NSE MD says...Insider trading is rampant in India...

11 MAR, 2013, 07.17AM IST, ET BUREAU 

Insider trading is rampant in India: Ravi Narain, MD, National Stock Exchange

Ravi Narain (58), MD & CEO, National Stock Exchange, hangs up his boots as chief executive this month end. During the two decades spent at the bourse, Narain has seen NSE becoming the world's largest exchange by the number of equity trades, the largest globally in currency trading and the second-largest globally in index options. But he will not be walking into the sunset; rather in a non-executive role as vice chairman, he will provide a helping hand to his successor Chitra Ramkrishna, now joint MD, if and when required. In an exclusive chat with ET, Narain, who became MD&CEO in mid-2000, talks about insider trading, taxing foreign investors and fat finger errors while welcoming the FM's announcement of setting up a committee to examine the global competitiveness of Indian financial markets. Excerpts: 
The cut in STT must have come as a welcome development, but was there anything in particular about the Budget that grabbed your attention? 
One piece of the Budget announcement that went relatively unnoticed was to set up a council that would look at international competitiveness of India's financial sector. I thought actually it went a little low key because of all the other announcements. This is hugely welcome in that it clearly has acquired attention in Delhi that we need to worry about the cost structure of India's financial sector. 
We are seeing an export of Indian financial markets to destinations where cost of transaction is substantially lower..... 
The export of markets is about many things - cost and the duties, and also about financial policies. All these are very neatly put in the terms of reference of the council. The larger point is that India is today a very large generator of demand for financial services of one kind or the other. We are potentially very competitive in the supply of those financial services. So, it's a very nice potential match but for that to happen we need to complete certain parameters and one of them is the cost structure. There are obviously other issues as well. For example, the really large deals very often can't be fully addressed within India because of balance sheet size. One is the sophistication end of products and services...we are gradually evolving towards that. But over a period of time the demand for financial services will continue to grow quite powerfully and given India's competitive advantage in this area it would be good for us to keep a very close eye on whatever we can do to make the supply side equally competitive....I am reading this is really what is behind the FM's announcement. 
Some years ago, the Mistry Committee talked of making Mumbai an international financial centre. Why are we lagging? 
There's some low hanging fruit in every report and there's some harder to do things. I mean if there's a legislative piece, that's going to find it's own path. So this is part of the problem that happened. And it's not just the Mistry report; the other was the Raghuram Rajan committee report. Even if one were to go back and revisit these two reports very carefully and look at them with a dispassionate, urgent eye I think one could do very significant things which will help to strengthen flows into the country. 
How do you think the issue of taxing foreign flows can be resolved? 
In all fairness this is not a tax haven issue in my view. This is a need to rethink the whole basis of taxation as being looked at in various parts of the world. This is about do you tax by residence or by source. It is not as if the investor is not paying tax anywhere in the world. There are some tax havens, agreed, but most of them are saying that there is a certain basis for their taxation that's applicable to them in terms of residence. Then if each country comes out with a different framework, and if some don't, it complicates life....It's more from their point of view to redress that they are taxable in one jurisdiction and if a second jurisdiction also applies tax it creates issues. 
India needs dollars and it's tough for us to ask the US to change their tax laws... 
It is a fact that much of the investible resources lie within the US and they are all flowing in different directions historically. But that is changing. Now you see fairly large investible funds in parts of the world other than the US. The world will gradually no longer remain largely US-centric for all global frameworks. There is no easy solution at this moment but it's time to start thinking about all this. It's a little longer term and complex problem but it has to be looked at in that framework otherwise this problem will repeat itself ad nauseum. 
Over the past 20 years we have seen different kinds of inflows. One conspiracy theory that has survived is that a large part of these flows could be round-tripping. Are such concerns being blown out of proportion? 
It's very hard to discount the possibility. But at the same time you don't want to end up with the tail wagging the dog. As a country of considerable substance India should create stable, consistent frameworks which will attract both domestic and foreign flows. If there is round tripping obviously we should have measures to go after those who are doing round tripping and not let it to subvert the larger policy framework. Having said that, I will add there is significant investor interest. Look at the number of countries interested in trading Nifty ETFs. That means there is significant broadbased interest. 
Sebi is setting up a committee on insider trading regulations. What are the areas you think need to be fixed? 
Insider trading is notoriously difficult to catch in just about any jurisdiction and what I have seen as a somewhat dispassionate observer of the larger markets is that they really go after the big guys. They have this clear ABC analysis that they will go after the really large attempts to do insider trading and smash those and so on and just ignore the little stuff. We've not always done that and I think if we tried that it would help control insider trading.
Second, of course is the ability to use technology to catch insider trading....We need to be a little more deft on that score and lot of that is not easy. For example, the ability to tap telephones, to tap emails. Ultimately if you see any cases which are cracked on insider trading that are big deals, they are all cracked because of this kind of surveillance. It's not about an exchange system catching them, it's really about tapping into networks and I think there has been some conversation around that. So that's the broad direction to catch insider trading. ........more.....

