JPMorgan's Dimon's aggressive style may hurt bank cause

Reuters, by Rachelle Younglai and Philipp Halstrick, WASHINGTON/FRANKFURT,  Thu Sep 29, 2011

Jamie Dimon, CEO and chairman of JPMorgan Chase & Co., poses for
 a portrait in his office in New York, in this photo taken December 22, 2010.
(Credit: Reuters/Lucas Jackson)

(Reuters) - Masters of the universe are not always so masterful after all.

JPMorgan Chase Chief Executive Jamie Dimon's squabble with the head of the Bank of Canada over bank regulation managed to achieve only one thing -- angering the central banker.

Once viewed as a star for helping the U.S. government prop up the now-defunct Bear Stearns during the 2008 financial crisis, Dimon is in danger of becoming a pariah among global regulators.

At a meeting last week between the world's most powerful bankers and Bank of Canada Governor Mark Carney, Dimon tried to tell the central banker that banks were suffering under the weight of all the new bank rules. But his aggression drove a red-faced and visibly angry Carney out of the room, according to people familiar with the encounter.

Dimon referred to new global bank liquidity rules as "cockamamie nonsense," according to one of the attendees at the closed-door meeting held by the Institute of International Finance on Friday.

Dimon also said the rules did not bear any relation to financial reality and that they were constructed by regulators, academics and people who did not have any market experience, the attendee said.

Major banks have lashed out at the slew of new rules being implemented in response to the financial crisis. They contend higher capital standards and other new regulations will impede their ability to lend and hurt the already-fragile economy, although their arguments appear to be falling on deaf ears with regulators.

Another person at the meeting said Dimon acted very aggressively and complained about a plan from the Basel committee of global regulators to force the world's biggest banks to hold up to 2.5 percent in extra capital.

Carney, who spent more than decade at Goldman Sachs before becoming Canada's central banker, was calm at first and tried to appease Dimon, responding: "I hear what you are saying. I don't think it will surprise you that I am taking a different view. These are reasonable responses to the financial crisis," one of the attendees recalled.

But Dimon grew increasingly aggressive, prompting Bank of Nova Scotia CEO Rick Waugh to jump in to try to smooth relations, the source said.

The outspoken Dimon has already blasted the new international bank rules as anti-American and went a step further at the meeting. "I have called it anti-American. The only reason I am calling it anti-American is because I am American. I also think it's anti-European," the attendee recalled him saying.

In the end, an agitated Carney left in the middle of Dimon's tirade. Other chief executives such as Goldman Sachs' Lloyd Blankfein and Deutsche Bank's Josef Ackermann looked stunned, the sources said.

Ackermann tried to explain why Carney left abruptly, saying the central banker was on a tight schedule.

Some bankers were shaking their heads. "It was Dimon's style that astonished all bankers, not the content," said one banker familiar with the meeting. Another voiced concern that Dimon's anger hurt his message. Others said they thought Dimon's comments were appropriately delivered.

Once singled out by President Barack Obama for running a well-managed bank, Dimon has become increasingly more vocal in his opposition to the new bank rules. For over a year, he has fought the administration privately and publicly over the Dodd-Frank regulation bill.

In June, Dimon took U.S. Federal Reserve Chairman Ben Bernanke to task and said new financial regulations could jeopardize the country's economic recovery and job creation.

At the time, he was praised for speaking out. But Dimon may have exacerbated the already-tense relations between the banking community and its financial supervisors with his latest exchange, first reported by the Financial Times.

On Monday, Dimon called Carney to put his comments in context, a source close to Dimon said. Dimon told the central banker that he had the utmost respect for him and that he thought the world of him, the source said.

But that was too late for Carney, who is rumored to be in line to become the next head of the Financial Stability Board -- a body of international regulators that makes policy recommendations to the Group of 20 economies.

The Bank of Canada and JPMorgan both declined to comment.

Two days after the encounter, Carney rejected bankers' complaints in a public speech to the IIF, a lobby group for global banks.

