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"I think I can do business with him. And I think he was serious."--U.N. Secretary General Kofi Annan, on his agreement with Saddam Hussein.EDITED BY ROBERT McNATT & LARRY LIGHTReturn to top

A PROTECTIONIST CHANGES HIS STRIPES

HERE'S A CONCEPT FOR YOU: Dick Gephardt as poster boy for IMF bailouts. Although he's considered the most prominent protectionist in the House, Minority Leader Gephardt now backs passage of the $18 billion aid package for the International Monetary Fund.

He is working closely with Treasury Secretary Robert Rubin to pass the bill, which is designed to help the IMF prevent an Asian financial meltdown. In the past, Rubin and Gephardt have clashed over trade issues such as the NAFTA deal. But those differences have been pushed aside. Rubin now calls Gephardt "a key leader in helping to forge a bipartisan consensus on this important issue."

Why the change of heart? Gephardt believes an Asian collapse will hurt U.S. job growth. He also wants to shed his protectionist label and broaden his base for a possible Presidential race. So he will talk about the issue on Mar. 3 to the Council on Foreign Relations. Then he'll head to Wall Street and urge business leaders to lobby on the IMF's behalf. EDITED BY ROBERT McNATT & LARRY LIGHT Richard S. DunhamReturn to top

SMITHKLINE: OLDER, WISER--AND POORER

WHEN CORPORATIONS DON'T get hitched, it can cost a bundle. Twice, within less than a month, SmithKline Beecham has had second thoughts at the altar, as merger proposals with American Home Products and then Glaxo Wellcome fell through. The failed courtships will cost the company, and its investment bankers, millions.

In the latest breakup, SmithKline and Glaxo may have rung up as much as $32 million in banking, legal, and public-relations fees, estimates Britain's Acquisitions Monthly. But the biggest losers are the investment banks that worked on the deal. Morgan Stanley, Dean Witter, Discover represented SmithKline Beecham, while Lazard Freres advised Glaxo. By some industry estimates, those two firms might have earned $160 million in fees had the merger gone down.

The bankers involved won't comment on the record, but one close to the talks says: "Some advisers are desperate to do deals, but those who try to retain a measure of objectivity try not to force people to do deals against their wishes." Translation: It's more important to retain the confidence of a lucrative client than to consummate a deal. And $32 million ain't chump change. Stanley Reed EDITED BY ROBERT McNATT & LARRY LIGHTReturn to top

COMPUTER SCIENCES: NOT YET CLEARED FOR TAKEOVER

WILL NATIONAL SECURITY concerns doom Computer Associates International's $9 billion hostile bid for Computer Sciences Corp.? CSC consults for the Pentagon, CIA, and National Security Agency. A healthy chunk of its $1.1 billion in defense work is classified.

But a foreign national, Walter Haefner of Zurich-based Careal Holding, holds a 23% stake in CA, acknowledges the company. CSC lawyers are studying whether his ownership might endanger some of its eyes-only business under Pentagon rules that restrict security clearances for foreign-owned firms. "Foreign ownership will clearly trigger national security reviews," says James McAleese, a defense industry lawyer.

Haefner's stake may not bar the deal, though. Computer Associates says that he is only a passive investor. And Charles Wang, chairman and CEO of CA notes that it is already cleared for some classified business anyway. CSC has hauled its foe into court to stop the merger. Now, any further national security review could cause further delay. As for Wang, he says the security issue "is just a smokescreen." EDITED BY ROBERT McNATT & LARRY LIGHT Stan CrockReturn to top


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