http://economictimes.indiatimes.com/opinion/interviews/Taxing-foreign-inflows-is-not-a-tax-haven-issue-Ravi-Narain-MD-National-Stock-Exchange/articleshow/18901702.cms

Goldman Sachs -‘overweight’-Nifty at 7,000 in a year

Goldman Sachs still ‘overweight’ on equities, sees Nifty at 7,000 in a year

Neither FIIs nor DIIs appear to be driving the market MUMBAI, MARCH 8:   Near-term macro concerns notwithstanding, global investment banking behemoth Goldman Sachs has retained its overweight view on Indian equities. Believing rupee to be more vulnerable than equities, the bank highlighted that the recent concerns around the Union Budget, widening current account deficit and slowing FII flows tend to impact the rupee to a greater degree than the equity market.The bank’s latest Portfolio Strategy Report said: “We retain our 3-month and 12-month overweight views on Indian equities despite near-term macro concerns which we expect may impact the rupee and Indian bond yields to a larger degree. Our view hinges upon two factors — a growth recovery on the horizon and a supportive equity valuations backdrop.” TURNING GROWTH CYCLE For the Nifty, the report has set a 12-month target of 7,000. “Recent CAI and PMI indicators suggest growth has troughed, suggesting the macro cycle is turning. From a relative perspective, India is the third least expensive market in Asia-Pacific ex-Japan based on 10-year historical P/E and P/B z-scores. In the near-term, an RBI cut on March 19 or firmer IP print may give confidence that the growth cycle is turning,” added the report.The report also pointed to a break down in relationship between FII inflow and equity market.It stated given the $25 billion of foreign institutional investors inflow last year, a number of equity investors had voiced concern that the inflows would grind to a halt in 2013, which would pose significant risk to the market. Nevertheless, FII flows have totalled a healthy $8.5 billion already in 2013, while the Nifty is down 3 per cent year-to-date.In short, the relationship of FII inflow and the equity market has broken down completely. Currently, there is neither a strong relationship between FII nor DII flows with the Nifty. In other words, neither investor base appears to be ‘driving the market’, said the report. manisha.jha@thehindu.co.in http://www.thehindubusinessline.com/markets/stock-markets/goldman-sachs-still-overweight-on-equities-sees-nifty-at-7000-in-a-year/article4488770.ece

10 MAR, 2013, 08.09PM IST, PTI 

Over 1,000 IAS officers fail to submit property returns

NEW DELHI: Over 1,000 IAS officers have failed to submit their immovable property returns to the government within the stipulated time frame this year. 

Of the total of 1,057 officers who did not submit their IPRs for 2012, a highest of 147 are from Uttar Pradesh cadre, 114 of Arunachal Pradesh-Goa-Mizoram-Union Territories (AGMUT), 100 of Manipur-Tripura, 96 ofJammu and Kashmir and 88 of Madhya Pradesh cadre among others, according to Department of Personnel and Training data. 
Suspended IAS couple Arvind and Tinoo Joshi of MP cadre are also among the list of erring officials. 
Joshis, both 1979 batch officers of Madhya Pradesh cadre, made headlines after Income Tax department raided their residence in February, 2010 and allegedly unearthed assets worth over Rs 350 crore. 
58 IAS officers of Karnataka cadre, 53 of Andhra Pradesh, 48 of Punjab, 47 of Orissa, 45 of West Bengal, 40 of Himachal Pradesh, 35 of Haryana, 25 ofJharkhand, 23 of Assam-Meghalaya, 22 of RajasthanBSE 1.80 %, 20 of Tamil Nadu, 17 of Maharashtra, 16 of Nagaland, 14 of Gujarat, 13 of Bihar, 10 of Kerala, nine each of Uttarakhand and Chhattisgarh and eight of Sikkim cadre have not given their IPRs, it said. 
The total sanctioned strength of IAS is 6,217, including 1,339 promotion posts. Of these, 4,737 officers are in position. An all-India service officer is bound to file property returns of a year by January end of the following year, failing which promotion and empanelment to senior level postings may be denied. Besides, there are 107 IAS officers who have not submitted their IPRs for 2011. As many as 198 IAS officials did not give their property details for 2010. "A circular has already been sent to all cadre controlling authorities to inform them about timely submission of their IPRs," said an official of the DoPT, which acts as a nodal agency for administrative matters of the IAS officers.

http://economictimes.indiatimes.com/news/politics-and-nation/over-1000-ias-officers-fail-to-submit-property-returns/articleshow/18894526.cms

Bad assets rise 42 per cent..NPA RISE ALARMING....

