EU 'very close' to an 'ambitious' trade deal with Canada

The European Union is "very close" to an "ambitious" free-trade deal with Canada, its trade commissioner said Thursday, with negotiations still seemingly needed on agriculture and investor protections, among other issues.

European Trade Commissioner Karel De Gucht couldn't confirm when the trade talks would conclude toward the Comprehensive Economic and Trade Agreement, but he said the EU is "united in working together with Canada to close the gaps on the final issues."

EU Trade Commissioner Karel De Gucht, shown here in May, briefed reporters Thursday on the state of the EU's trade negotiations with Canada and other countries. He said a trade pact with Canada would largely deal with 'innovative high-tech trade.' (Laurent Dubrul/Reuters)

At a meeting Thursday of the EU's council of foreign affairs and trade ministers, De Gucht and Neoklis Sylikiotis — the commerce minister for Cyprus, which currently holds the rotating presidency of the council — told reporters that the negotiations are "very close to an agreement" as ministers discussed how to conclude several outstanding issues.

De Gucht called the future agreement "ambitious and important" and said the council wants to "conclude the deal as soon as possible."

"The majority of the deal is about setting the future framework for the innovative high-tech trade between two developed economies," De Gucht said. "Of course I'm not interested in a paper deal but one that would bring real and meaningful benefits."

He gave no details on what has been agreed to and what issues remain.

However, a written news release revealed that on Oct. 30 an agreement was reached with Canada on the chapter of the agreement relating to the criminal enforcement of intellectual property rights. It did not elaborate on the exact text of this chapter.

The Netherlands said earlier this fall that if the trade deal included provisions similar to the Anti-Counterfeiting Trade Agreement voted down by the European Parliament last July, it would not support the deal.

'Sensitive' agricultural issues broached

International Trade Minister Ed Fast met with De Gucht last Thursday and subsequently said both sides are looking for "ambitious outcomes" that will yield an "appropriately balanced" pact.

"We will only sign an agreement that is in the best interests of Canadians," Fast said in question period on Monday, accusing the opposition of engaging in "idle speculation" about what might be in the final deal.

Last week's talks represented the first time concrete positions were exchanged on several agricultural commodities prioritized for inclusion in the final deal. More work remains as negotiators figure out the technical aspects of these proposals.

The "sensitive" agriculture sector had been left to the final stages of the talks, as both sides grapple with contentious issues.

Investor protections discussed

Some of the EU's trade and foreign affairs ministers said at their meeting Thursday that the European Union's policy on investor protections also has to be finalized before a trade deal with Canada comes into force.

Similar but not identical to Chapter 11 in NAFTA, the Comprehensive Economic and Trade Agreement will have a dispute-settlement process to allow foreign investors to hold countries accountable for breaching aspects of the deal.

Members of the Group of the Greens/European Free Alliance vote against the Anti-Counterfeiting Trade Agreement at the European Parliament in Strasbourg in July. If similar measures are contained in an eventual draft trade pact with Canada, it could scuttle the deal. (Vincent Kessler/Reuters)

A leaked EU briefing document dated earlier this fall suggested the two sides remained apart on aspects of the investment protection Canada originally asked to include in the deal.

Much of Thursday's public deliberations of the EU ministers involved the final responsibility, or liability, of member states. While the EU negotiates deals on behalf of all its 27 member states, the actions of one or more specific countries could trigger a dispute in which the entire EU would share accountability.

Canada could face a similar situation if actions by municipal or provincial governments trigger disputes with European companies.

Ratification challenges

If Canada does successfully negotiate an agreement with the European Commission, that doesn't necessarily mean it would be ratified by the European Parliament.

Members of the European Parliament have expressed dissatisfaction with Canada on several fronts, including its pulling out of the Kyoto Accord, promotion of Alberta's oilsands, lobbying against the EU's fuel directive, and the seal hunt.

Last June, European President José Manuel Barroso quarrelled openly with Prime Minister Stephen Harper and Finance Minister Jim Flaherty over Canada's refusal to contribute to the International Monetary Fund's bailout of European banks and linked the success of the trade talks to Canada's co-operation with Europe on other fronts.

Depending on what's in the final text, individual countries may need to sign off on the deal as well, if it impacts matters of their national jurisdiction.

A vigorous debate among environmental and civil society groups could influence votes, as it did when the Anti-Counterfeiting Trade Agreement was defeated in a surprise vote last July.

An agreement with Canada isn't the only trade pact on the EU's agenda. It's also working toward deals with Japan, Singapore, Morocco and Tunisia.

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Eurozone unemployment hits record high

Another month, another record unemployment rate for the economy of the 17 EU countries that use the euro.

Figures released Friday from Eurostat, the European Union's statistics office, showed that the recession in the eurozone pushed unemployment in the region up to 11.7 per cent in October.

The previous record of 11.6 per cent in September was anticipated in light of the eurozone's return to recession in the third quarter, commonly defined as two consecutive quarters of negative growth.

While the eurozone's unemployment has been inching upward since June 2011, the equivalent rate in the U.S. has fallen to below eight per cent as the world's largest economy continues its recovery from recession.

Eurostat found 18.7 million people were out of work across the eurozone, an increase of 173,000 on the previous month.

Greek youth unemployment near 60 per cent

Spain and Greece have the region's highest unemployment rates — both over 25 per cent, with youth unemployment levels heading towards 60 per cent, a potentially toxic long-term economic and political development.

Both countries are in recession and struggling to convince markets as well as their own people that they can get a grip on their debts to improve living standards further down the line. Both, along with a number of euro countries, have introduced tough austerity measures, such as cutting spending and raising taxes, in order to get a handle on their debts.

However, reducing wages and pensions lowers demand in the economy to the detriment of the labour force.