"If some institutions feel pressure today, it's because they have done too little for too long rather than being asked to do too much too soon," Carney said on Sunday.

"While the worsening global economic outlook has implications for bank performance, it does not provide a rationale for delaying the implementation of Basel III (bank capital rules,)" he said.

(Additional reporting by Louise Egan in Ottawa, Lauren LaCapra in New York and CameronFrench in Toronto; Writing by Rachelle Younglai; Editing by Dan Grebler)

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Asia’s Wealthiest Avoid Banks, Opt For Family Offices

Big Four auditors face massive shake-up

Asia’s Wealthiest Avoid Banks, Opt For Family Offices

Jakarta Globe, Netty Ismail, September 26, 2011

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Singapore. Stephen Diggle, co-founder of a hedge fund that made $2.7 billion for investors in 2007 and 2008, set up a family office in Singapore to manage the millions in fees he earned instead of entrusting his wealth to private bankers.

“It was fairly demonstrably clear that there was a very significant problem of alignment of interests by private banks and their customers,” said the 47-year-old founder of Vulpes Investment Management, whose Singapore-based family office has invested in hotels in Japan and farms in Uruguay. “They ceased to be custodians of people’s money and they became salesmen.”

Asia’s wealthiest investors, whose ranks are swelling as the region’s economic growth outperforms the rest of the world, are turning to family offices to maintain control of their money after the collapse of Lehman Brothers Holdings in 2008 made them more risk averse.

“Private banks try to sell you everything and not necessarily what’s best for your family office or for yourself,” said Clinton Ang, managing director of Singapore- based wine and spirits distributor Hock Tong Bee, who also prefers to manage his family’s wealth himself. “If sophisticated investors haven’t already learned the lessons of the past crisis, with the impending crisis that is on the horizon, they’d better.”

The MSCI World Index has tumbled 17 percent from this year’s high in May and is trading close to a one-year low after Standard & Poor’s stripped the United States of its AAA credit rating and Europe’s debt crisis deepened.

About 90 percent of Ang’s investable assets are in cash after he sold from October through March its investments in stocks, bonds and most property assets, said the 38-year-old, who describes himself a follower of Templeton Asset Management’s Mark Mobius.

Family offices are typically tailored to the families’ personal needs, and often include estate planning, philanthropy and lifestyle management such as maintaining homes and yachts. Private wealth managers at global investment banks rely on fees and commissions from managing their clients’ money.

Most family offices in Asia are more defensive in their investment strategy and tend to hire a “generalist” to manage their wealth, rather than specialists such as former hedge fund managers, said William Chan, chief executive officer of Singapore-based Stamford Privee, which manages his family’s wealth and that of two others. Such managers may cost between $300,000 and $400,000 a year, while specialists would be more expensive, Chan said.

Wealthy families tend to choose investment professionals they had previous dealings with, such as a private banker, as their office manager, said Chan. Others may select an ex-investment banker who advised them on transactions such as an initial public offering of their company.

“Being the trusted adviser is key,” Chan said.

Wealth in Asia, excluding Japan, is expected to rise at about double the global rate of almost 6 percent through the next five years, the Boston Consulting Group said in a May report. Singapore will be the world’s top wealth management center by 2013, overtaking Switzerland and London, a PricewaterhouseCoopers study published in June shows.

Asia is also attracting overseas family offices. “Anecdotally, we are seeing more European family offices inquire about setting up their Asian headquarters to participate in the Asian growth,” said Amy Lo, head of ultra-high net worth in Asia-Pacific at UBS AG’s wealth management business.

About 62 percent of US-based family offices surveyed this year said they were considering increasing allocations to Asian markets outside Japan, according to Family Office Exchange.

Some family offices cater to more than one family to gain economies of scale. It costs at least $1.5 million a year to run a family office that includes an investment team, and a family will need a minimum of $100 million to justify the expenses, said Chan of Stamford Privee.