Bad assets rise 42 per cent at Rs. 1.83 trillion till December 2012: CARE

Press Trust of India | Updated On: March 10, 2013 14:51 (IST)

Mumbai: Slowdown in growth and high interest rates have resulted in a 42.6 per cent rise in bad assets in banking system to Rs. 1.83 lakh crore till December 2012, CARE Ratings has said.
The gross non-performing assets in the system have risen to Rs. 1.83 lakh crore from Rs. 1.28 lakh crore a year ago, witnessing a growth of 42.6 per cent."Consistent high interest rates have impacted the debt repayment capacity of corporates thereby resulting in asset quality deterioration and rise in the quantum of restructured assets across the banking sector," CARE Ratings said.The agency also attributed the stress to subdued economic activity that dented top lines of corporates.The gross NPA ratio of the system has increased to 3.53 per cent in December 2012, as against the 2.88 per cent level in December 2011, it said.State-run banks contributed the maximum to the increase in NPAs, with a 48 per cent surge while the same for private banks stood at 10 per cent, CARE said.
Gross NPAs as a percentage of advances moved up to 3.92 per cent versus the March 2012's 3.02 per cent for the public sector banks while for private banks, it dropped marginally to 1.97 per cent from the 2 per cent levels in March 2012.Restructured assets in the system have grown 23 per cent since March 2012 to Rs. 3.2 lakh crore, or 6.1 per cent of the total advances, it said.The same ratio of restructured assets had stood at 5.4 per cent in March, 2012.However, in some solace for the sector, the ratings agency said it did not expect credit growth to fall below the expectations and expects the margins to remain stable in the near term."Given the current economic scenario and the recent downward revision in estimated GDP growth to 5 per cent for FY13, we expect advances growth for FY'13 to be around 16 per cent, in line with earlier projections," CARE said, acknowledging that some impact of the growth slowdown has been witnessed in this area as well.
In the near term, CARE expects the banking system's margins to remain stable as the rates are on a decline, it said.However, the agency added that during the first three quarters, "margins in the banking sector have been witnessing downward pressure on account of higher cost of deposits, deceleration in credit growth as well as interest reversals due to rising NPAs".

http://profit.ndtv.com/news/economy/article-bad-assets-rise-42-per-cent-at-rs-1-83-trillion-till-december-2012-care-319261?pfrom=home-latest

Reuters  |  London  March 8, 2013 Last Updated at 14:10 IST

World stocks hit highest level since June 2008

US jobs data is expected to point to a continuing pick up in the world's biggest economy.

World shares hit their highest level since June 2008 and the dollar touched a fresh 3-1/2-year high against the yen on Friday, ahead of U.S. jobs data expected to point to a continuing pick up in the world's biggest economy.China also gave markets a boost as official data showed February exports grew 21.8 percent versus a year ago, more than double the expected rise.

European shares, which have rebounded strongly this week after last week's Italian election and U.S. spending cuts-related wobble, opened up 0.5 percent. That put them on track for their biggest gains since the opening week of the year.In Asian trading Japan's Nikkei had hit a 4-1/2 year high and the 0.5, 0.6 and 0.5 opening rises by London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX helped MSCI's world share index to its highest level since late June 2008."There appears to be a strong risk-on mood in the market at the moment," said Ken Wattret, co head of European market economics at BNP Paribas."The negativity from the Italian elections was shrugged off pretty quickly, the Fed has made it clear that its policy will remain accommodative. If we get a get a good set of payrolls numbers, that will further fuel that sentiment."

In the currency market, a sudden spike in tensions between North and South Korea added to the broader U.S. growth-led demand for the dollar.The euro eased 0.1 percent, but clung to the bulk of the gains made the previous day, after the European Central Bank wrong-footed investors who had positioned for a more clear-cut signal on rate cuts from its head Mario Draghi.Friday's U.S. payrolls report, due at 1330 GMT, is key to gauging the Federal Reserve's policy course as the Fed will keep its near-zero rate stance until the unemployment rate falls to 6.5 percent, as long as inflation does not threaten to top 2.5 percent.

