Poland cuts interest rates as economy slows

WARSAW, Poland — The National Bank of Poland has cut interest rates to a historic low as the economy continues to slow and inflation is below target.

The central bank cut its benchmark reference rate to 3 percent from 3.5 percent on Wednesday, surprising many economists who had expected the bank to keep rates on hold for now.

The bank didn't give an immediate explanation for the move. However, when it made its last rate cut two months ago, it cited a marked economic slowdown in the country.

The European Commission has forecast economic growth of 1.2 percent for this year, which would be the lowest rate of growth for Poland since 2001.

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Kenya co. turns old sandals into colorful objects

NAIROBI, Kenya — The colorful handmade giraffes, elephants and warthogs made in a Nairobi workshop were once only dirty pieces of rubber cruising the Indian Ocean's currents.

Kenya's Ocean Sole sandal recycling company is cleaning the East African country's beaches of used, washed-up flip-flops and other sandals.

About 45 workers in Nairobi make 100 different products from the discarded flip-flops. In 2008, the company shipped an 18-foot giraffe to Rome for display during a fashion week.

Company founder Julie Church says the goal of her company is to create products that people want to buy, then make them interested in the back-story.

Workers wash the flip-flops, many of which show signs of multiple repairs. Artisans then glue together the various colors, carve the products, sand and rewash them.

Church first noticed Kenyan children turning flip-flops into toy boats around 1999, when she worked as a marine scientist for WWF and the Kenya Wildlife Service on Kenya's coast near the border with Somalia.

Turtles hatching on the beach had to fight their way through the debris on beaches to get to the ocean, Church said, and a plan to clean up the debris and create artistic and useful items gained momentum. WWF ordered 15,000 key rings, and her eco-friendly project took off.

It has not made Church rich, however. The company turns over about $150,000 a year, she said. Last year it booked a small loss.

But new investment money is flowing in, and the company is in the midst of rebranding itself from its former name — the FlipFlop Recycling Company — to Ocean Sole.

The company aims to sell 70 percent of its products outside Kenya. It has distributors in the United States, Europe and new inquiries from Japan. Its biggest purchasers are zoos and aquariums.

One of Church's employees is Dan Wambui, who said he enjoys interacting with visitors who come to the Nairobi workshop.

"They come from far ... when they see what we are doing we see them really happy and they are appreciating. We feel internationally recognized and we feel happy about it," Wambui said.

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On the Internet:

Ocean Sole: http://www.ocean-sole.com

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Germany plans tighter control of managers' pay

BERLIN — The German government plans to give company shareholders a greater say in setting managers' pay — a proposal aimed at curbing perceived corporate excesses along the same lines as a measure approved by voters in neighboring Switzerland earlier this year.

Chancellor Angela Merkel's government hopes to pass Wednesday's Cabinet proposal into law before German elections in September, in which Merkel will seek a third term. The opposition swiftly denounced it as ineffectual window-dressing, while an influential industry group said there was no need for new rules.

The government's plan foresees obligatory, binding votes at publicly listed companies' annual general meetings on the pay system and maximum pay level for managers. Those decisions are currently taken by German companies' supervisory boards, the equivalent of boards of directors, and shareholder votes are voluntary and nonbinding.

The proposal "is an economically sensible and at the same time effective contribution to avoid people serving themselves in large public companies," said Max Stadler, a deputy justice minister. It doesn't call for any specific limits on salaries.

Germany's main opposition Social Democrats have attacked perceived corporate greed and said Wednesday that the plan wouldn't solve the problem. Annual shareholder meetings are "dominated by institutional investors such as hedge funds which themselves are drivers of the perverse bonus and pay system," the party's parliamentary group said in a statement.

The Social Democrats argued that decisions on executive pay should stay with supervisory boards; in Germany, employee representatives generally make up half of those boards. But they said changes are needed — for example, limiting the tax-deductibility of managerial pay and obliging directors to set a maximum proportion by which managers' pay can exceed average workers' salaries.

