Exclusive: Sanctions delay North Korea's atom bomb work, U.N. report says

By Louis Charbonneau and Michelle Nichols

UNITED NATIONS (Reuters) - Increasingly tough financial sanctions, an arms embargo and other international restrictions on trade with North Korea have significantly delayed expansion of Pyongyang's illicit nuclear arms program, according to a confidential report by a U.N. panel of experts seen by Reuters on Tuesday.

"While the imposition of sanctions has not halted the development of nuclear and ballistic missile programs, it has in all likelihood considerably delayed (North Korea's) timetable and, through the imposition of financial sanctions and the bans on the trade in weapons, has choked off significant funding which would have been channeled into its prohibited activities," the 52-page report said.

In the report to the U.N. Security Council's North Korea sanctions committee, the panel also recommended sanctioning three North Korean entities and 12 individuals. It will be up to the 15-nation council whether or not it follows the recommendations.

The three entities the panel said should be blacklisted are the newly created Ministry of Atomic Energy Industry, the Munitions Industry Department of the Central Committee of the Korean Workers Party (KWP), and the State Space Development Bureau.

The individuals the panel wants sanctioned include the atomic energy industry minister, once he is nominated, and four senior officials at the KWP Munitions Industry Department.

It also recommends the blacklisting of one national from Kazakhstan, Aleksandr Viktorovich Zykov, and two from Ukraine, Iurii Lunov and Igor Karev-Popov, for their involvement in North Korea-related arms deals.

"The DPRK (North Korea) has continued to defy the international community in a series of actions which have heightened concern about its intentions," it said.

The panel listed North Korea's February nuclear test and its rocket launches as examples of violations that have increased international concerns about Pyongyang. It was North Korea's third nuclear test since 2006.

Pyongyang is under U.N., U.S., European Union and other sanctions, including a U.N. ban on all arms exports, due to its nuclear weapons program.

IMPORT-EXPORT

Among potential violations the panel listed were the seizure by a U.N. member state of aluminum alloys suspected to be nuclear-related in August 2012 and the seizure of missile-related items bound for Syria in May 2012.

Previous breaches included shipments of arms-related material to Syria in November 2010 and rocket fuses for Iran in 2008, the panel report said.

"The DPRK has continued its efforts to import and export items relevant to missile and nuclear programs and arms," it said. "There was no major change in either the number or nature of the incidents investigated by the panel over the reporting period."

The panel said countries should be on the lookout for North Korean attempts to procure the following key items for Pyongyang's nuclear program - maraging steel, frequency changers, high-strength aluminum alloy, fibrous or filiamentary materials, filament winding machines, ring magnets, semi-hard magnetic alloys in thin strip form and other items.

U.N. diplomats said that China, North Korea's principal ally and trading partner, continues to play a key role in enabling Pyongyang to skirt sanctions, though this is not discussed explicitly in the panel's report.

Beijing has vowed to push for full implementation of the latest round of U.N. sanctions adopted by the council in March, though it remains unclear how much China was keeping that promise.

Recently Bank of China Ltd shut the account of North Korea's main foreign exchange bank, the state-run Foreign Trade Bank, which was hit with U.S. sanctions in March after Washington accused it of helping finance Pyongyang's nuclear weapons program.

That closure was the first significant, publicly announced step taken by a Chinese firm to curb dealings with North Korea.

TARGETING BANKS

The U.N. financial restrictions are working, the panel said.

"The panel is highly confident that financial measures of the resolutions in general are being effectively implemented by major banks," the experts wrote.

"It has concerns, however, about the ability of banks in states with less effective regulators and those unable to afford effective compliance to detect and prevent illicit DPRK transfers," said the report, citing a case involving the Bank of Congo in the Republic of Congo.

It said the Bank of Congo processed a wire transfer linked with an attempted arms shipment in 2009 to an account in the name of a diplomat at North Korea's embassy in Beijing, but Banque de France refused to accept the transfer.

"This case illustrates how the DPRK makes use of its diplomatic officials in the conduct of prohibited activities ... and in the using bank accounts to shield illicit fund transfers from bank's due diligence procedures," the experts said.

The report also said a diplomat at the North Korean embassy in the Republic of Congo has been actively involved in negotiating the contracts for the arms shipments.

The panel said that since May 2012 Japan has reported nine cases of suspected violations of the ban involving luxury goods including alcohol, tobacco, electronic items, automobiles and cosmetics.

The Security Council sanctions resolution adopted in March drew attention to North Korean bulk cash deliveries, an issue the expert panel also touched on in its report. [ID:nL1N0BZ6V1] U.N. envoys say such transfers are often carried out by North Korean diplomatic personnel.