With demand for low-risk assets cool ahead of the data, German Bund futures steadied at 142.87 as European trading gathered pace. They had fallen the previous day after the ECB's less dovish than expected tone."We saw yesterday after the initial (unemployment) claims in the U.S. and (ECB President Mario) Draghi's comments that not only Bunds but also Treasuries were under downward pressure so maybe there's already some positioning for a strong payrolls number," said Piet Lammens, a strategist at KBC.

http://www.business-standard.com/article/international/world-stocks-hit-highest-level-since-june-2008-113030800191_1.html

World Bank bars L&T ..FORGERY ISSUE...!!!!

World Bank bars L&T for six months over forgery by executive

Press Trust of India | Updated On: March 08, 2013 23:41 (IST)

Washington: World Bank has barred Larsen & Toubro (L&T) from doing any business with it or the projects funded by it for 6 months, after finding that a senior executive of the Indian conglomerate has indulged in fraud. The debarment will continue till September 6, making L&T ineligible for being awarded contracts for any World Bank-funded projects, from receiving any loan proceeds made by the Bank or participating in any Bank-financed project. The sanction order, dated March 7, said that L&T's ineligibility would continue across the entire World Bank group and has been imposed on L&T "for fraudulent practices" as per the bank's Procurement Guidelines against Fraud and Corruption. 

During the debarment period, L&T as well as any of the entities controlled directly or indirectly by it can't be nominated even subcontractor, consultant, manufacturer, supplier or even service provider to an  otherwise eligible firm being awarded a World Bank-financed project.  The matter pertains to a bid submitted by L&T through Regional Business Head of its Medical Equipment and Systems unit to a World Bank-financed project in Tamil Nadu. In January 2005, the World Bank Group had entered into a Development Credit Agreement with the Indian government to provide $110.83 million of International Development Association credit for the Tamil  Nadu Health Systems Project. It was set up to improve the effectiveness of health systems in the state by increasing access to critical health services for poor, disadvantaged and tribal groups. In July 2008, bidding documents were issued by Tamil Nadu Medical Service Corporation for a contract to supply 130 ultrasound scanners under the Project, following which L&T submitted a bid on September 3, 2008 through the said Regional Business Head. 
Upon technical and financial evaluation, L&T's bid was found to be the lowest-priced, but a complaint was received later that some of the certificates submitted with the bid might have been forged.The bid contained a total 115 performance certificates purportedly issued by medical facilities stating that the ultrasound scanners supplied by L&T were working well. After the company was asked to explain, the Regional Business Head said that some medical facilities may have mistakenly denied issuing the certificates and requested that L&T "not be viewed as (having) indulged in fraudulent practice". In December 2008, L&T was informed that the tender has been cancelled and the contract was awarded to another firm through a new bidding process.

After looking into the matter, the World Bank's Integrity Vice Presidency (INT) alleged that L&T "engaged in fraudulent practices by submitting forged performance certificates with its bid".

http://profit.ndtv.com/news/corporates/article-world-bank-bars-l-t-for-six-months-over-forgery-by-executive-319228?pfrom=home-latest

India's billionaire wealth....

India's billionaire wealth much above country's fiscal deficit

Press Trust of India | Updated On: March 05, 2013 18:48 (IST)

New Delhi/New York: The total net worth of India's 55 billionaires has fallen marginally to $189 billion (over Rs. 10 lakh crore) in the past one year, but even half of this amount exceeds the country's total fiscal deficit. As per the annual list of world's billionaires, published by business magazine Forbes, India has 55 billionaires with a total net worth of $189.1 billion. In comparison, India had 48 billionaires with collective networth of $194.6 billion a year ago. 
An analysis of Forbes rankings of Indian billionaires shows that just 10 richest from the country together command a total wealth of over $100 billion - a figure higher than the estimated fiscal deficit of about $95 billion for the financial year ending this month. India's fiscal deficit for the year 2012-13 is estimated at little over Rs. 5 lakh crore or 5.2 per cent of the country's total GDP. Forbes has ranked Mukesh Ambani, with a networth of $21.5 billion, as richest from India for sixth year in a row.     
While there are only three Indians in the global top-100, the overall list has 55 billionaires this year from the country. This number has grown from 48 in 2012. It was 55 in 2011 as well. Lakshmi Mittal, the second richest Indian has a networth of $16.5 billion, followed by Azim Premji ($11.2 billion), Dilip Shanghvi ($9.4 billion), Shashi & Ravi Ruia ($8.5 billion) and Kumar Mangalam Birla ($7.9 billion). 
Other Indians in the top ten are Savitri Jindal ($7.6 billion), Sunil Mittal ($6.8 billion), Shiv Nadar ($6.5
billion) and K P Singh ($6.3 billion). Uday Kotak, Micky Jagtiani, Cyrus Poonawalla, Adi Godrej, Anil Agarwal, Subhash Chandra, B L Munjal, Rahul Bajaj, Rajan N R Narayana Murthy, K Anji Reddy, MA Yusuff Ali, Vikas Oberoi, S Gopalakrishnan, Venugopal Dhoot, Rakesh Jhunjhunwala and Yusuf Hamied are also on the list. 