The main industry lobby group in Germany, which has Europe's biggest economy, said the planned new rules were "superfluous." Markus Kerber, a top official with the Federation of German industries, said they would weaken companies' supervisory boards, and argued that "those who are responsible for choosing managers must also decide on their compensation."

Germany's best-paid executive is Martin Winterkorn, the chief executive of Volkswagen AG, Europe's biggest automaker. He earned roughly 14.5 million euros in 2012, compared with the previous year's 17.5 million euros, the company said in February.

His earnings declined after the supervisory board rejigged the company's pay and bonus system. Winterkorn had previously said his pay couldn't rise boundlessly, however successful the company, and he supported the move.

Amid widespread anger over "fat cat" bosses, Swiss voters in March approved a plan to boost shareholders' say on executive pay.

Swiss lawmakers now have to draft a law giving shareholders the right to hold a binding vote on all compensation for company executives and directors. The Swiss law will also ban "golden hellos" and "goodbyes" — one-off bonuses that senior managers sometimes receive when joining or leaving a company.

The European Union's internal market commissioner, Michel Barnier, has said he plans to propose that company shareholders across the continent be given the power to set managers' pay.

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Telefonica Q1 profit up despite Latin America dip

MADRID — Spanish telecoms company Telefonica said Wednesday its first-quarter net profit rose 21 percent to 902 million euros ($1.18 billion) despite a fall in revenues in its key Latin American market.

The company, which has mobile and fixed-line operations across Europe and Latin America, said that revenue from its business in Brazil had overtaken its domestic market for the first time. Sales in the Latin American country reached 3.263 billion euros, while a 16.4 percent drop in recession-strapped Spain left income at 3.260 billion euros.

The Brazilian figure was down 10 percent in euros — because of exchange rate fluctuations — but up 3 percent in the local currency, Telefonica said.

Income in Latin America dropped by 4 percent to 7.23 billion euros — again due to exchange rate fluctuations. In Europe, where many countries are in recession, income fell 11 percent to 6.67 billion euros.

Telefonica said overall revenue dropped 9 percent to 14.14 billion euros from 15.51 billion euros in the same period last year.

The company said net debt edged up to 51.8 billion euros from 51.3 billion at the end of 2012. The fall in the Venezuelan bolivar added to borrowings.

Telefonica SA's shares were down 1.2 percent at 11.15 euros in trading in Madrid.

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Spain refuses to hand over ex-HSBC worker

MADRID — Spain's National Court on Wednesday ruled against extraditing a former HSBC employee to Switzerland, where he faces charges of stealing and revealing client information.

A statement said that the court rejected the charges that Swiss authorities had wanted to bring against Herve Falciani, who allegedly stole information between 2006 and 2007 relating to 24,000 customers of the Swiss division of HSBC.

Details of the accounts were sent to France's former finance minister, Christine Lagarde — now head of the International Monetary Fund — who passed them on to other governments in the U.S. and European Union. The move exposed many of HSBC's Swiss clients to prosecution for tax evasion as well as adding political pressure on Switzerland to crack down the practice.

The court statement said two of the Swiss charges — revelation of secrets and infringing client confidentiality — could not be used to protect suspected illegal activities. It said one other — bank secrecy — did not exist in Spain. Regarding a fourth charge of financial espionage, the court said Switzerland was using this for its own interests and not those of other states, and as such it could not be taken as a base for extradition.

The court said it was lifting all restrictions against Falciani, allowing him to leave Spain if he chooses. He has French and Italian citizenship.

A former employee of global banking group HSBC, Falciani was arrested in July 2012 after he left France by sea and tried to enter Spain through the northeastern port of Barcelona.

The court released him last December but withdrew his passport. It argued then that Falciani was cooperating with investigators from several European countries in probes into tax evasion, money-laundering and terrorism financing.

In an interview with El Pais newspaper last month, Falciani, 40, said it was U.S. Justice Department officials who originally suggested he should go to Spain because he was in danger.