The panel report referred to North Korea's "trade-based money-laundering via front companies and agents to pay for illicit procurements and to transfer proceeds of sales of weapons and WMD-related items."

"It (North Korea) uses company formation agents to establish firms off-shore in locales where laws make it difficult or impossible to determine beneficial ownership," the panel said. "It may often conduct its banking under a similar name in a different country."

The panel also said North Korea continues to violate the Security Council ban on luxury goods.

"The DPRK circumvented sanctions using ... false shipping and customs declarations and the use of intermediaries to make payments either through hand carrying or wire transfers. In at least two instances the end users were falsely declared as a diplomatic mission in Pyongyang," it said.

It said the panel had also requested information from China on six earlier luxury goods cases. "China's customs officials told the panel that goods covered by the panel's 2012 report were not considered luxury goods," the experts wrote.

(Reporting by Louis Charbonneau and Michelle Nichols. Editing by Christopher Wilson and Xavier Briand)

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IRS IG Report: Targeting Conservatives Began In 2010

The targeting of conservatives by the IRS started earlier and was more extensive than the IRS acknowledged last week, according to a draft IRS inspector general report obtained by ABC News.

As we reported on "Good Morning America" this morning, the IRS began targeting "Tea Party or similar organizations" in March 2010. That was when the Cincinnati-based IRS unit responsible for overseeing the applications for tax exempt status starting using the phrases "Tea Party," "patriots" and "9/12? to search for applications warranting greater scrutiny.

During this first phase, 10 Tea Party cases were identified. By April of 2010, 18 Tea Party organizations were targeted, including three that had already been approved for tax-exempt status.

By June 2011, the unit had flagged over 100 Tea Party-related applications and the criteria used to scrutinize organizations had grown considerably, flagging not just "Tea Party" or "Patriot" in group names, but also groups that were working on issues like "government debt," "taxes" and even organizations making statements that "criticize how the country is being run."

The report, done by the Inspector General for the IRS, also shows that senior IRS officials in Washington was aware of what was going on as early as August 4, 2011 when, according to the report, the IRS chief counsel held a meeting with the IRS's Rulings and Agreements unit "so that everyone would have the latest information on the issue."

Click here to see the draft report.

Related: Senator Says Obama Should Condemn IRS Targeting

Related: IRS Targeted Tea Party Groups

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Israel warns U.S. about Russian arms sale to Syria -report

WASHINGTON (Reuters) - Israel warned the United States in recent days that Russia plans to sell advanced ground-to-air missile systems to Syria despite Western pressure on Moscow to hold off on such a move, the Wall Street Journal reported on Wednesday.

The newspaper said U.S. officials had confirmed they were analyzing the Israeli reports but would not comment on whether they believed the sale of S-300 missile batteries was near.

No comment was immediately available from officials at the Pentagon or U.S. State Department.

The government of Syrian President Bashar al-Assad has been seeking to purchase the advanced S-300 missile batteries, which can intercept both manned aircraft and guided missiles, from Moscow for many years.

Western nations have repeatedly urged Russia to block the sale, which they argue could complicate any international intervention in Syria's escalating civil war.

The Journal said the information provided to Washington by Israel showed that Syria has been making payments on a 2010 agreement with Moscow to buy four batteries for $900 million, including a payment made this year through Russia's foreign-development bank, known as the VEB.

The paper said the package included six launchers and 144 operational missiles, each with a range of 125 miles (200 miles), with an initial shipment expected in the next three months.

While the effectiveness of Syria's aging air force is unclear, most experts believe that its air-defense missile system, which was upgraded after a 2007 Israeli strike on a suspected nuclear site, remains quite potent.

(Reporting By Andrea Shalal-Esa; Editing by David Brunnstrom)

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Government may sell 40 billion pound student loan book - report

LONDON (Reuters) - The government is considering whether to sell its 40 billion pound student loan book as part of a series of privatisations that includes selling off the Royal Mail Group, the Sunday Times newspaper said.

The government is testing the market with the sale of a 900 million pound tranche of loans, which was announced by Business Secretary Vince Cable on March 26. The newspaper said that the government was now looking at wholesale privatisation.

It said that the sale of the loan book may not raise a significant sum but would slash public debt by removing the loans from the government's balance sheet.

The Student Loans Company, which lends out about 5.5 billion pounds a year, had 28 billion pounds of loans outstanding at the end of March 2012. Senior civil servants say a hike in tuition fees could drive up the total to 40 billion pounds, the newspaper said.

The Department for Business, Innovation & Skills, which oversees the Student Loans Company, declined to comment.