Other measures taken alongside the austerity, such as reforming labour practices, are intended to promote jobs but they take time, both to enact and to feed through an economy.

That's why many economists think that unemployment in many countries will likely carry on rising for a while yet, certainly as long as they remain in recession.

"Labour market conditions in the single currency area are clearly deteriorating and survey indicators of employment intentions point to worse to come," said Jonathan Loynes, chief European economist at Capital Economics.

At present, the five euro countries at the forefront of the debt crisis — Greece, Spain, Italy, Cyprus and Portugal — are in recession.

Others, like the Netherlands and Austria — neither of which is particularly debt-laden — could officially fall into recession too after posting declines in third-quarter economic output. Austria has the lowest unemployment rate in the eurozone of 4.3 per cent.

The eurozone's powerhouse economies, such as Germany and France, have also seen growth levels fall in the last year and that's ratcheting up the pressure on businesses to cut costs. Germany's unemployment rate stood at a still-low 5.4 per cent in October, but France's was nearly double that at 10.7 per cent.

Some respite came with the news that inflation in the eurozone fell by more than anticipated to 2.2 per cent in November from 2.5 per cent the previous month.

Since it was a preliminary estimate, Eurostat gave no reasons behind the decline but waning labor market pressures to lift wages are likely to have been, at least partially, behind the fall.

Despite the decline, inflation is still above the European Central Bank's target of keeping price rises at just below two per cent. Few economists think the ECB will cut its main interest rate from the current record low of 0.75 per cent at its monthly policy meeting next Thursday.

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Canadian economy stuck in neutral

Canada's economic expansion slowed to a crawl in the third quarter, growing by 0.1 per cent in the three months ended September and expanding at a pace of less than one per cent for the year as a whole, according to data released today.

Statistics Canada said Friday the country's gross domestic product expanded at a 0.6 per cent annualized pace, down from 0.8 per cent during the second quarter because of less investment by businesses and slumping exports.

For comparison purposes, the U.S. economy is currently expanding at a 2.7 per cent annual pace.

Canadian exports shrank by two per cent during the period, the largest decline since the second quarter of 2009.

Emanuella Enenajor, an economist at CIBC World Markets, says the domestic demand helped offset Canada's weak exports during the quarter.

"Growth in the quarter was almost entirely driven by household consumption," Enenajor wrote in a note.

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Harper's Muskrat Falls announcement clears hurdle

An expected announcement Friday on a federal loan guarantee for the controversial Muskrat Falls plan will clear the final important hurdle to launching the hydroelectric project.

Stephen Harper pledged to support a Muskrat Falls loan guarantee during an election campaign stop in St. John's in 2011. (CBC)

Prime Minister Stephen Harper is travelling to Labrador to unveil details of what is expected to be the loan guarantee that he pledged during the 2011 federal election campaign.

The guarantee effectively is the last piece of a complex puzzle that the Newfoundland and Labrador government has been assembling for years to generate power on the Churchill River and launch the $7.4-billion project.

The loan guarantee will substantially lower the costs of borrowing for the project.

Newfoundland and Labrador Premier Kathy Dunderdale has said final approval of the guarantee will clear the way for what is called sanctioning of the project, or the formal green light.

But even without the loan guarantee, Newfoundland and Labrador has been plowing ahead with Muskrat Falls, to the consternation of opponents who see the project as financially ruinous or environmentally risky.

Earlier this year, Nalcor — Newfoundland and Labrador's Crown energy corporation — began clearing forests to build roads and infrastructure for the Muskrat Falls site outside Happy Valley-Goose Bay. Nalcor has argued that costs would mount substantially if it waited a year before launching that preliminary work.

It will take several years to dam Muskrat Falls and build a generating station, which will pump out 824 megawatts of power. Much of that will be funnelled by subsea cables from Labrador to Newfoundland, with as much as 40 per cent of the power marked to head to Nova Scotia by an additional set of subsea cables.

Nova Scotia connection vital

Halifax-based Emera Inc. is a partner in the Muskrat Falls project, and will be responsible for marketing its share of the energy.

Nova Scotia Premier Darrell Dexter, right, appeared in St. John's with then Newfoundland and Labrador premier Danny Williams to announce a tentative agreement on Muskrat Falls. (CBC)

Harper and Dunderdale will be joined by Nova Scotia Premier Darrell Dexter. While Nova Scotia is not a partner in Muskrat Falls, Dexter's support has been critical in the development of the project.

Muskrat Falls has come in for steady criticism from a number of groups, some alleging that it has not undergone an independent review through the Public Utilities Board, which ruled this winter it could not proceed because Nalcor had turned over too little information in time for it to meet a government-imposed deadline.

Other concerns have been raised about whether Newfoundland and Labrador, which is poised to launch the most expensive project in its history, can afford the debt load that will come from the project, and whether ordinary ratepayers will in effect be footing the costs of the project.

As well, the leaders of Newfoundland's Liberal and New Democratic parties have threatened to filibuster technical legislation that will need to be introduced to clear the way for Muskrat Falls.

They have also criticized Dunderdale for setting only a couple of hours for formal legislative debate of Muskrat Falls, and at that through a private member's bill.

Cheapest option available: Dunderdale

But Dunderdale, who has said Muskrat Falls has undergone intense scrutiny by experts and the public, has consistently said Muskrat Falls represents the cheapest option to supply power to Newfoundland and Labrador consumers.

The government has launched a public relations campaign to help persuade the public that Muskrat Falls represents a stable source of renewable energy that will be cheaper than relying on alternatives, including burning oil at the Holyrood generating station the government would soon like to decommission.

Muskrat Falls has been more than three decades in the making, and is a key part of what is known as the Lower Churchill energy project. The current plan does not involve another site at Gull Island, which if developed could generate substantially more power.