Blue Ocean Capital Partners, a unit of Singapore-based private-equity firm Tembusu Partners, plans to set up an office with a UK-based family firm this year, said director Daniel Lin.

Lin, 28, said he and his 54-year-old father, who founded Tembusu Partners, will start by managing their family wealth with a chief executive officer. At least two other families have agreed to partner with them later, he said.

“For private banks, because they have certain targets, they need to find something that will give them a financial return pretty quickly,” Lin said. “For us, we’re not in a hurry to make money out of this; we have time to build on the intangibles such as family values and governance.”

Bloomberg

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Big Four auditors face massive shake-up

Big Four auditors face massive shake-up

Reuters, by Huw Jones, LONDON, Tue Sep 27, 2011

(Reuters) - The "Big Four" global auditors could be broken up, leaving them susceptible to takeovers if radical European Union plans to boost competition go ahead, a UK auditing official said on Tuesday.

EU Internal Market Commissioner Michel Barnier is due to publish a draft law in November to curb what he sees as a conflict of interest when auditors check the books of and supply lucrative consultancy services to the same customer.

Auditors, KPMG, Ernst & Young, Deloitte and PwC, audit nearly all big companies in the world, often serving the same clients for decades.

A copy of Barnier's draft law seen by Reuters proposes that auditors be banned from offering consultancy services to the companies they audit, or even banned from consulting altogether -- a move that could force the firms to split their operations.

"Breaking up the Big Four audit firms would make them more susceptible to be taken over by emerging Chinese firms," a UK audit official said on Tuesday on condition of anonymity due to the sensitivities involved.

Barnier's spokeswoman said he has made it clear that the audit sector displayed clear failings during the crisis, giving banks a clean bill of health just before they were rescued.

He has trailed his plans for a year and the industry had hoped they would be watered down by the time he formally proposed them next month.

"To reinforce independence and professional skepticism, the prohibition of the provision of non-audit services to the audited entities and even the prohibition of the provision of non-audit services in general would effectively address this issue," the draft said.

"Better audits and more informative audit reports will enhance confidence in the markets while also informing stakeholders of any problems with regards to any particular entity," the draft added.

The EU plans go much further than the United States, another major base for the Big Four, where the standard setter PCAOB is mulling requiring firms to switch auditors regularly, but has stopped short of recommending audit-only firms.

BREAK UPS

Deloitte said it supports improving audit quality but rejects joint audits, mandatory rotation and tendering, and a complete ban on non-audit services.

Rolf Nonnemmacher, co-chairman of KPMG Europe, said the reform goes as far as a breakup of the best performing firms.

"The implementation of these proposals would lead to a massive reduction in quality of audits, to the detriment of companies. In addition this would impose high costs on companies," Nonnemmacher said.

Ernst & Young had no immediate comment, while PWC said there was no evidence that the radical measures would improve audit quality.

However, auditor Grant Thornton, which along with peer BDO has tried to end the stranglehold of the Big Four, welcomed Barnier's plans.

"While we believe there could be some implementation issues, we still applaud what the Commissioner is attempting to achieve," a Grant Thornton spokesman said.

Accounting officials believe the Big Four would be forced to choose between auditing or consultancy.

"It would certainly mean a different profession," said Michael Izza, chief executive of the UK accounting body ICAEW.

The ACCA, another UK accounting body, said it was unclear whether imposing extensive rules and curbs was the best way to promote independence and skepticism.

The European Parliament, which will have the final say with EU states, has broadly backed the plans.

Auditing industry officials estimate that 28-30 percent of global revenues come from statutory audits, with about 18 percent from non-audit services provided to the same audit client. This means that about half of total revenues is earned from providing consultancy services to clients which are not being audited as well.

Britain, as home to the Big Four's European base, is likely to oppose some of Barnier's more radical proposals though its Office of Fair Trading said in July a full-blown competition probe into the sector is warranted.

Accounting officials say such a probe would become redundant if Barnier's draft makes it onto the statute book.

"If I was the UK Competition Authorities I would be inclined to leave this up to Europe. It's not a UK issue, it's actually a global issue," the auditing official said.

