Tear gas fired on protesters outside G20 meeting

THERE were violent protests outside the G20 meeting in Pittsburgh in the US yesterday where world leaders closed in on a statement calling for new restraints on banker pay.

Some protesters rolled dustbins toward police, who fired tear gas in return. Some demonstrators also used pallets and corrugated steel to block a road.

The march did not have a city permit and police declared it an unlawful assembly.

Protesters, many loudly denouncing capitalism, had been trying to march toward the site of the summit. The marchers split up into smaller groups after being confronted by police.

Inside, leaders would not endorse specific monetary caps on bankers, a deal- breaker for the US.

However, high levels of compensation, which in some cases resulted in top executives of money-losing financial companies reaping tens of millions of dollars in bonuses, have outraged political leaders and are a top target of regulatory reform efforts.

Officials were focused on finding ways to link a bank’s bonus pool and executive compensation more closely to the health of its balance sheet and overall profitability.

“Europeans are horrified by banks, some reliant on taxpayers’ money, once again paying exorbitant bonuses,” said European Commission President Jose Manuel Durao Barroso in a statement preceding the official opening of the summit of the Group of 20 nations.

“In Pittsburgh, the EU will call for coordinated action to stop this, building on measures already taken in Europe and elsewhere,” he said.

Before the global financial crisis that began last year, and in some cases right through it, a glaring disconnect between pay and performance was on display at many banks, including some rescued by massive taxpayer bailouts.

In addition, critics say the crisis was exacerbated by pay structures that rewarded short-term performance, which encouraged excessive risk-taking.

Key to the formulation of the G20 statement will be input from the Financial Stability Board, a policy coordinating arm of the G20 nations with the world’s largest economies.

The FSB was expected to publish guidelines on pay today. FSB Chairman Mario Draghi had scheduled a news conference.

The FSB said earlier this month that it would advise G20 nations to prevent banks with low levels of capital from offering large bonuses under guidelines to be discussed by the G20.

“We will have a link between total bonus pool and the firm’s overall performance,” Draghi said on September 15.

An FSB official said the board would issue guidelines at the summit on how firms should structure pay packets.

The guidelines were also expected to cover disclosure of pay levels, deferral and vesting periods on share-related pay, independent oversight, and clawing back unfairly earned pay.

Japan wants to play a part in formulating global rules to rein in “excessive money-making games,” Prime Minister Yukio Hatoyama said in a speech yesterday ahead of the summit.

US President Barack Obama on Wednesday said financial regulation needed strengthening to put an end to the “greed, excess and abuse” that caused the financial crisis.

Earlier calls from some EU leaders, particularly French President Nicolas Sarkozy, for quantitative caps on pay were toned down after US officials made clear that such an approach was not politically feasible.

The G20 adopted high- level principles in April to stop remuneration packages from encouraging traders and bankers to take excessive short-term risks that could destabilize a firm.

White House spokesman Richard Gibbs yesterday tried to soothe concerns by German Chancellor Angela Merkel that regulatory reform was taking a backseat to the US drive to address global economic imbalances.

“I don’t think they are in any way mutually exclusive,” Gibbs said.

“Obviously the president is going to spend a lot of time over the fall working on financial regulatory reform.”

Asked to describe the most vital item for G20 action, he said: “I think quite frankly it will be financial regulatory reform.”

The US wants G20 countries to commit to reducing reliance on US consumers by boosting consumption in exporting countries, such as China, while encouraging debt-laden nations such as the US to save more.

Merkel said: “Imbalances are an issue. We must have imbalances and all the possible causes on the agenda. Exchange rates belong to that.”

Merkel, on track to win a second term in the German election on Sunday, said the world’s leading countries were making progress on financial reform and should not shy away from measures that might prove unpopular with the banking industry, where the economic crisis began.

As the protest brewed outside, a group of 80 students waved red and black anarchist flags and black banners with anti-capitalist slogans.

They joined hundreds more protesters as they converged on Arsenal Park for the rally, organised by the Pittsburgh G20 Resistance Project, an umbrella of activist organisations.

A few blocks from the planned starting point of the march, 200 Tibetan activists waving Tibetan and American flags staged a separate peaceful demonstration.

“We want to take the opportunity of Chinese President Hu Jintao arriving here today for the G20 to ask world leaders to press him to improve human rights in Tibet,” Nga Wang Tasha, of the Original Tibetan Youth Congress of New York and New Jersey said.

“We also want to ask President Barack Obama, who made change a slogan of his campaign, to press for a change in the situation in Tibet.”