http://profit.ndtv.com/news/economy/article-indias-billionaire-wealth-much-above-countrys-fiscal-deficit-319013?pfrom=home-latest

Cadbury accused of using nonexistent factory to avoid Rs. 252 crore in taxes

Press Trust of India | Updated On: March 05, 2013 23:56 (IST)

New Delhi: A show cause notice raising a demand of Rs. 252 crore has been served on Cadbury India Limited for alleged excise duty evasion.
The notice, seeking recovery, was issued by Directorate General of Central Excise Intelligence after its investigation found that the firm has wrongfully claimed 'area-based exemption' for its new unit at Baddi in Himachal Pradesh, official sources said. A Cadbury India spokesperson said it will respond to the show cause notice in consultation with its legal advisers. 
"We are in the process of reviewing the contents of the show-cause notice from the Excise Department and will respond to it in consultation with our legal advisers. A show cause is a matter of form in any such enquiry," the spokesperson said in an email response to PTI query. 
" We have been fully cooperating with the authorities on this enquiry. Since the process is currently under way, it will be inappropriate on our part to discuss the details at this time," he added. 
As per the central government norms, the area-based exemption for new industrial units of firms in Himachal Pradesh provide full exemption from excise duties for specified goods for a period of 10 years.
However, for availing this the unit should have been established before March 2010 to claim such benefit. During its investigation, the officials found that the company claimed excise duty exemption for its new unit in Sandoli village in Baddi, relating to a period even before it came into existence, the sources said.

http://profit.ndtv.com/news/corporates/article-cadbury-used-nonexistent-factory-to-avoid-taxes-gets-rs-252-crore-duty-evasion-notice-319038?pfrom=home-latest

5 Yr HIGHs.....DOW, DAX, FTSE, NIKKEI...ALL HIGHS...

US stocks skyrocket, Dow Jones crosses 14,200-pt level ......PTI: NEW YORK, MAR 05 2013, 22:45 IST

US stocks today surged to record high with the benchmark Dow index touching over 14,200 points in early trade as investor sentiment was primarily boosted by optimism over Chinese economy.The 30-share key Dow Jones Industrial Average shot up to 14,239.68 points in the first hour of trading. This is the highest-ever level scaled by the blue chip index and also for the first time since the 2008 financial meltdown.In October 2007, the index had closed at a high of 14,164.53 points and two days later, it had reached an intra day high of 14,198.10 points.Today, the benchmark was trading nearly one per cent or 111.86 points higher at 14,239.68 points.Investor sentiment was mainly bolstered by China's plans to increase spending, including nearly 11 per cent hike in defence expenditure.Two other indices -- S&P 500 and Nasdaq Composite – gained as much as one per cent in early trade.

The broader S&P 500 jumped to 1,537.25 points while the tech-heavy Nasdaq Composite went up to 3,212.36 points.

http://www.financialexpress.com/news/dow-breaks-through-record-set-in-2007-s-p-at-5yr-high/1083533

FTSE 100 closes above 6,400 for the first time in five years REUTERS: LONDON, MAR 06 2013, 02:31 IST

Britain's blue chip shares surged on Tuesday to close above 6,400 for the first time in over five years helped by solid company reports and supportive central bank comments.

Financials and miners added the most points to the FTSE 100 , with results from heavyweight stocks in both sectors meeting or beating expectations despite tricky trading environments.

Miner Xstrata gained 7.2 percent after beating expectations in its final results before it merges with Glencore , which also gained 6.2 percent after posting results.

The banking sector, which also rises and falls with optimism over the economy, made gains led up by Standard Chartered .

The globally-focussed bank reported its tenth straight year of rising profit, and gained 3 percent following its results - a rare phenomenon this earnings season among UK banks.