Other elements of the draft regulation include:

• Regular dialogue between auditors and their regulators about the firms they audit, a move aimed largely at banks;
  
• A company would have to change or "rotate" auditors every nine years to end the custom of decades-long auditing by the same firm;
  
• A ban on covenants whereby banks insist that a company receiving a loan must be audited by one of the Big Four;
  
• Introduction of "joint audits," so that the Big Four share auditing work with smaller rivals. Would apply to companies whose balance sheet is above 1 billion euros;
  
• The European Securities and Markets Authority to play a coordinating role in supervising auditors in the EU;
  
• Making international auditing standards mandatory.

(Reporting by Huw Jones; Additional reporting by Juliane von Reppert-Bismarck in Brussels, Kathrin Jones in Frankfurt and Dena Aubin in New York; Editing by Erica Billingham and Helen Massy-Beresford)

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Police crack down on 'Occupy Wall Street' protests

New York police accused of heavy-handed tactics as 80 anti-capitalist protesters on 'Occupy Wall Street' march are arrested

Guardian.co.uk, 25 Sep 2011

YouTube footage of protesters being pepper-sprayed

The anti-capitalist protests that have become something of a fixture in Lower Manhattan over the past week or so have taken on a distinctly ugly turn.

Police have been accused of heavy-handed tactics after making 80 arrests on Saturday when protesters marched uptown from their makeshift camp in a private park in the financial district.

Footage has emerged on YouTube showing stocky police officers coralling a group of young female protesters and then spraying them with mace, despite being surrounded and apparently posing threats of only the verbal kind.

NYPD officers strung orange netting across the streets to trap groups of protesters, a tactic described by some of them as "kettling" – a term more commonly used by critics of a similar tactic deployed by police in London to contain potentially violent demonstrations there.

The media here in New York has been accused of being slow off the mark to cover the demonstrations, which have been going on for more than a week. The Guardian was one of the first mainstream news organisation to give detailed coverage to the protests – here are some links to our earlier coverage.

• This is a gallery of photographs taken by John Stuttle last weekend.
• Karen McVeigh visited the camp in Zuccotti Park on Monday
• Later in the week, Paul Harris recorded video interviews with some of the protesters.

Now, however, the local media has paid more attention – almost certainly because Saturday's protest became disruptive, bringing chaos to the busy Union Square area and forcing the closure of streets.

The NewYork Times quoted one protester, Kelly Brannon, 27, of Ridgewood, Queens:

"They put up orange nets and tried to kettle us and we started running and they started tackling random people and handcuffing them. They were herding us like cattle."

The scenes are showing signs of attracting high-profile criticism. Anne-Marie Slaughter, who was director of policy planning, at the State Department from 2009 to 2011, said on Twitter: "Not the image or reality the US wants, at home or abroad," linking to a picture of a police officer kneeling on a protester pinned to the ground.

Here's an extract from a Reuters report, which said the demonstrators were protesting against "bank bailouts, the mortgage crisis and the US state of Georgia's execution of Troy Davis".

• At Manhattan's Union Square, police tried to corral the demonstrators using orange plastic netting. Some of the arrests were filmed and activists posted the videos online.
  Police say the arrests were mostly for blocking traffic. Charges include disorderly conduct and resisting arrest. But one demonstrator was charged with assaulting a police officer. Police say the officer involved suffered a shoulder injury.
  Protest spokesman Patrick Bruner criticized the police response as "exceedingly violent" and said the protesters sought to remain peaceful

And this is a fuller take from Associated Press.