Interprovincial politics have played a key role in Muskrat Falls, as Newfoundland and Labrador and Nova Scotia have partnered to find a way deliver power to other markets while bypassing Quebec.

Newfoundland and Labrador has had a strained relationship with Quebec for decades, due largely to the 65-year contract with Hydro-Quebec over the Churchill Falls generating station. Under that deal, which expires in 2041, Newfoundland and Labrador sells power at a flat, inexpensive rate to Quebec, which has been able to resell the power to other markets while keeping the profits.

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Kent rejects Cenovus Energy gas project in Alberta

Environment Minister Peter Kent says he won't approve an Alberta gas project planned by Cenovus Energy.

Environment Minister Peter Kent has announced a proposed shallow gas infill development project at CFB Suffield Wildlife Area in Alberta will not go ahead. (Canadian Press)

The proposal involves a shallow gas infill development project in the CFB Suffield national wildlife area.

It's the first decision issued under the new, streamlined environmental assessment rules that the federal government announced to much controversy last spring.

Kent says a joint-review panel found the project would put wildlife and habitat at risk and he had to turn it down.

He says the decision proves critics were wrong and the new process does not provide an automatic green light for resource development.

The review took six years to complete. Kent told reporters on Parliament Hill Friday that had the proposal been initiated under the new legislation, the process would have taken a "significantly" shorter period of time.

With files from CBC News

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Canadians value more vacation over pay hikes

An international report Wednesday found that Canadian workers would rather get an additional week's paid vacation than be paid more to do their jobs.

The Mercer consultancy report says 20 per cent of Canadians polled said the job perk they would most like to receive from employers is another week's worth of paid vacation.

Canadians were the only country in the survey — which included workers from the U.S., Britain, France, China and Brazil — who said they valued time off over more money.

An extra $500 in salary was the second-most requested option, at 18 per cent.

"These results were fairly similar across our random sample of employees. However, we did observe some differences in employees' preferences depending on age, life stage and income level," Mercer said.

Workers between ages 25 and 44 tended to prefer time off, whereas those earning less than $20,000 a year and those over 45 preferred the financial boost.

"We recommend that all employers revisit the benefits they offer their employees," Mercer said. "This research can provide direction in terms of the perceived value employees place on [them]."

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Ecuadorians take $19B suit against Chevron to Toronto

A $19-billion environmental lawsuit over black sludge that seeped into an Ecuadorian rainforest a generation ago makes its Canadian courtroom debut today.

The Ontario Superior Court in Toronto will be the latest venue in the bitter 19-year legal fight between Chevron Corp. and dozens of Ecuadorian Amazon villagers.

Ecuador's highest court upheld an award to the villagers for damages for contamination between 1972 and 1990 by Texaco, which Chevron bought in 2001.

Since the ruling in January, Chevron has said it won't pay a cent because it contends Texaco dealt with the problem before it bought the company.

The villagers are taking the case to a Canadian court because Chevron has billions of dollars worth of assets here, including a 20 per cent stake in the Athabasca oilsands.

Chevron spokesman Kent Robertson says the company believes bribery was involved in the Ecuador judgment, and its lawyers argue that the Ontario court does not have jurisdiction to consider the case.

After filing suit in Canada this past May, the Ecuadorians launched similar legal actions in Argentina and Brazil.

Earlier this month a judge in Argentina froze Chevron's assets there until the $19 billion is collected.

The Supreme Court of Canada has upheld the principle that foreign court judgments are enforceable in Canada as long as there is a "real and substantive connection" between the foreign jurisdiction and the subject matter of the claim.

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Royal Bank profit jumps to record $7.5B

The Royal Bank says it had a record annual profit in 2012, including $1.9 billion of net earnings in the fourth quarter. The quarterly profit amounted to $1.25 per share of net earnings, or $1.27 per share of adjusted diluted earnings.

For the full-year ended Oct. 31, RBC had $7.5 billion of net earnings.

That's up 17 per cent from 2011 and equal to $4.96 per share of net earnings or $5 per share on an adjusted basis.

The adjusted profit beat consensus estimates by a penny per share in both the quarter and the full year.

RBC president and chief executive, Gord Nixon, says the company had solid earnings from most of its businesses including Canadian banking — which contributed more than $1 billion of earnings during the quarter.

"While the financial industry is expected to face headwinds in 2013, we are confident in our ability to weather these challenges given our strong financial and competitive position," Nixon said in a statement.

The bank says it increased its provisions for credit losses in the fourth quarter to $362 million, up $86 million from last year.

It attributed the increased provisions to a single account at its RBC Capital wholesale division as well as business lending in its Canadian banking business.

Royal's fourth-quarter net income was up 22 per cent from $1.57 billion in the fourth quarter of 2011.

The 2012 annual profit was up from $6.44 billion last year, which included a $526-million loss at discontinued operations.

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U.K. media ethics report urges independent press regulator

Britain needs a new independent media regulator to eliminate a subculture of unethical behaviour that infected segments of the country's press, a senior judge said at the end of a yearlong inquiry into newspaper wrongdoing.

Lord Justice Brian Leveson said a new regulatory body should be established in law to prevent more people being hurt by "press behaviour that, at times, can only be described as outrageous."

He said "what is needed is a genuinely independent and effective system of self-regulation."

Leveson issued his 2,000-page report at the end of a media ethics inquiry that was triggered by revelations of tabloid phone hacking and expanded to engulf senior figures in politics, the police and Rupert Murdoch's media empire.

His proposals will likely be welcomed by victims of press intrusion and some politicians, who want to see the country's rambunctious press reined in. But some editors and lawmakers fear any new body could curtail freedom of the press.

Leveson insisted in his report that politicians and the government should play no role in regulating the press, which should be done by a new body with much stronger powers than the current Press Complaints Commission.