The results also reflect well on global growth trends, which many FTSE 100 stocks, such as the miners, are also highly sensitive to.

"To an extent, (their results) are not just about Standard Chartered, it's a proxy for emerging market growth opportunities, which also look encouraging," Mike Ingram, market analyst at BGC Partners, said.

"Corporate earnings have actually done pretty well, even if the economy hasn't, so the bull case for equity markets is actually quite reasonable," Ingram added, saying that supportive monetary policy was also helping the gains.

The European Central Bank, the Bank of England and the Bank of Japan are all expected to stick to ultra easy monetary policy at meetings this week, following on from reassurances by U.S. Federal Reserve..................................................................................................................................................................................http://www.financialexpress.com/news/ftse-100-closes-above-6400-for-the-first-time-in-five-years/1083785

Hugo Chavez,Dies....

Hugo Chavez, Venezuela’s Anti-U.S. Socialist Leader, Dies

By Charlie Devereux & Daniel Cancel - Mar 6, 2013 4:49 AM GMT+0530

Hugo Chavez, the self-declared socialist who transformed Venezuelan politics by channeling record oil revenue to the poor, nationalizing corporations and vilifying foes as U.S. imperialist puppets, has died. He was 58.

He died today at 4:25 p.m. at a military hospital in Caracas, Vice President Nicolas Maduro said on state television. On Dec. 10, 2012, Chavez arrived in Cuba to undergo his fourth cancer operation in 18 months the following day, two months after winning re-election in a campaign in which he told voters he was “totally free” of the disease. It was the last time he would be seen in public.

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Venezuelan President Hugo Chavez salutes during a military parade to commemorate the 20th anniversary of his failed coup attempt, in Caracas on Feb. 4, 2012. Photographer: Juan Barreto/AFP/Getty Images

3:15

March 5 (Bloomberg) -- Robert Abad, a money manager who helps oversee $51 billion in emerging-market assets at Western Asset Management Co., talks about the death of Venezuelan President Hugo Chavez and its potential impact on Venezuela. Abad speaks with Matt Miller on Bloomberg Television's "Bloomberg Rewind." (Source: Bloomberg)

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Army Lieutenant Colonel Hugo Chavez speaks to reporters after being released from prison in Caracas, on March 26, 1994. Photographer: Bertrand Parres/AFP via Getty Images

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President-elect Hugo Chavez speaks with reporters outside the White House in Washington on Jan. 27, 1999. Photographer: William Philpott/AFP/Getty Images

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Venezuelan president Hugo Chavez gestures during the welcoming ceremony for his Bolivian counterpart Evo Morales at the Miraflores presidential palace in Caracas on September 17, 2011. Photographer: Juan Barreto/AFP/Getty Images

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Chavez addresses the UN General Assembly in 2006. He called U.S. President George W. Bush the devil and said the stage still smelled like sulfur a day after Bush spoke. Photographer: Stephen Chernin/Getty Images

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Venezuelan President Hugo Chavez, left, and Cuban President Fidel Castro, right, speak to reporters in Barcelona City, Venezuela, on June 28, 2005. Photographer: Juan Carlos Hernandez/Bloomberg

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Venezuelan President Hugo Chavez, right, and New York Stock Exchange Chairman Richard Grasso, center, wave to the gallery before the closing bell at the New York Stock Exchange on June 10, 1999. Photographer: Henny Ray Abrams/AFP/Getty Images

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Venezuelan President Hugo Chavez walks with his daughter Rosa Virginia as he departs for Cuba to receive medical treatment, in Caracas, on March 23, 2012. Photographer: Leo Ramirez/AFP/Getty Images

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President Hugo Chavez waves a Venezuelan flag while speaking to supporters after receiving news of his reelection in Caracas on October 7, 2012. Photographer: Juan Barreto/AFP/GettyImages

“We received the most difficult and tragic information that we can transmit to our people,” a sobbing Maduro said while flanked by Cabinet officials and Jorge Arreaza, Chavez’s son-in-law. “Comandante Chavez, we will assume your legacy, your project, your challenges. Wherever you are, comandante, on behalf of this people that you protected and loved we thank you.”

A former paratrooper who spent two years in jail after leading a failed 1992 coup, Chavez revolutionized and polarized Venezuelan politics. Taking inspiration from ex-Cuban President Fidel Castro, he built homes and medical clinics for the poor, nationalized more than 1,000 companies or their assets and built an anti-American alliance stretching from Iranto Nicaragua. He won re-election three times in 12 years.