• The marchers carried signs spelling out their goals: "Tax the rich," one placard said. "We Want Money for Healthcare not Corporate Welfare," read another.
  The demonstrators were mostly college-age people carrying American flags and signs with anti-corporate slogans. Some beat drums, blew horns and chanted slogans as uniformed officers surrounded and videotaped them.
  "Occupy Wall Street," they chanted, "all day, all week."
  Organizers fell short of that goal. With metal barricades and swarms of police officers in front of the New York Stock Exchange, the closest protesters could get was Liberty Street, about three blocks away.
  The Vancouver-based activist media group Adbusters organized the weeklong event. Word spread via social media, yet the throngs of protesters some participants had hoped for failed to show up.
  "I was kind of disappointed with the turnout," said Itamar Lilienthal, 19, a New York University student and marcher.

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Palestinian president requests statehood

CNN News, by the CNN Wire Staff, September 23, 2011

Abbas to address U.N. General Assembly

STORY HIGHLIGHTS

• Palestinians seek "inalienable, legitimate, national rights," Abbas tells the United Nations
• The Palestinian president formally requests full U.N. membership
• The effort is likely doomed to failure, as the United States has promised to veto it if necessary
• Ahead of the speech, security concerns rise in Jerusalem

United Nations (CNN) -- Palestinian President Mahmoud Abbas urged the United Nations to recognize Palestine as a full member of the international organization in a historic speech Friday to the General Assembly in New York.

Israel, Abbas said, continues to stymie peace, so it is time for the United Nations to act.

"We aspire for and seek a greater and more effective role for the United Nations in working to achieve a just and comprehensive peace in our region that ensures the inalienable, legitimate national rights of the Palestinian people," said Abbas, who was greeted with a long round of applause as he took the rostrum.

The speech was closely watched across the Middle East. In Ramallah, hundreds gathered and raptly watched on big-screen television. They greeted news that he had formally filed the statehood request with cheers, song and dance.

Less than an hour after Abbas ends his speech, Israeli Prime Minister Benjamin Netanyahu is expected to give a rebuking speech declaring the request a unilateral move that will only hinder the prospect of true peace in the region.

Mass demonstrations are planned for Friday in New York and are expected across the Middle East.

U.S. Embassies across the region warned citizens to avoid the expected demonstrations, saying they could turn violent with little warning.

An increased police presence was visible in Jerusalem, where the military had stockpiled riot-control gear against the possibility of greater violence.

Ahead of the speech, Palestinian youths lobbed rocks and bottles at Israeli security forces at a West Bank security checkpoint leading to Jerusalem, a fairly routine Friday occurrence.

There were no injuries, but rock-throwing between Israeli citizens and Palestinians in Qusra led to three injuries, one of them fatal, according to the Israel Defense Forces.

Abbas to formally delivered a letter to the United Nations secretary-general making a request that Palestine become a member state of the international body.

No immediate action is expected, and such a U.N. declaration is almost certainly doomed to failure: In addition to Israel's opposition, the United States has vowed to veto the effort if necessary in the Security Council.

"Peace will not come through statements and resolutions at the U.N.," President Barack Obama said in a speech to delegates at the General Assembly on Thursday. "If it were that easy, it would have been accomplished by now."

Obama and Abbas met on Wednesday as part of behind-the-scenes diplomatic efforts that have accompanied the Palestinian statehood request. He said he supports Palestinian statehood, but reiterated the long-standing U.S. position that Israel must be part of the discussions.

Israel has described the bid as counterproductive to the peace process, and has called for a resumption of talks to begin in New York and to be continued in Ramallah and Jerusalem.

While a U.S. veto would block any effort to gain full U.N. membership, the General Assembly could vote to upgrade the status of Palestinians, who are currently part of the U.N. as a non-voting observer "entity." The General Assembly could change that status to permanent observer "state," identical to the Vatican's status in the United Nations.

Despite a breathtaking year of change that has seen popular revolutions mark political upheaval in Tunisia, Egypt, Libya and other nations, talk of Palestinian statehood has dominated the General Assembly's session this week.

The membership effort sends a strong message by Abbas to Palestinians that he is working to advance the Palestinians' cause, said Steven Cook, a senior fellow for Middle Eastern studies at the Council on Foreign Relations.

"Right now, he's thinking about his domestic political situation in order to maintain his position," Cook said. "So he's not eaten alive."