But Leveson said it was "essential that there should be legislation to underpin the independent self-regulatory system."

He said the new body should be composed of members of the public including former journalists and academics — but no serving editors or politicians. It should have the power to demand prominent corrections in newspapers and to levy fines of up to 1 million pounds ($1.6 million).

Phone-hacking scandal sparks inquiry

Prime Minister David Cameron set up the Leveson inquiry after revelations of illegal eavesdropping by Rupert Murdoch's now-defunct News of the World tabloid sparked a criminal investigation and a wave of public revulsion.

The furor erupted in 2011 when it was revealed that the News of the World had eavesdropped on the mobile phone voicemails of slain schoolgirl Milly Dowler while police were searching for the 13-year-old.

Murdoch shut down the 168-year-old newspaper in July 2011. His U.K. newspaper company, News International, has paid millions in damages to dozens of hacking victims, and faces lawsuits from dozens more, from celebrities, politicians, athletes and crime victims whose voicemails were hacked in the paper's quest for scoops.

Leveson heard evidence from hundreds of journalists, politicians, lawyers and victims of press intrusion during months of hearings that provided a dramatic, sometimes comic and often poignant window on the workings of the media. Witnesses ranged from celebrities such as Harry Potter author J.K. Rowling and Hugh Grant — who both complained of intrusive treatment — to the parents of Dowler, who described how learning that their daughter's voicemail had been accessed had given them false hope that she was alive.

Subculture of unethical behaviour

Leveson said that the ongoing criminal investigation constrained him from accusing other newspapers of illegal behaviour, but argued there was a subculture of unethical behaviour "within some parts of some titles."

While many editors have denied knowing about phone hacking, Leveson said it "was far more than a covert, secret activity, known to nobody save one or two practitioners of the 'dark arts."'

More broadly, he said newspapers had been guilty of "recklessness in prioritizing sensational stories almost irrespective of the harm the stories may cause."

"In each case, the impact has been real and, in some cases, devastating," the judge said.

The hacking scandal has rocked Britain's press, political and police establishments, who were revealed to enjoy an often cozy relationship in which drinks, dinners and sometimes money were traded for influence and information.

Rebekah Brooks, the former chief of News Corp.'s British operations, leaves the Old Bailey court on London on Sept. 26, 2012. (Lefteris Pitarakis/Associated Press)

Leveson said over the past three decades, political parties "have had or developed too close a relationship with the press in a way which has not been in the public interest."

He acquitted senior politicians of wrongdoing, but recommended that political parties publish statements "setting out, for the public, an explanation of the approach they propose to take as a matter of party policy in conducting relationships with the press."

Parliament will have to approve the legal changes the report recommends, and Cameron is under intense pressure from both sides. He is also tainted by his own ties to prominent figures in the scandal.

Former Murdoch editors and journalists charged with phone hacking, police bribery or other wrongdoing include Cameron's former spokesman, Andy Coulson, and ex-News of the World editor Rebekah Brooks, a friend of the prime minister.

Coulson and Brooks were appearing in court Thursday on charges of paying public officials for information.

Cameron, who received a copy of Leveson's report a day early, is due to make a statement about it in the House of Commons later Thursday.

He and other senior politicians insist they will not curb Britain's long tradition of free speech.

"Everybody wants two things: firstly, a strong, independent, raucous press who can hold people in positions of power to account, and secondly to protect ordinary people, the vulnerable, the innocent when the press overstep the mark," Deputy Prime Minister Nick Clegg said Thursday.

"That's the balance that we are trying to strike and I am sure we will."

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Low house prices not all bad news, CIBC says

A slowdown in house prices isn't necessarily completely negative for Canada's economy, one of the country's largest banks said today.

"Cheaper home prices could bring winners as well as losers across the economy," CIBC World Markets economist Avery Shenfeld said.

After a multi-year run-up, price gains have slowed down and even started declining in many Canadian cities. The Canadian Real Estate Association reported recently that the average price of a Canadian home was $361,516 in October, virtually unchanged from a year ago.

'A gradual cooling in house prices … will look good in hindsight' —CIBC economist Avery Shenfeld

That slowdown has led to much speculation that a modest price correction — or worse — could be in the offing, and gotten economists thinking about the implications of declining home prices on Canada's economy.

Contrary to conventional wisdom, Shenfeld suggests a decline in home prices would be welcome news for other parts of Canada's economy.

"What of the young newlyweds scraping by on mac and cheese in order to save for their first home? A slip in prices could ease that task, freeing up spending power in the process," he said.

Shenfeld's theory is that every dollar spent on housing is a dollar that could otherwise be spent somewhere else. So if a would-be homebuyer is able to knock $10,000 off the purchase price, that's $10,000 that's likely to be spent somewhere else, instead of pledged to a bank to pay back the mortgage.

The less "house poor" someone is, the more he or she is able to spend money elsewhere in the real economy, the theory goes.

Local examples

Realtors are quick to note that all real estate markets are local, so extrapolating from national data could often be misleading. And indeed, Shenfeld takes the example of the City of Calgary's housing market to illustrate his point.

In Calgary, house prices have trailed the Canadian average over the past five years, including a drop of almost 15 per cent in 2008, when many markets were seeing outside gains.

Yet the data shows despite Calgary's housing market underperforming the national average for the last half-decade, the city has posted some of the largest increases in retail spending over that time period, outperforming the national average in that category handily.

Shenfeld points to the nearby British Columbia housing market to illustrate another point. The province's housing prices led the country on the way up, and are currently doing so on the way down. Before 2003, the province saw a net outflow of people to other provinces, but between 2003 and about 2010, B.C. saw net in-migration.

The rapid run-up in prices was one factor that caused that trend to reverse again, Shenfeld suggests.