‘Transformed Venezuela’

“There’s no doubt that Hugo Chavez transformed Venezuela,” said Robert Pastor, a former U.S. National Security Adviser forLatin America under President Jimmy Carter. “One can debate whether the policies he pursued actually helped the masses, but you cannot question the fact that the majority felt that he was a leader who cared about them.” Expressions of sympathy poured in from leaders around Latin America. Brazilian President Dilma Rousseff called Chavez’s death a loss for Latin America’s poor. Argentine PresidentCristina Fernandez de Kirchner announced she would travel to Caracas immediately. “He was a generous man to all the people in this continent who needed him,” a visibly emotional Rousseff said in Brasilia, where she marked Chavez’s death with a moment of silence.

Missed Ceremony

Chavez was unable to return to Caracas for a swearing-in ceremony to start his third six-year term on Jan. 10, 2013, after winning about 55 percent of the vote over Henrique Capriles Radonski in October. He traveled back to the capital Feb. 18, 2013, and was transferred to a military hospital, the government said.

Aside from photos the government published Feb. 15, 2013, of Chavez in his Havana hospital bed, Venezuelans hadn’t seen or heard from their president since he stepped off a plane in Cuba for his Dec. 11 operation. Chavez suffered a respiratory infection following the surgery that required the use of a tracheal tube and left him unable to speak, the government said. Under Venezuela’s constitution, an election must be held within 30 days. It’s unclear whether Vice President Nicolas Maduro or National Assembly President Diosdado Cabello will take over on an interim basis.

In a national address from Caracas on Dec. 8, 2012, Chavez said he suffered bouts of pain and was advised by his doctors to have surgery immediately. Preparing to return to Cuba, he called on Venezuelans to unite behind Maduro, a former bus driver and union leader who became foreign minister, as his successor.

Endorsing Successor

“There is risk in this process that you can’t deny,” a somber Chavez said during a late-night address from the presidential palace, flanked by Maduro and Cabello. “It’s my firm opinion, clear like a full moon, irrevocable, absolute, total, that in a scenario that would oblige new presidential elections that you should elect Nicolas Maduro.” Two days later Chavez returned to Cuba for more surgery. Previous treatments had also included chemotherapy and radiation. Like his mentor Castro, Chavez could captivate followers during six-hour improvised monologues during which he sang, toured socialist farming co-operatives, criticized ministers for inefficiency and told stories about his days as a tank battalion leader. The speeches infuriated detractors, who banged pots and pans in protest and accused him of installing communism.

UN Speech

One of his most memorable moments on the world stage came in 2006 when, during a speech to the United Nations General Assembly, Chavez said that the podium still smelled like sulfur one day after George W. Bush spoke there, calling the then-U.S. President the “devil.” “Yesterday, ladies and gentleman, from this rostrum, the president of the United States, the gentleman whom I refer to as the devil, came here, talking as if he owned the world,” Chavez said. Along with Castro, Chavez paid homage to the 19th-century liberator of Venezuela and most of the Andean region, Simon Bolivar, citing his writings and changing the name of the country to the Bolivarian Republic of Venezuela. He even exhumed the legendary general’s bones in an attempt to prove that he had been poisoned by Colombian oligarchs and didn’t die from natural causes as is historically documented. Chavez said that he wouldn’t rest until Bolivar’s dream of a Latin America united and independent from foreign powers was realized. He tapped the world’s largest oil reserves to provide about $7 billion annually in subsidized crude to Cuba and its Caribbean neighbors, more than three times what the U.S. spends in aid in the Western Hemisphere.

Small-Town Upbringing

Hugo Rafael Chavez Frias was born on July 28, 1954, to Hugo de los Reyes Chavez and Elena Frias de Chavez in the small western town of Sabaneta in Barinas state. The region is known for its cattle, cowboy culture and joropo harp music. Raised in a working-class family, Chavez was brought up largely by his grandmother and sold sweets on the street after school to supplement the household’s income. A baseball fan and amateur pitcher, he admired Nestor Isaias Chavez (no relation), a Venezuelan who pitched for the San Francisco Giants in the 1960s, and like Castro, wanted to play professional ball in the U.S. During a 1999 visit to New York, he threw out the first pitch at a Mets game at Shea Stadium. He also rang the closing bell on the New York Stock Exchange.

