money manager David Einhorn slammed the shale drilling industry that ushered in a new era of US oil production as wasteful, expensive and a terrible investment.

Shale explorers including Pioneer Natural Resources Co. and EOG Resources Inc plunged as investors heeded Mr Einhorn's remarks at the Sohn Investment Conference in New York on Monday.

Mr Einhorn, who manages US$12 billion as president of Greenlight Capital, said investors who are bullish on oil prices should avoid buying stock in producers and instead invest in the commodity itself. He singled out Irving, Texas-based Pioneer for special attention.

"Pioneer burns cash and isn't growing," said the 46-year- old. "Why is the market paying US$27 billion for this company?"

Pioneer fell as much as 5.3 per cent for the biggest intraday decline since Feb. 11. EOG had been up as much as 2.5 per cent before Mr Einhorn's comments triggered a sell-off that wiped out most of Monday's gains. Both companies recovered some of those declines later: Pioneer closed 1.9 per cent lower at US$168.33, and EOG was up 0.5 per cent.

Tadd Owens, a spokesman for Pioneer, didn't immediately respond to a voicemail seeking comment. EOG spokeswoman K Leonard also didn't immediately respond.

On Monday, Mr Einhorn also singled out Concho Resources Inc, Whiting Petroleum Corp. and Continental Resources Inc. as examples of shale explorers that spend too much and generate too little cash. A Concho spokeswoman said she wasn't immediately able to comment; spokespersons for Whiting and Continental didn't immediately respond to requests for comment.

Shale explorers revolutionised North American oil and natural gas production with sideways drilling and hydraulic fracturing techniques honed in Texas, Oklahoma and North Dakota. As a result, US crude output almost doubled in the past eight years to more than 9.3 million barrels a day, more than every member of OPEC except Saudi Arabia.

Mr Einhorn has a long history of betting against companies within his New York-based hedge fund firm. He's also a frequent speaker at the annual Sohn conference where he explains his rationale. The strategy has had mixed success.

In May 2008, he told investors they should bet against Lehman Brothers Holdings Inc. because it needed more capital to recover from credit-market losses. Lehman Brothers filed for bankruptcy that September.

At the Sohn conference last year, Mr Einhorn said he was betting software company Athenahealth Inc could fall as much as 80 per cent. The prediction has yet to come true: the Watertown, Massachusetts-based company has fallen 7.6 per cent since Mr Einhorn's pronouncement and was never down more than 16 per cent during the intervening 12 months.

In 2014, he also criticised "cool kid" companies in the technology sector that he faulted for using buzz words in their financial documents to lure venture capital.

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