CNN's Kevin Flower and Fionnuala Sweeney contributed to this report.

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Whistleblowers: Drug cartels throw fundraisers for U.S. officials

Raw Story, By Stephen C. Webster, Monday, September 19th, 2011

Two former law enforcement officials who worked with the Federal Bureau of Investigation (FBI) as confidential informants on probes into police corruption have come forward with allegations of drug cartel ties to top cops, judges and elected officials.

Greg Gonzales, a retired sheriff's deputy, and Wesley Dutton, a former New Mexico livestock investigator, told The El Paso Times that the FBI uncovered some "big names" in the course of one investigation, but it was dropped without result.

Both men helped with several investigations during their 18 months as confidential informants, the report says, including one that ended with the arrest of FBI special agent John Shipley, who was allegedly selling guns to cartel members.

But far from a sole bad apple, these two whistleblowers claim drug cartels wield tremendous influence over law enforcement and elected officials, even throwing fundraisers and parties attended by "bankers, judges, and law enforcement officers." Large campaign contributions, they added, have been made to help influence key appointments.

And perhaps one of the most outrageous claims in their report: law enforcement is said to have personally escorted drug shipments, dropped from small aircraft onto private ranches near the border, to their next stops along the distribution chain.

Both men also claim to have been physically threatened if they ever brought this information to light.

All of the allegations were reportedly laid out in a letter to Gov. Rick Perry (R), who's office confirmed to the Times that they had received it and passed the information along to the Texas Department of Public Safety (DPS). Reached by Times reporter Diana Washington Valdez, DPS director Steven McCraw initially expressed interest in talking to the men, but then called back 30 minutes later saying he'd looked into the matter and found their claims to be untrue. 

Both men have sought help from the advocacy group Judicial Watch, but the organization has yet to take any action.

Despite the blistering nature of the Times' report, their claims had not been picked up by other media outlets by late Monday. The FBI refused to comment.

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Obama hails end of military restrictions on gays

Reuters, WASHINGTON, Tue Sep 20, 2011

President Barack Obama gestures as he talks about cutting the U.S. deficit
 by raising taxes, from the Rose Garden of the White House in Washington
September 19, 2011. (Credit: Reuters/Larry Downing)

Related News 

• "Don't Ask, Don't Tell" for military gays runs out - Mon, Sep 19 2011
• Appeals court asked to vacate "Don't Ask" judgment - Thu, Sep 1 2011

  

(Reuters) - President Barack Obama hailed the end of the policy banning gays from serving openly in the U.S. military, saying its official demise on Tuesday marked a key step toward fulfilling America's founding ideals.

"Today, the discriminatory law known as 'Don't Ask, Don't Tell' is finally and formally repealed," Obama said in a statement released by the White House. "As of today, patriotic Americans in uniform will no longer have to lie about who they are in order to serve the country they love."

The repeal went into effect on Tuesday, ushering in a new era in the U.S. armed forces. The law had allowed gay men and women to serve in the military only if they kept their sexual orientation a secret. They faced the threat of being kicked out of the military under the law if they were open about their homosexuality.

Obama last December signed legislation to repeal the policy known as "Don't Ask, Don't Tell," which had been passed by Congress and signed into law in 1993 under then-President Bill Clinton.

"Our armed forces have been both a mirror and a catalyst of that progress, and our troops, including gays and lesbians, have given their lives to defend the freedoms and liberties that we cherish as Americans," Obama said.

"Today, every American can be proud that we have taken another great step toward keeping our military the finest in the world and toward fulfilling our nation's founding ideals," the president added.

Under the "Don't Ask, Don't Tell" policy, more than 14,500 U.S. service members were thrown out of the military since it went into effect in 1993, according to the Servicemembers Legal Defense Network.

Gays rights groups for years denounced the law and called its end a important milestone in the fight against anti-homosexual discrimination. Some have compared its demise to the integration of the U.S. armed forces.