(Reporting by Brenda Goh; Editing by Hugh Lawson)

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Champagne celebrations turn to prosecco in frugal Britain - report

By Paul Casciato

LONDON (Reuters) - More than half of British consumers refuse to spend money unless it is "absolutely necessary" in a weak economy, with prosecco now more likely to mark a special occasion than champagne, according a new consumer trend report released on Friday.

Global research firm Mintel's annual "British Lifestyles" report said one day after the country skirted a "triple dip" recession that consumers have made paying their bills and saving for a rainy day their top priorities.

Britain's Office for National Statistics provided some relief for Conservative Prime Minister David Cameron's government on Thursday when it reported that the economy grew faster than expected in the first three months of the year.

But the legacy of a sluggish economy that has flatlined since 2010 appeared clear in a report which showed that the top financial priority for 82 percent of British consumers was just keeping up with their bills.

"British consumers are adjusting to the new economic reality, with financial prudence and savvy shopping already the default for many," Mintel consumer analyst Ina Mitskavets said in a statement with the report.

Beyond paying the bills, Britons put saving up for rainy days and big ticket purchases as their other top priorities.

British consumers were also working longer hours, taking fewer holidays and more than a third said things have become more difficult in the past year.

In other trends highlighted in the report, more people were cooking and baking from scratch at home and beauty product sales remained strong because it was an affordable way for women to lift their mood, the so-called "lipstick effect."

In a sign of cooling interest in the high life for ordinary people, value sales of champagne dropped by 32 percent between 2007 and 2012 as drinkers reached for prosecco, cava and other sparkling wines instead when out in bars and restaurants.

"If you are out with all your friends celebrating your birthday you don't want to lose that celebration moment to pop the cork," Mintel drinks analyst Chris Wisson said.

"If you can save money while doing it, why wouldn't you? ... I think that's the rationalisation people have come to."

Mitskavets said other factors appearing on the horizon included a generation of youngsters who were taking on the parsimony of their parents after formative years spent watching the family struggle with the bills.

"The younger generation are also growing up extremely frugal because they came of age in that age of austerity," Mitskavets said. "The next generation is going to always have that in the back of their minds. We need to save as much money as possible."

(Reporting by Paul Casciato; editing by Mike Collett-White)

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Speedier loans draw small UK firms to online financing - report

By Kylie MacLellan

LONDON (Reuters) - Small British businesses have turned to seeking funding from members of the public online because of the slow speed at which banks process loan applications, a report showed on Friday.

Peer-to-peer lending, which allows small investors to earn interest from loaning money to individuals or businesses, is one of several alternative sources of finance that have grown up as banks ration credit in response to tougher capital rules and the economic slowdown.

This week the British government gave banks greater incentives to lend to small firms in a bid to inject new life into the country's stagnant economy.

The report, produced by innovation charity Nesta using data from Britain's largest peer-to-peer business lending website Funding Circle, found the length of time it takes to secure a bank loan, rather than the availability of loans, was the most common reason given by firms for choosing the online route.

More than 75 percent of the 89 companies surveyed also said they would go to Funding Circle first for future funding.

"Coupled with the recession, it's the explosion of social media and the use of (the) Internet that has made it easier and cheaper to connect those who want to invest with the businesses that need finance," said Stian Westlake, executive director of policy and research at Nesta.

British and U.S. authorities are working out how best to regulate the wider crowd funding industry, which also includes sites that enable individuals to buy small equity stakes in companies or fund creative projects in return for non-financial rewards, such as a copy of an album.

Crowd funding websites helped companies and individuals worldwide raise $2.7 billion (1.7 billion pounds) from members of the public in 2012, an 81 percent increase on the previous year, data showed earlier this month.

Regulators are keen to make sure investors are aware of the risks and ensure the sites vet firms adequately to avoid scams.

Nesta said 88 percent of the 630 lenders surveyed had other investments such as stocks or bonds, while 38 percent had more than 10 years experience working with small- and medium-sized firms.

On average, Funding Circle lenders had invested a total of 7,983 pounds and 75 percent said they expected to increase the amount of money they put in over the coming year.

(Editing by David Holmes)

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Treasury OKs MoD's contractor-run procurement plan: report

(Reuters) - The Ministry of Defence's plan to explore letting a company manage military-equipment procurement has been approved by the UK Treasury, Bloomberg reported, citing a person familiar with the matter.

HM Treasury was unavailable to comment on the matter.

Bloomberg said Defence Secretary Philip Hammond would on Thursday outline the final stage of plans to make the Defence Equipment and Support agency into a government-owned and contractor-operated body, known as a "go-co". (http://link.reuters.com/xah67t)

As in many other European countries, Britain's defence ministry has been faced with procurement-cost overruns in response to budget pressures, and has been casting about for possible savings.