Coup Attempt

After entering a military academy in 1975, Chavez began reading socialist authors and spending time with people dedicated to changing the country’s political system, which he viewed as corrupt and impervious to growing social problems. He received a master’s degree in political science from Simon Bolivar University in 1990. Violent riots over a rise in gasoline and public transportation costs in 1989 that left hundreds dead prompted Chavez to lead a coup attempt in 1992. He was pushed into the public eye for the first time after surrendering and telling television reporters that his mission to take power had failed, “for now.” He was jailed for two years before being pardoned. Returning to national politics in 1998, he ended a 40-year, two-party political system by defeating a former Miss Universe, Irene Saenz, for the presidency with 56 percent of the vote. His coalition put education, health care and cheap access to basic foods at the forefront of its policies while Chavez made himself accessible to the country’s poorest citizens.

‘Two Faces’

In a prescient essay published before Chavez even took office, Nobel Prize-winning author Gabriel Garcia Marquez described the “two faces” of the former coup leader he had interviewed: “One to whom good luck had given the opportunity to save his nation and the other an illusionist who could go down in history as just another despot,” he wrote in the Colombian magazine Cambio. In the years ahead, Chavez would rewrite the constitution, win re-election in 2000 and extend his term to six years from five years. He would later abolish term limits altogether in a 2009 referendum. Critics said that through his legislative changes and control of the media, Chavez had effectively become a dictator. His anti-U.S. sentiment and wish to regain control of the oil industry led Chavez to tour the Organization of Petroleum Exporting Countries early in his presidency to seek OPEC’s consensus on boosting the price of crude.

Economic Contraction

As prices for Venezuelan crude surged more than 10-fold, to about $126 a barrel in 2008 from less than $9 a barrel when he took office, Chavez began to pour money into social programs, helping to cut the poverty rate by half. He also froze gasoline and electricity tariffs. Chavez radicalized his agenda following a 2002 coup that removed him from power for 48 hours and after a two-month general strike later that year paralyzed oil production. He responded by firing more than 18,000 employees of Petroleos de Venezuela SA, the state oil company, and replacing its board. The strike caused the economy to shrink 27 percent in the first quarter of 2003 while unemployment rose to 20 percent. Chavez overhauled his economic policies after the strike by installing currency controls and price ceilings on basic goods such as corn meal, beef and milk. He started a nationalization drive that would give the state majority control of almost every industry, a move that sparked shortages of basic goods and inflation of more than 30 percent.

Defending Qaddafi

Chavez accused the U.S. of orchestrating and financing the attempted overthrow and sharpened his tone against what he called the “empire.” The U.S. rejected the charges, though White House spokesman Ari Fleischer initially blamed the unrest on Chavez and said -- incorrectly, as it turned out -- that Chavez had “resigned the presidency.” Sanctions that prohibited Chavez from buying military equipment from the U.S. prompted him to turn to Russia, China and Iran as commercial partners. He defended Libyan dictator Muammar Qaddafi as he fought a 2011 rebellion that would take his life and called his alliance with Iran “holy.” Chavez was re-elected in 2006, to a six-year term, with more than 60 percent of the vote. The following year he narrowly lost a referendum to solidify his socialist policies by changing the nation’s constitution. The political opposition -- which had sat out parliamentary elections in 2005, leaving Chavez with a near absolute majority in Congress -- gained ground in regional elections in 2008 and won the popular vote in congressional elections in 2010.

Cancer Diagnosis

Known for a work schedule that often involved 40 cups of coffee a day and cabinet meetings lasting past midnight, Chavez slowed down his furious pace in 2011 after a knee injury sidelined him from a regional tour.After visiting Brazil and Ecuador he was operated on in Cuba, where he said doctors discovered a pelvic abscess and later a cancerous tumor. Recovery kept him on the island for almost one month. Maduro said that Chavez’s body couldn’t withstand the frenetic pace of his presidency up to that point.“Chavez is a work machine,” Maduro said in a June 11, 2011, interview on the Telesur television network that Chavez created and financed. “For the last 12 years he’s sustained an intense agenda. With so much tension some part of his body had to give. Chavez forgets about rest.”Chavez would undergo three more operations in Cuba. Attending a Roman Catholic mass with his parents, Hugo and Elena, following radiation treatment in April 2012, Chavez wiped tears from his face and pleaded for his life. “I ask God to give me life, however painful,” said Chavez, who earlier in his presidency frequently clashed with Vatican officials over his support for socialism. “I can carry 100 crosses, your crown of thorns, but don’t take me yet. I still have things to do.” Chavez, who was divorced twice, had four children.To contact the reporters on this story: Charlie Devereux in Caracas atcdevereux3@bloomberg.net; Daniel Cancel in Buenos Aires at dcancel@bloomberg.net To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net.