"Dreams of retiring in B.C., and taking one's spending money to that province, might be back in vogue if relative prices of housing are better in line with other provinces," he said.

No crash expected

While the report does acknowledge there's financial pain to be had from lower housing prices, Shenfeld says that doesn't mean Canada's in for the type of calamity that a housing crash wrought on the U.S. and Irish economies in recent years.

In both cases, it wasn't just lower home prices that started it all, but the wave of defaults that followed. That's simply less likely to happen here, Shenfeld says, because Canada never loaned as aggressively to low-income buyers due to much tighter regulation.

Shenfeld notes that while a Canadian homeowner that counted on downsizing to fund her retirement might have to pare spending plans, he doesn't expect any widespread economic pain related to housing on the horizon.

"As a home owner, I'd prefer that one particular Toronto street stays insulated from any house price declines. But to look on the bright side, a gradual cooling in house prices, one early enough to avoid a larger financial sector shock, will look good in hindsight," he said.

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Budget Rent a Car fraud claims probed by RCMP

B.C. Attorney General Shirley Bond says provincial agencies are investigating allegations of fraud at Budget Rent a Car locations in the Vancouver area.

CBC News has spoken with Budget customers and former employees who accuse the company of grossly overcharging customers for minor repairs that sometimes aren't even done.

"There will be a fair process to look at whether the allegations are true or not," Bond said.

"It is being taken very seriously and I don't accept the fact that consumers should be treated inappropriately in this province and I expect the processes to be rigorous and examine the allegations."

Vancouver area Budget franchises are owned by Syd Belzberg, a prominent businessman who has won awards for philanthropy.

But some of his former employees claim Belzberg makes money by systematically deceiving customers.

Former employees allege Budget Rent a Car locations in the Vancouver area intentionally rip off customers. (CBC)

"We would consciously lie to people," Dylan Paul told CBC News.

"I will use the word lie and I will use the word swindle. It was by design. I had personal meetings with the owner, with the general manager, and I know how I participated in that. And a lot of times I should have just said, 'No.'"

Former employee Martin Torres tells a similar story.

"It was a big grab of money, like unbelievable — lots of money being made on a daily basis dishonestly. And you were part of it. And finally I got out," he said.

Paul, who managed Budget's downtown location, says he feels terrible about what he did.

"I've had people cry … because they can't afford [the repairs] ... and we are charging $1,000 for a windshield and it doesn't cost that," Paul told CBC News.

"And if someone did that to my wife, it would just break my heart. That was the reason I left."

Bogus charges

According to Paul, the scam was to slap customers with a bogus charge of at least $300 for minor vehicle damage.

From left to right, former employees of Budget Rent a Car shared stories about duping customers with CBC News: Martin Torres, Graeme Darbyshire, Dylan Paul and Elie Daher. (CBC)

"A car would come in and we would charge the person $1,000 for the windshield and tell them we are going to send it to get repaired," Paul said.

"Thirty minutes after that customer has left, we will rent that car to someone else … without repairing it."

The repair shop that came up with the estimates and repair bills is also owned by Belzberg, but customers were led to believe it was independent.

"We are all operating under the same business concept, business idea, which is find damages and charge people," said Elie Daher, who worked as a customer service representative for Budget's downtown location for several months.

Graeme Darbyshire, the lead customer service agent in charge of a suburban outlet, says ripping off customers was mandatory.

"It's Budget's way or the highway with everything from top to bottom — more so Syd Belzberg's way."

Darbyshire estimates as much as 70 per cent of the additional charges were unfair.

Foreigners bilked

The former employees say bilking foreigners was Budget's specialty.

"We knew one, these are foreigners so the chance of them complaining is very unlikely and two, the language barrier they don't know," said Paul.

Daher remembers an incident when his manager spotted a wealthy customer from Hong Kong and flagged her to pay more.

"We charged the lady $4,000 a week for renting the car … for a Mercedes C class," he said, adding the rental would normally cost $199 a day, or about $1,400 for seven days.

The employees all worked on commission, so the more they overcharged customers, the more they made.

"If you add up what happened with the dishonest sales tactics, the damage, the stuff like the fuel, it's easily millions of dollars," Paul said.

Belzberg has declined repeated requests for an interview with CBC News.

But his manager said in an email to CBC News he was "shocked" by the allegations made by former employees.

"We take these allegations very seriously," the email said. "We take great pride in the excellent service we give to our customers. Under no circumstances would we condone any business practices which do not serve the best interests of our customers."

The company earlier said the employee commission system for repairs had been scrapped and vehicle damage would now be assessed by an independent appraiser and repaired at an independent shop, adding that anyone caught misleading customers would be fired.

No apology

David Klein, a well-known class action lawyer, says tracking down customers who may have been overcharged could be a challenge.

Lawyer David Klein believes Budget customers have a solid case. (CBC)

"Finding all those people from all over North America can be a challenge and could be an impediment to having the matter proceed," he said.

"There are, though, enough people who are local, enough people who are right here in British Columbia, that I think a case would be viable."

The former employees who spoke to CBC News hope things will get cleaned up — but they're skeptical.

"Even now, with all this coming to light, you don't have the owner or the [general manager] come out and apologize for it," Paul said.

Budget's corporate head office in the U.S., which has the power to enforce changes in the Belzberg operation, says the allegations are being investigated.

"When this process is complete, we will then review our options with respect to taking appropriate action," the company said in a statement.

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Disney, Wal-Mart, Sears used deadly Bangladeshi factory

Amid the ash, broken glass and melted sewing machines at what is left of the Tazreen Fashions Ltd. factory in Bangladesh, there are piles of children's shorts bearing Wal-Mart's Faded Glory brand.