Bloomberg said potential bidders to fill the role include U.S. contractors Jacobs Engineering Group Inc, Bechtel Group Inc, Fluor Corp, CH2M Hill Inc and KBR Inc, while British company Serco Group Plc may also be interested.

(Reporting by Richa Naidu in Bangalore; Editing by Eric Walsh)

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Hilco to rescue music retailer HMV in 50 million pound deal - report

(Reuters) - Restructuring specialist Hilco is set to throw British entertainment retailer HMV a lifeline in a 50 million pound deal that will save 2,500 jobs, Sky News reported.

The deal, which could be struck as soon as Friday, will see HMV emerge from administration, Sky News said on its website, with the chain expected to be run by incumbent HMV executives together with newly-appointed Hilco executives.

As part of the deal, Hilco will acquire about 130 HMV stores and all nine outlets operating under the Fopp brand, Sky News said.

Major music companies and film studios, as well as HMV's landlords are understood to be backing the deal, Sky News said.

Hilco has long been seen as the frontrunner to take control of HMV and the restructuring specialist tightened its grip on the company in January, buying up the 92-year-old group's debt soon after it sought creditor protection.

It has also been appointed to help administrators Deloitte run the business during the administration.

HMV's business of selling CDs, DVDs and video games has struggled in declining markets and amid increasing competition from supermarkets and online retailers such as Amazon.Com Inc.

Hilco and Deloitte could not be reached for comment outside regular business hours.

(Reporting by Abhishek Takle in Bangalore; editing by Andrew Hay)

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Iran's nuclear program entails huge costs, few benefits: report

By Yeganeh Torbati

DUBAI (Reuters) - Iran will pursue its nuclear quest although it has reaped few gains from a totem of national pride that has cost it well over $100 billion in lost oil revenue and foreign investment alone, two think-tanks said on Wednesday.

A report by the Washington-based Carnegie Endowment for International Peace and the Federation of American Scientists said Iran's atomic work could not simply be ended or "bombed away" and that diplomacy was the only way to keep it peaceful.

"It is entangled with too much pride - however misguided - and sunk costs simply to be abandoned," the report's authors, Ali Vaez of the International Crisis Group and Carnegie's Karim Sadjadpour, said of Iran's five-decade-old nuclear program, which began under the U.S.-allied shah.

"Given the country's indigenous knowledge and expertise, the only long-term solution for assuring that Iran's nuclear program remains purely peaceful is to find a mutually agreeable diplomatic solution," the report said.

Iran says its nuclear work has medical uses and will produce energy to meet domestic demand and complement its oil reserves.

The United States and other states suspect Iran is covertly seeking a nuclear arms capability. Israel has threatened military action to prevent the Islamic Republic from acquiring atom bombs. Tehran denies pursuing nuclear weapons.

The U.S. and its allies have demanded that Iran curb its enrichment of uranium and have imposed increasingly tough sanctions on Iran's energy, banking and shipping sectors that have cut Iranian oil exports by more than half since 2011.

Iran and six world powers are due to meet in Kazakhstan this week in hopes of finding a solution to the standoff. Their last meeting in February failed to achieve a breakthrough.

The report, entitled "Iran's Nuclear Odyssey: Costs and Risks", seeks to tabulate the opportunity costs of the nuclear program, and puts these at "well over $100 billion" in terms of lost foreign investment and oil revenues.

Relatively small uranium deposits will keep Iran from being fully self-sufficient in nuclear energy, it said, while Tehran has neglected to maintain existing infrastructure and develop other resources that could better secure its energy needs.

For instance, Iran's 1,000-megawatt Bushehr nuclear reactor, which came onstream in 2011 after repeated delays, accounts for just 2 percent of its electricity production, while about 15 percent of "generated electricity is lost through old and ill-maintained transmission lines", the report said.

Iran has vast oil and gas reserves, but sanctions have forced major Western firms to abandon the petroleum sector, making crucial upkeep difficult. Iran's solar and wind energy sectors have also gone undeveloped, the report said.

"No sound strategic energy planning would prioritize nuclear energy in a country like Iran," the report said.

"Instead of enhancing Iran's energy security, the nuclear program has diminished the country's ability to diversify and achieve real energy independence."

The authors recommended that outside powers engage with Iranians through "grassroots public diplomacy" and make clear what they could gain by compromise.

"The Iranian people have been largely absent from the nuclear discussion," they wrote. "While U.S. officials and members of Congress frequently speak of 'crippling sanctions', they rarely impress upon Iranians the concrete costs of their country's nuclear policies and the potentially myriad benefits of a more conciliatory approach."