'DIGNITY AND RESPECT'

The Pentagon sent out a memo noting that the Defense Department already has certified that ending the policy would not harm military readiness, unit cohesion or recruiting and retention of service members.

"Effective today, statements about sexual orientation or lawful acts of homosexual conduct will not be considered as a bar to military service," or admission to the military academies and other programs, Under Secretary of Defense for Personnel and Readiness Clifford Stanley wrote in the memo.

"All Service members are to treat one another with dignity and respect regardless of sexual orientation," Stanley wrote, warning that "harassment or abuse based on sexual orientation" would not be tolerated in the military.

The Pentagon said military recruiters are now accepting enlistment applications from openly gay people.

Opponents of lifting the ban had argued that allowing openly gay people to serve in the military could harm U.S. troops' combat effectiveness. Marine Corps Commandant James Amos had said that implementing the change could cost lives because of the impact on discipline and unit cohesiveness.

Three months before Congress passed the repeal last year, a gay rights group, the Log Cabin Republicans, had won a court ruling striking down the policy.

Repeal of "Don't Ask, Don't Tell" is an important development in the gay rights movement in the United States, which has seen progress in its goal of legalizing same-sex marriage. Six U.S. states -- New York, Connecticut, Iowa, Massachusetts, New Hampshire, Vermont as well as Washington, D.C., already allow same-sex marriage.

(Reporting by Will Dunham; editing by Anthony Boadle)

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'Disobedient' Austrian Catholics preach message of reform

Deutsche Welle, 18 sep 2011 

The movement has published
a manifesto for reform

Hundreds of Catholic priests and lay people in Austria have issued a 'Declaration of Disobedience.' The movement is calling for reform of the Catholic church including the ordination of women and an end to celibacy.

Disgruntled Roman Catholics in Austria have not only been breaking bread at their weekly masses - they have also been breaking with tradition.

A total of 329 priests - one in ten of all priests in Austria - are openly supporting the call for reform that they say is needed to breathe life back into the church.

The movement calls for male priests to be allowed to marry, ending the church's celibacy rule. The would-be reformers also want women to be able to enter the priesthood and urge greater acceptance of divorce. 

The group wants women, as well as
men, to be ordained

Rather than simply appealing for reforms, the group has declared it will break ecclesiastical rules by giving communion to Protestants and remarried divorced Catholics. It will also allow lay people - men and women - to preach and to lead head parishes without a priest. 

The dissidents' main spokesman is Father Helmut Schüller, who claims that a shortage of priests makes reform essential. In the entire southern state of Carinthia, not one single priest will be ordained this year.

"We're presenting suggestions for how we can continue, when we have no replacements," said Schüller. "How we can find people from our own ranks - for example our own parish members who can simply continue on? We've been thinking about this for years."

It might be too early to call it a schism but unlike the congregations in Austrian churches, the number of "disobedients" is on the increase.

Moral justification

One woman, a religion teacher who wished to remain anonymous, claims she has right on her side when she breaks church law.

"One can only change a law by breaking the law," she said. "When we come to a law that is spelt out the way it is now - that does not address our requirements and our rights but actually restricts them - then I believe I have the right to violate it." 

Schönborn has said that Catholics
should stick to the rules

Head of the Roman Catholic Church in Austria, Cardinal Christoph Schönborn, says he is shocked by the open call to defy church doctrine. In a letter he told the rebels they should leave the Church if they do not wish to play by the rules.

Calls for a more liberal church are not new in Austria, says religion commentator Markus Veinfurter, who claims there are no signs that the establishment will listen. "They are all raising the same issues," said Veinfurter. "But there is no movement in the church whatsoever, as far as the hierarchy is concerned."

A public opinion poll shows most Austrians, 76 percent of those surveyed, support the priests' demands and their disobedience.

"Where does it lead?" said Veinfurter. "I think people will go on leaving the Church, people, even those from the innermost part of the church will lose their allegiance. Maybe in a few years time the bishops will be on their own."

Author: Kerry Skyring / rc

Editor: Andreas Illmer

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