There were also shorts from hip-hop star Sean Combs's ENYCE label laying on the floor and stacked in cartons.

An Associated Press reporter searching the factory on Wednesday found these and other clothes, including sweaters from the French company Teddy Smith, among the equipment charred in the fire that killed 112 workers Saturday. He also found entries in account books indicating that the factory took orders to produce clothes for Disney, Sears and other Western brands.

Also listed was Li & Fung, a Hong Kong-based buying house that is among the biggest suppliers of garment products from Bangladesh. Li & Fung issued a statement Monday saying it placed orders at the factory for just one company, Kids Headquarters, and that the value of those orders totalled just $111,000 US.

Garment workers vandalize an auto rickshaw during a protest Wednesday against the death of their colleagues in a devastating fire. (Andrew Biraj/Reuters)

The garments and documents left behind in the factory show it was used by a host of major American and European retailers, though at least one of them — Wal-Mart — had been aware of safety problems. Wal-Mart blames a supplier for using Tazreen Fashions without its knowledge.

The fire has elevated awareness of something labor groups, retailers and governments have known for years: Bangladesh's fast-growing garment industry — second only to China's in exports — is rife with dangerous workplaces. More than 300 workers there have died in fires since 2006.

3 factory officials arrested

Police on Wednesday arrested three factory officials suspected of locking in the workers who died in Saturday's fire, the deadliest in the South Asian country's less than 35-year history of exporting clothing.

Local police Chief Habibur Rahman said the three will be questioned amid reports that many workers trying to escape the blaze had been locked inside. He said the owner of the factory was not among those arrested.

The three officials were arrested at their homes in Savar, the Dhaka suburb where the factory is also located. Rahman did not identify the officials or give their job status.

About 1,400 people worked at the plant, some 70 per cent of them women. Most are from the north, the poorest region of Bangladesh.

Workers who survived the fire say exit doors were locked, and a fire official has said that far fewer people would have died if there had been even one emergency exit. Of the dead, 53 bodies were burned so badly they could not be identified. They were buried anonymously.

The fire started on the ground floor, where a factory worker named Nasima said stacks of yarn and clothes blocked part of the stairway.

'Everyone was screaming for help. Total chaos, panic and screaming.'—Nasima, garment factory worker

Nasima, who uses only one name, and other workers said that when they tried to flee, managers told them to go back to their work stations, but they were ignored.

Dense smoke filled the stairway, making it hard to see, and when the lights went out the workers were left in total darkness. Another worker, Mohammad Rajib, said some people used their cellphones to light their way.

"Everyone was screaming for help," Nasima said. "Total chaos, panic and screaming. Everyone was trying to escape and come out. I was pulling the shirt of a man. I fainted and when I woke up I found myself lying on the road outside the factory.

"I don't know how I survived."

Rajiv said the factory conducted a fire drill just three days before the fire broke out, but no one used the fire extinguishers.

"Only a selected group of workers are trained to use the extinguishers. Others have no idea how to use them," he said.

The AP reporter who examined the factory Wednesday saw dozens of fire extinguishers with tags indicating they were inspected early this month. Many appeared unused.

Workers expressed support for the factory owner, Delwar Hossain. Rajib said he is "a gentle man" who heeded workers when they protested for more pay and against rough behavior by some managers.

"He took action and fired some of them," he said. "He did not sack any worker. He told us: `You are my people. If you survive, I will survive."'

3rd day of protests by garment workers

Prime Minister Sheikh Hasina and Interior Minister Muhiuddin Khan Alamgir have said arson is suspected. Police say they have not ruled out sabotage.

Bangladeshi garment workers protest Tuesday through the streets to mourn the death of the 112 victims of Saturday's fire in a garment factory on the outskirts of Dhaka, Bangladesh. (Ashraful Alam Tito/Associated Press)

Wal-Mart had received an audit deeming the factory "high risk" last year, said it had decided to stop doing business with Tazreen, but that a supplier subcontracted work to the factory anyway. Wal-Mart said it stopped working with that supplier on Monday.

Calls made to The Walt Disney Company and to Sears Holdings were not immediately returned.

Local TV reports said about 3,000 garment workers held protests over the fire Wednesday, blocking roads and throwing stones at some factories and vehicles. It was the third straight day of demonstrations, and as they did previously, factories in the area closed to avoid violence.

Police used batons to disperse the protesters, but no injuries were immediately reported.

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CNOOC, Nexen resubmit bid to U.S. investment body

Calgary's Nexen Inc. and the Chinese state-owned company seeking to buy it have withdrawn and resubmitted a notice about the proposed $15-billion acquisition to the U.S. Committee on Foreign Investment.

Nexen said Tuesday that the company and its bidder, China National Offshore Oil Co., did so under "mutual agreement" with the committee.

"Discussions with CFIUS continue, with a view to completing the CFIUS review process as expeditiously as possible," Nexen said in a brief statement.

Regulatory hurdles

Although Nexen is based in Canada, it has offshore holdings in the U.S. Gulf of Mexico and CNOOC said the deal requires approval from regulators in the U.S.

U.S. politicians on both sides of the aisle have cautioned Ottawa against turning over natural resources to a Chinese state-owned company. Critics fear that CNOOC may answer more to Beijing than it does to the market.

Industry Minister Christian Paradis is in the midst of deciding whether the deal would be of net benefit to Canada. The review period, which has been extended twice so far, is to end on Dec. 10, though it can be extended again with CNOOC's consent.

The Conservative government has said it will clarify its foreign investment guidelines shortly.

In an apparent bid to ease Ottawa's concerns, CNOOC has pledged to keep the head office in Calgary, seek a listing on the Toronto Stock Exchange and place some $8 billion of its assets under the control of Nexen's management in Canada.