A lasting deal would have to include commitments by Iran to abstain from activities vital to weapons production, which could give confidence that Iran could continue to enrich uranium to low levels needed for power generation, it said.

"There is virtually no chance that Iran will abdicate what it and many developing countries now insist is a right - a right to enrichment," the report said.

Negotiators should also discuss less politically charged topics such as nuclear safety cooperation and alternative energy options for Iran, "increasing the chances of breaking free of zero-sum games and creating win-win opportunities", it said. (The report can be found at http://carnegieendowment.org/2013/04/02/iran-s-nuclear-odyssey-costs-and-risks/fvui)

(Editing by Alistair Lyon)

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FBI denies report it arrested Russian tycoon Abramovich

MOSCOW (Reuters) - A spokesman for Roman Abramovich denied a news report on Monday that the billionaire Russian owner of London's Chelsea soccer club had been arrested in the United States.

"It's not true," John Mann said in response to a report on the web site of Russian financial daily RBK that Abramovich had been held by the U.S. Federal Bureau of Investigation.

"He is in the U.S. but he has not been arrested or detained," said Mann, who is Abramovich's Moscow spokesman.

The unsourced RBK report followed media speculation over the unexplained death in Britain of exiled Russian tycoon Boris Berezovsky, who launched and lost a multi-billion-dollar court case against Abramovich, his former business partner, last year.

Abramovich, 46, is a major shareholder in London-listed steel firm Evraz, whose shares fell by more than 6 percent before recovering to trade 3.4 percent down on the day.

The London-based tycoon, reputed to have close ties to the Kremlin, was brought in late last year to strike a peace deal between the feuding shareholders in Norilsk Nickel, the world's largest nickel and palladium miner.

(Reporting by Douglas Busvine; Editing by Steve Gutterman)

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UK government to sell helicopter search and rescue operations - report

(Reuters) - The British government is selling its helicopter search and rescue operations to U.S.-based Bristow Group Inc, Sky News reported on Monday.

The exact value of the deal has not been confirmed, but it is expected to be in the region of 3 billion pounds, Sky News said.

Bristow Group has won the contract to run the service from 2015 to 2026, Sky News said.

Bristow Group in Houston, Texas, could not be reached outside office hours.

(Reporting by Ankur Banerjee in Bangalore; Editing by Lisa Shumaker)

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Report: Israel fires flares over Lebanon

BEIRUT (AP) — Lebanon's state-run news agency says Israeli warplanes have violated Lebanese airspace.

Lebanon's National News Agency says Israeli warplanes dropped flares on Monday over the Mediterranean Sea, just off the coast near the southernmost town of Naqoura.

The Lebanese army did not immediately confirm the report.

But earlier Monday, the army issued statements alleging a series of violations of Lebanese airspace by Israeli jets.

Israel has escalated its flights over Lebanon in recent weeks amid regional tensions resulting mainly from the civil war in neighboring Syria.

The Israeli military declined to comment on the reports.

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China replaces Britain in world's top five arms exporters: report

BEIJING (Reuters) - China has become the world's fifth-largest arms exporter, a respected Sweden-based think tank said on Monday, its highest ranking since the Cold War, with Pakistan the main recipient.

China's volume of weapons exports between 2008 and 2012 rose 162 percent compared to the previous five year period, with its share of the global arms trade rising from 2 percent to 5 percent, the Stockholm International Peace Research Institute (SIPRI) said.

China replaces Britain in the top five arms-dealing countries between 2008 and 2012, a group dominated by the United States and Russia, which accounted for 30 percent and 26 percent of weapons exports, SIPRI said.

"China is establishing itself as a significant arms supplier to a growing number of important recipient states," Paul Holtom, director of the SIPRI Arms Transfers Program, said in a statement.

The shift, outlined in SIPRI's Trends in International Arms Transfers report, marks China's first time as a top-five arms exporter since the think tank's 1986-1990 data period.

Now the world's second-largest economy, China's rise has come with a new sense of military assertiveness with a growing budget to develop modern warfare equipment including aircraft carriers and drones.

At the Zhuhai air show in southern China in November, Chinese attack helicopters, missiles, unmanned aerial vehicles and air defenses were on public show for the first time.

SIPRI maintains a global arms transfers database base that tracks arms exports back to the 1950s. It averages data over five-year periods because arms sales vary by year.

"Pakistan - which accounted for 55 percent of Chinese arms exports - is likely to remain the largest recipient of Chinese arms in the coming years due to large outstanding and planned orders for combat aircraft, submarines and frigates," SIPRI said.

Myanmar, which has been undergoing fragile reforms that the United States thinks could help counter Beijing's influence in the region, received 8 percent of China's weapons exports.