At an extradition hearing April 15, Falciani said that he told Swiss authorities in 2008 about what he had discovered at HSBC Private Bank (Suisse) SA, but that they refused to let him make an anonymous complaint.

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PepsiCo agrees to meet with Till family, Sharpton

NEW YORK — PepsiCo Inc. officials will meet Wednesday with members of Emmett Till's family and the Rev. Al Sharpton.

Sharpton continued to press for the meeting last week after the company's partnerships with Lil Wayne and Tyler, the Creator, of Odd Future to promote Mountain Dew sparked controversies.

PepsiCo and Lil Wayne have since parted over creative differences after the rapper's offensive lyrics related to the civil rights icon Till. The company also pulled a commercial directed by Tyler that angered anti-violence and civil rights advocates.

The meeting to be held at PepisCo headquarters in Purchase comes as an outcry over offensive lyrics increases. Reebok recently ended its partnership with Rick Ross for similar reasons.

Sharpton said last week that corporations have a civic responsibility when deciding who they partner with.

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T-Mobile US sells 500,000 iPhones in a month

FRANKFURT, Germany — T-Mobile US Inc., the last of the major U.S. carriers to start carrying iPhones, is selling them at a brisk pace, it reported Wednesday.

T-Mobile US, the No. 4 U.S. carrier, said it has sold half a million iPhones since it started on April 12. That puts its sales at roughly the same rate as Sprint Nextel Corp., the No. 3 carrier, which has far more customers.

The company said late last year that it planned to sell the iPhone, which helped it keep customers in the first three months of the year. As previously reported, it saw a small increase in customers under its own brand for the first time in four years. Analysts believe the customers were holding out for the iPhone.

T-Mobile US's parent Deutsche Telekom AG, discussed the U.S. business as it reported a 3.5 percent increase in net profit in the first quarter to 564 million euros ($739 million) from 545 million euros in the same quarter a year ago. Earnings rose in part because the company saw smaller deductions for the depreciation of its U.S. business.

Deutsche Telekom completed a merger of T-Mobile USA with MetroPCS Communications Inc. on April 30, creating the new T-Mobile US Inc. Deutsche Telekom owns 74 percent of the new company, while the rest went to MetroPCS shareholders.

T-Mobile USA, which had been losing contract customers, switched to a new "Un-carrier" approach in March and started selling phones on installment plans.

Deutsche Telekom AG also said it had 300 million euros less in accounting-related reductions related to the merger, which is part of a turnaround effort. As the No. 4 mobile provider, T-Mobile USA has struggled against bigger competitors.

Otherwise, sales and earnings slipped at Deutsche Telekom.

Revenue fell 4.5 percent to 58.7 billion euros, while adjusted operating earnings — which exclude financial items such as depreciation related to the merger — declined 4.3 percent to 4.29 billion euros. That still exceeded the analyst predictions for 4.24 billion euros compiled by financial information provider FactSet.

At T-Mobile USA, the company made 5.32 billion euros in operating earnings, down 5.6 percent in euro terms, as revenue slipped 8 percent to 15.37 billion euros. The company said service revenue fell as more customers opted for the new contracts, reducing operating earnings.

Elsewhere, the company said its subsidiaries in Europe battled a slow economy and increased regulation. The company's expenditure on capital investments rose some 40 percent to over 3 billion euros as it spent money on acquiring radio frequencies in the Netherlands.

Deutsche Telekom shares rose 3.4 percent to 9.44 euros in morning trading in Frankfurt.

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UN predicts boom in trade of 'green' products

GENEVA — The U.N.'s environment agency says the global market for low-carbon and environment-friendly goods and services is projected to almost triple to $2.2 trillion by 2020.

The U.N. Environment Program says trade in organic food and beverages is likely to reach $105 billion by 2015, up from $62.9 billion in 2011. Seafood farmed according to certified sustainability standards is forecast to rise to $1.25 billion from $300 million in 2008.