It has also promised to carry on Nexen's social responsibility programs in Canada and around the world.

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Will a new Bank of Canada governor shake up interest rates?

Mark Carney's successor as governor of the Bank of Canada is not expected to implement a radical change in interest rate policy and most likely will hold the current underlying philosophy, which includes a hawkish attitude toward inflation.

Speculation has already begun about possible candidates to replace Carney, who announced on Monday that he will step down next June to become the next governor of the Bank of England.

But it's unlikely that the new Bank of Canada governor will diverge from Carney when it comes to setting interest rates here, says Louis Gagnon, a finance professor at Queen's University School of Business.

"In this business you're either hawkish or dovish. Hawkish people are very suspicious of inflation and dovish people are slightly more accommodating. [Carney] is in the hawkish camp," Gagnon said.

"I think the Bank of Canada as an institution, not only the governor, but the body, is hawkish. I'd be very surprised if they were to select someone who has a different philosophy, because that person would not sit well with that group of people."

The Bank of Canada has a two per cent target for inflation, which means that if inflation should exceed that level, interest rates would be increased to keep it in check. With the Canadian economy growing slightly — the OECD yesterday predicted moderate growth for Canada in 2013 — inflation might go up as well, which means the next governor could end up raising interest rates.

The Paris-based Organization for Economic Co-operation and Development said in its report the Bank of Canada may need to start raising interest rates from near record lows by the latter half of 2013.

However, Gagnon said that such a move shouldn't be interpreted as a new governor having a different policy objective than his predecessor.

"If [Carney] saw that inflation rose consistently above the two per cent mark, he'd most certainly increase interest rates."

As for governor contenders, Gagnon said there's no pecking order right now and that it will be a long time before a shortlist is created.

He said the candidate must have a deep and solid understanding of the macro economy, the capital marketplace, financial markets and the overall banking system.

"Monetary policy is so crucial. It's central to everything. It establishes the short-term interest rate, which itself is the starting point of the credit marketplace.

"So credit markets take their cues from monetary authorities. And so you have to have a very, very solid understanding of all these dimensions," said Gagnon.

The board of the Bank of Canada vets candidates for the governor's job and comes up with a short list, from which the government chooses.

Finn Poschmann, vice president of research at the C.D. Howe Institute, said that with Carney leaving after just over five years in a seven-year term, there may be an incentive for the board to look for continuity.

This is one of the reasons that Tiff Macklem, the senior deputy governor at the Bank of Canada, has been suggested as a leading candidate. Macklem has been with the Bank of Canada for a number of years, and also spent time in the finance department.

"There's of course no shortage of qualified possible contenders. But with continuity an incentive, if not an imperative, then you look inside for an experienced hand," Poschmann said. "They don't have to look very far for someone with the right set of experiences, both through Tiff's work on previous jobs, including the department of finance."

If continuity is important, then Bank of Canada deputy governors Agathe Côté and Timothy Lane could also be up for consideration.

Another possible contender is Jean Boivin, the associate deputy minister of finance and former deputy governor of the Bank of Canada.

Don Drummond, TD Bank's former chief economist, who spent years in senior roles at the department of finance, could also be a candidate. But Drummond said on Monday that he wasn't interested in the job, Bloomberg News reported.

Economic analyst Patti Croft said Julie Dickson, who heads the Office of the Superintendent of Financial Institutions Canada, would be her top pick.

"Her experience, expertise on the regulatory side would be a wonderful addition," Croft said. "It's something Mark Carney was very interested in. It was one of his comparative advantages and she has it in spades."

Croft also said Stephen Poloz, president and chief executive officer of Export Development Canada, who is an economist with global experience, would be a good choice.

"The important thing is there's a remarkable pool of talent they can draw from," Croft said.

With files from The Canadian Press

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BP suspended from new U.S. government contracts

The Obama administration put a temporary stop to new federal contracts with British oil company BP on Wednesday, citing the company's "lack of business integrity" and criminal proceedings stemming from the Deepwater Horizon disaster in 2010.

The action by the Environmental Protection Administration won't affect current contracts, but prevents BP and its affiliates from new government contracts and grants "until the company can provide sufficient evidence to EPA demonstrating that it meets federal business standards," the agency said.

In London, BP said it had no immediate comment but expected to make a statement later Wednesday.

It was not immediately clear what new or pending contracts the suspension might affect. In the past, BP has been a major supplier of energy to the U.S. military, and has also provided fuel products and drilling services for other U.S. agencies such as the Bureau of Ocean Energy Management.

The suspension will not affect any existing agreements between BP and the federal government.

2 BP supervisors, ex-executive in court on spill charges

The news comes as two BP rig supervisors and a former BP executive were scheduled to be arraigned Wednesday on criminal charges stemming from the explosion and the company's response to the oil spill.

BP well site leaders Robert Kaluza and Donald Vidrine were indicted this month on manslaughter charges in the death of the 11 rig workers. The federal indictment accuses them of disregarding abnormal high-pressure readings that should have been glaring indications of trouble just before the blowout of BP's Macondo well.

Former BP executive David Rainey was charged separately with concealing information from Congress about the amount of oil that was leaking from the well.

Their defence attorneys have vowed to fight the charges.

BP to plead guilty, pay $4.5B

On Tuesday, a BP lawyer entered a not-guilty plea for the company as it was arraigned on related criminal charges. The plea in Federal Court was a procedural move paving the way for the company to plead guilty at a later date.

David Rainey was indicted Nov. 15 on counts of obstruction of Congress and false statements. (Cheryl Gerber/File/Associated Press)

BP announced earlier this month that it will plead guilty to manslaughter, obstruction of Congress and other charges, and pay a record $4.5 billion US in penalties to resolve a Justice Department probe of the disaster.