Bangladesh received 7 percent of the arms, and Algeria, Venezuela and Morocco have bought Chinese-made frigates, aircraft or armored vehicles in the past several years.

Beijing does not release official figures for arms sales.

Germany and France ranked third and fourth on the arms exporter list. China followed only India in the acquisition of arms, though its reliance on imports is decreasing as it ramps up weapons production capabilities at home.

After decades of steep increases in military spending and cash injections into domestic defense contractors, experts say some Chinese-made equipment is now comparable to Russian or Western counterparts, though accurate information about the performance of Chinese weapons is scarce.

China faces bans on Western military imports, dating back to anger over its crushing of pro-democracy protests in and around Tiananmen Square in 1989. That makes its domestic arms industry crucial in assembling a modern military force that can enforce claims over Taiwan and disputed maritime territories.

China has faced off recently with its Southeast Asian neighbors and Japan over conflicting claims to strings of islets in the South China Sea and East China Sea, even as the United States executes a military pivot towards the Pacific.

(Reporting by Michael Martina; Editing by Nick Macfie)

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Police examine 600 new hacking claims at Murdoch paper - report

LONDON (Reuters) - Police are investigating an estimated 600 new allegations of phone hacking at Rupert Murdoch's now defunct News of the World newspaper, Guardian newspaper said on Friday.

The news comes at a sensitive time for the media, with a divisive parliamentary vote on how to regulate Britain's famously aggressive newspapers due to be held on Monday.

Prime Minister David Cameron is pushing for a form of self-regulation, while the opposition and his Liberal Democrat coalition partners want any new regulatory framework to be backed by new legislation.

Citing unnamed sources, the Guardian said new hacking information had been obtained from the phone records of an "insider" who is now being lined up as a prosecution witness, and that more details would emerge in court on Monday.

News International, the British newspaper arm of Murdoch's News Corp media empire, was not immediately available for comment.

Scores of celebrities, politicians, crime victims and others have sued or demanded compensation from News International since hacking revelations emerged two years ago.

Britons were shocked to learn that News of the World journalists had hacked the phone of a murdered school girl, but the practice is now known to have been more extensive.

Allegations of phone hacking have since spread to another newspaper, the Sunday Mirror, and police arrested four former editors from the tabloid on Thursday, sending shares in parent company Trinity Mirror tumbling.

The Guardian said the same insider behind new allegations of phone hacking at the News of the World also led to the arrests at the Sunday Mirror.

On Friday, British media reported that Richard Wallace, a former editor of the Daily Mirror, the Sunday Mirror's sister paper, was questioned by police but was not arrested.

(Reporting by Mohammed Abbas; Editing by Jon Hemming)

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Qatar in talks to invest up to 10 billion pounds in UK projects - report

(Reuters) - Qatar has begun talks with the UK government to invest up to 10 billion pounds into key infrastructure projects in Britain, the Financial Times reported on Wednesday citing people involved in the negotiations.

The Financial Times reported that officials and ministers from both countries held talks over what schemes the Qataris could invest in and whether a specific fund could be set up for the same.

Although the 10 billion pounds investment figure was cited, a timeline for the investment has not been agreed, the FT said.

Potential projects include power plants, road and rail projects and even the Thames 'super-sewer' project under London, the daily reported. The new 14 billion pound nuclear reactor at Hinkley Point in Somerset planned by French utility EDF was one of the schemes discussed, FT said.

(Reporting by Karen Rebelo in Bangalore; Editing by Bob Burgdorfer)

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UK should rely less on ethanol for transport bio fuels - report

By Nina Chestney

LONDON (Reuters) - Britain should reduce its reliance on corn ethanol for renewable fuels and encourage the use of cheaper and more sustainable bio fuels such as used cooking oil, a report by a UK think tank said on Tuesday.

It said the government should consider modifying its Renewable Transport Fuel Obligation (RTFO), which currently requires that 5 percent of Britain's fuel supply by volume is made up of renewable fuels by 2013-14.

The RTFO should instead have an energy content target or set specific targets for ethanol and biodiesel, Chatham House said in the report.

"In its present form the RTFO may not be an appropriate instrument for achieving the (EU target) economically," Chatham House said, adding that it could also result in higher fuel costs for motorists.

The RTFO is Britain's main policy instrument for meeting a wider European Union goal that 10 percent of transport fuel should come from renewable sources by 2020.

The RTFO does not specify the type of renewable fuels but these have to meet certain criteria and cut greenhouse gas emissions by a minimum amount.

The government's department for transport was not immediately available to comment on the report.

In recent years, Britain's bio fuel consumption has shifted markedly from biodiesel to ethanol, Chatham House said.