UNEP's 300-page report released Wednesday urges developing countries with abundant renewable resources to reduce poverty by taking advantage of so-called 'green trade.'

Achim Steiner, UNEP's executive director, says that also would help "reverse the global decline in biodiversity, mitigate the release of greenhouse gases, halt the degradation of lands and protect our oceans."

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Coke takes anti-obesity campaign global

NEW YORK — Coca-Cola says it will make lower-calorie options and clear calorie labeling more widely available around the world, intensifying a push against critics who say its drinks pack on the pounds.

The Atlanta-based company, which makes Sprite, Fanta and Minute Maid, already offers diet drinks in most markets. But there's no consistency in their availability, particularly in emerging markets such as China and India.

Coca-Cola also said Wednesday that it would support programs that encourage physical activity and no longer market to kids younger than 12. The company did not say in which countries it currently markets to children.

With sugary drinks often blamed as a culprit for making people fat, Coca-Cola Co. has been more aggressive in trying to convince customers its products can be part of a healthy lifestyle. Earlier this year, the company aired its first TV ad addressing the matter in the U.S. and has since been rolling out the spot to other countries.

The ad touts Coca-Cola's wide range of lower-calorie offerings. But executives have also made a point of standing by the company's full-calorie drinks, saying that physical activity plays an important role in fighting obesity.

"There is a place for all of our beverages in a healthy lifestyle," CEO Muhtar Kent said in a call with reporters.

The announcement from Coca-Cola comes as packaged food companies across the industry look for growth in emerging markets, where middle-class populations are growing rapidly. As more people head to cities and see their incomes increase, they're more prone to eating convenient packaged foods that critics say have fueled obesity rates in developed nations.

The shifting populations around the world nevertheless represent an enormous opportunity for companies. For example, Coca-Cola has noted that Americans on average drink 403 servings of its various beverages a year. That compares with just 12 servings per year in India and 38 in China.

And the company's diet options aren't nearly as popular in such countries as they are back at home. In the U.S., where soda consumption has been declining for years, diet drinks now account for 41 percent of sales for the flagship Coke brand. That's up from single-digits in the 1980s.

Even in major Chinese cities, by contrast, the percentage of sales that diet options account for is in the "high single digits," Kent said.

Coca-Cola Co. says its goal is to have diet options available wherever regular versions are sold. But that doesn't mean there would be a diet alternative for every particular brand. For example, if a store in India sells Coke it might also offer Sprite Zero, which doesn't have any calories, to meet the goal.

The company also says it's working to have cans and bottles around the world display calories counts on the front of labels, as it does in the United States.

But the company didn't have a timeline for when it hoped to achieve its goals.

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Follow Candice Choi at www.twitter.com/candicechoi

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AOL shares tumble on weak 1Q results

NEW YORK — AOL Inc. said Wednesday that its first-quarter net income jumped 23 percent, helped by an increase in global advertising revenue.

But its adjusted earnings fell short of Wall Street predictions and AOL shares slumped more than 9 percent in midday trading.

The New York-based internet company earned $25.9 million, or 32 cents per share, for the three months ended March 31, up from $21.1 million, or 22 cents per share, in the same quarter of 2012.

Excluding one-time items, the company said it posted an adjusted profit of 41 cents per share. Analysts surveyed by FactSet expected adjusted earnings of 44 cents per share, on average.

Revenue rose 2 percent to $583.3 million from $529.4 million. Analysts expected $542.6 million in revenue.

AOL split from Time Warner Inc. in 2009 and has been trying to increase revenue ever since by shedding unprofitable businesses and buying popular sites such as the Huffington Post and the technology blog TechCrunch.

The company said its advertising revenue increased 9 percent to $359.2 million, helped by higher display and search revenue, but that was mostly offset by a 9 percent drop in subscription revenue to $165.8 million.

Shares of AOL fell $3.91, or 9.4 percent, to $37.51 in midday trading. Its shares have traded in a 52-week range of $24.35 to $43.93.

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