Fuel suppliers are importing increasing amounts of lower-priced ethanol derived from U.S. corn but it has a much lower calorific value than petrol, making it the most expensive form of renewable fuel, it added.

According to government data cited in the report, ethanol increased its share of UK bio fuel supply to around 61 percent by 2012 from 41 percent in 2010, while biodiesel's share declined to around 35 percent from around 60 percent.

In 2011-12, supplying 10 percent of transport fuel from renewable sources under EU targets would have cost around $1.8 billion (1.2 billion pounds) using biodiesel, compared with $2.3 billion using ethanol, the report said.

Corn-based ethanol has also been criticised for competing with agricultural production for land and driving up food prices.

"Our research shows that bio fuels derived from agricultural crops offer poor value for money as a means to reduce emissions and can have serious consequences for food prices," said Rob Bailey, senior research fellow at Chatham House and author of the report.

"The UK's heavy reliance on corn ethanol is a particular concern in this regard. Biodiesel produced from waste cooking oil is a more sustainable option and offers cheaper emissions reductions," he added.

(Editing by Clelia Oziel)

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Police failings over BBC's Savile exposed in report

By Michael Holden

LONDON (Reuters) - British police made numerous mistakes that let the late BBC TV presenter Jimmy Savile get away with unprecedented numbers of sex attacks over six decades, and such failings could be repeated, a report by inspectors said on Tuesday.

Savile was one of Britain's biggest TV stars in the 1970s and 1980s, but revelations after his death in November 2011 about his activities stunned Britons and destroyed his reputation as an eccentric charity fundraiser.

Police say he took advantage of his fame to commit 214 offences, including 34 rapes or serious sexual assaults, beginning as long ago as 1955.

Despite the extent of his crimes, the body which carries out independent inspections of police forces said errors by officers meant he was never prosecuted.

Her Majesty's Inspectorate of Constabulary said just five official allegations were recorded against Savile along with two pieces of intelligence about him.

The earlier of those dated back to 1964, when an entry was made on an intelligence ledger held by London Metropolitan Police's paedophile unit.

In the second case, an anonymous letter sent to the Met in 1998 was classified as "sensitive" because of Savile's celebrity status, meaning other detectives did not have access to it.

Five complaints came forward during the 2000s but officers failed to "join the dots", and eight other victims said they had tried unsuccessfully to report incidents to police.

"FORGET ABOUT IT"

One male victim tried to tell police about an alleged rape in 1963 but a police officer told him to "forget about it".

Another man tried to report an assault on his girlfriend at a recording of the "Top of the Pops" music show which made Savile famous. An officer told him he could be "arrested for making such allegations".

"The findings in this report are of deep concern, and clearly there were mistakes in how the police handled the allegations made against Savile during his lifetime," said HM Inspector of Constabulary Drusilla Sharpling.

"However, an equally profound problem is that victims felt unable to come forward and report crimes of sexual abuse," she added.

The report warned that unless the force rectified mistakes, such as the failure to share intelligence or take complaints seriously, "there is a distinct possibility that such failures could be repeated".

The Association of Police Chief Officers accepted improvements were needed and said it had commissioned a report into the effectiveness of the Police National Database which was created in 2011 to ensure better sharing of intelligence.

A one-time professional wrestler, the cigar-chomping Savile became famous as a pioneering DJ in the 1960s before becoming a regular fixture on TV, hosting prime-time pop and children's shows.

He ran about 200 marathons for charity, raising tens of millions of pounds (dollars) for the health service, which led some to give him keys to hospital rooms where victims now allege they were abused. He was knighted by both the Queen and the late Pope John Paul II.

Police said most of his victims were aged under 18. The last of Savile's suspected offences took place just two years before his death, when he was 84.

(Editing by Andrew Heavens)

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Boy, 12, admits to prank crime report at actor Ashton Kutcher's home

LOS ANGELES (Reuters) - A 12-year-old boy admitted in court on Monday that he falsely reported to police last year that criminals with guns and explosives had invaded the home of actor Ashton Kutcher and shot people, the Los Angeles County District Attorney said.

The boy, whose name was withheld because he is a minor, prompted police to dispatch emergency responders to the "Two and a Half Men" star's Hollywood home in October.

Such prank emergency calls are known as "swatting" because SWAT (Special Weapons and Tactics) officers are often sent to such purported crime scenes. The child was charged with making a false bomb threat and computer intrusion because he placed the call from a computer.

The boy has also been charged with a misdemeanor count of making a false emergency report when he allegedly placed a hoax call about gunshots being fired on the Los Angeles-area property of teen pop star Justin Bieber.

The boy, who will turn 13 in April, faces additional felony charges of making a false bomb threat and computer intrusion after allegedly saying there was a bomb at a Wells Fargo bank branch in Los Angeles.

Those charges are expected to be dismissed when the boy is sentenced, the district attorney said.

All of the prank calls were placed in October.

The boy's sentence is at the discretion of the court, which could decide on at-home probation or placement in a group home among other punishments, district attorney spokeswoman Sandi Gibbons.

He has been released to the custody of his parents and the case has been transferred to his home county, which the court declined to name publicly.

In California juvenile cases, defendants have the option to either admit or deny charges brought against them by petition.

(Reporting by Eric Kelsey; Editing by Piya Sinha-Roy and Cynthia Osterman)

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Report: Blast injures several people in south Iran

TEHRAN, Iran (AP) — An Iranian semi-official news agency is reporting that an explosion has injured several people in a port in the south of the country.

The late Saturday report by ILNA did not specify the cause of the blast. It says it also damaged several cars and shattered windows of nearby buildings including a hotel in Imam Khomeini port, some 1,000 kilometers (620 miles) southwest of Tehran.

The port, one of Iran's major import and export terminals, is located in oil-rich Khuzestan province, the scene of occasional protests in recent years by members of Iran's Arabic-speaking minority seeking more rights.

Iran in the past has blamed explosions in the province on saboteurs tied to Arab and Western intelligence agencies.

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Syrian rebels report capture of provincial capital

BAGHDAD (Reuters) - Gunmen killed at least 40 Syrian soldiers and government employees who were being sent back to Syria by Iraqi authorities on Monday after fleeing a rebel advance, Iraqi officials said.

Around 65 Syrian soldiers and officials had handed themselves over to Iraqi authorities on Friday after rebels seized the Syrian side of the border crossing at the Syrian frontier town of Yaarabiya.

Iraqi authorities were taking them to another border crossing further south in Iraq's Sunni Muslim stronghold, Anbar province, when unidentified gunmen ambushed their convoy, a senior Iraqi official told Reuters.

No group has claimed responsibility.

The fighting on Iraq's border illustrates how Syria's near-two-year conflict, with its sectarian overtones, could spill over its borders, dragging in neighboring countries and further destabilizing the region.

Iraq's Anbar province is experiencing renewed demonstrations by Sunnis against the government of Shi'ite Prime Minister Nuri al-Maliki over what they see as the marginalization of their minority and misuse of terrorism laws against them.

Syria's rebels are mostly Sunnis fighting to topple President Bashar al-Assad's government, dominated by Alawites, an offshoot of Shi'ism.

Some 70,000 people have been killed in the civil war and nearly a million have fled across its borders, the United Nations says.

In what could be a new danger for the millions of Syrians who have fled their homes but remain inside the country, rebels pushed into Raqqa on Monday, a city known as the "hotel" of the country after thousands of displaced families fled there.

Residents of the northern city, home to half a million people, had pleaded with rebels not to enter the densely built metropolitan area, fearing that Assad's war planes and artillery could target residential areas.

NO GUARANTEE

The Syrian Observatory for Human Rights, a Britain-based monitoring group, said the Islamist Jabhat al-Nusra and other rebel groups launched the offensive on Saturday and large parts of Raqqa were now under rebel control.

Opposition activist photographs showed a burning guard post, men ripping down a poster of Assad and a fallen statue of his father, Hafez, who took power in 1970.

Video footage posted on the Internet by rebel groups showed an abandoned prison in what they said was the center of the city, 100 miles east of Aleppo.

International powers are divided on civil war, with Russia and Shi'ite Iran supporting their historical ally Assad and the United States and Sunni Muslim Gulf countries backing the opposition.

Saudi Arabia and Qatar are widely believed to be providing weapons but the United States says it does not wish to send arms for fear they may find their way to Islamist hardliners who might eventually use them against Western targets.

U.S. Secretary of State John Kerry, who said last week that Washington would directly provide medical supplies and food to rebels, reiterated that concern on Monday.

"There is no guarantee that one weapon or another might not at some point in time fall into the wrong hands," he told a joint news conference with Saudi Foreign Minister Prince Saud al-Faisal in Riyadh.

"Believe me the bad actors regrettably have no shortage of their ability to get weapons, from Iran, from Hizbollah, from Russia unfortunately, and that is happening," Kerry said.

Faisal, without confirming the supply of arms to rebels, said Saudi Arabia would do "everything within its capabilities" to provide "aid and security for the Syrians".

(Additional reporting by Oliver Holmes in Beirut, Kamal Naama in Anbar and Angus McDowall in Riyadh; Editing by Robin Pomeroy)

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