Attorneys for BP and the Justice Department are scheduled to meet Dec. 11 with a federal judge to discuss a date for pleading guilty.

The Deepwater Horizon oil rig, owned by Transocean Ltd. but operated on behalf of BP, was drilling in the Gulf of Mexico about 80 kilometres southeast of the Louisiana coast the night of April 20, 2010, when it was rocked by an explosion. The rig burned for about 36 hours before sinking to the Gulf bottom about 1.6 kilometers below the surface.

The bodies of 11 workers were never recovered.

The blast led to the nation's worst offshore oil disaster as millions of litres of crude oil spewed from BP's well.

With files from CBC News

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Bombardier signs record $7.8B jet deal with VistaJet

Bombardier Inc. has made the biggest sale of business aircraft in its history, potentially worth up to $7.8 billion if all options are exercised, the Montreal-based company announced Tuesday.

VistaJet, a private European company that provides luxury chartered flights, has placed firm orders for 56 Bombardier Global jets valued at $3.1 billion and acquired options for a further 86 Global jets.

'We are thrilled VistaJet has again chosen to grow their fleet with the industry-leading Global family.'—Steve Ridolfi, president of Bombardier Business Aircraft

VistaJet currently operates a fleet of Bombardier aircraft based in Europe, the Middle East, Asia and West Africa.

The new purchase is part of VistaJet's goal of making business aviation more accessible to emerging markets, said VistaJet chairman Thomas Flehr, who founded the company in 2004.

"This order is the most significant milestone for VistaJet and is a testimony to our successful strategy that focuses on global coverage," Flehr said in a joint statement by the companies.

"Our customers need to fly point-to-point across the globe, and in many instances at short notice."

Steve Ridolfi, president of Bombardier Business Aircraft, said it was also a historic order for Bombardier.

"It goes without saying that we are thrilled VistaJet has again chosen to grow their fleet with the industry-leading Global family," Ridolfi said.

VistaJet has placed firm orders for 25 Global 5000s, 25 Global 6000s and six Global 8000 jets. Deliveries will begin in 2014.

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SNC-Lavalin payments under scrutiny total $195M

Canadian engineering giant SNC-Lavalin says it has no evidence that $139 million paid to two companies for work related to projects in Libya was misused, following revelations that Swiss authorities are looking into the money as part of an international investigation of possible corruption and money laundering.

And the Montreal-based conglomerate says the amount is separate from $56 million in other mysterious payments revealed last spring.

SNC confirmed Monday that it hired the two firms, registered in the British Virgin Islands, as "commercial agents" — which the company says are people or entities hired to negotiate or operate on SNC's behalf who are paid a commission for their services.

Former SNC-Lavalin executive vice-president Riadh Ben Aïssa is accused of having a hand in the $139 million in anomalous payments. (Radio-Canada)

But SNC-Lavalin said it has no knowledge that the fees it paid to Duvel Securities Inc. and Dinova International Inc. between 2001 and 2011 might have been part of a laundering scheme.

"We are not aware of any evidence that funds paid to these companies were misused," spokesperson Leslie Quinton told CBC News in an email. "To the extent any fiduciaries of the company are found to have misused company funds, we reserve our right to makes claims to recover these amounts."

Over the weekend, a joint investigation by CBC, its French arm Radio-Canada and Swiss public broadcaster RTS revealed that Swiss authorities, with help from the RCMP, have been tracking the $139 million as part of a money laundering and corruption prosecution of former SNC executive vice-president Riadh Ben Aïssa and Geneva-based lawyer Roland Kaufmann.

Sources told RTS that the Virgin Islands corporations were set up by Kaufmann at Ben Aïssa's behest, and that prosecutors believe some of the money SNC paid to the companies' Swiss bank accounts wound up in Ben Aïssa's personal accounts in Switzerland.

Ben Aïssa, who was arrested in Bern in April, is still in custody and has been formally indicted on charges of corrupting a public official, fraud and money laundering tied to his dealings in North Africa — where he was in charge of SNC's lucrative business in Libya, among other responsibilities.

SNC also said Monday that the $139 million reportedly paid by its SNC International division to Dinova International and Duvel Securities is in addition to $56 million in improper payments that were revealed in March following an external audit. Those payments were from the company's construction division to commercial agents on two separate construction projects, neither of which SNC has publicly identified.

Spokesperson Quinton said SNC is co-operating with the latest investigation and has handed its accounting files and other records to Swiss officials.

"We have provided information and documentation to the appropriate authorities, and this includes the information we had on Duvel and Dinova," Quinton said. "We also reiterate that we strongly believe that anyone found to have committed any wrongdoing in connection to this or any other investigation should be brought to justice."

SNC watcher questions oversight at company

SNC-Lavalin shares closed off slightly Monday at $40.63, down from $41.54 Friday before news broke of the Swiss investigation into the $139 million in payments.

SNC-Lavalin board chairman Gwyn Morgan said earlier this year that the company had already taken action 'on all employees we believe behaved improperly.' (Fred Thornhill/Reuters)

"I'm not surprised" about the reports, said Anthony Scilipoti of Torono-based Veritas Investment Research, which has been highly critical of SNC-Lavalin. In late April, the equities research firm published a report about the engineering conglomerate titled Skeletons in the Closet.

"I think it makes you question the controls throughout the organization, not just in that division, because it's all interrelated," Scilipoti added. "I think it makes you question all the deals that were taking place."

So far, the widening scandal at SNC has claimed three company executives: Ben Aïssa and vice-president of finance Stéphane Roy were forced to resign in February, then CEO Pierre Duhaime stepped down in March.

At the time, SNC-Lavalin board chairman Gwyn Morgan told reporters that that company had taken action "on all employees we believe behaved improperly." The improper payments, he said, "were conducted and paid and done... by the people that have been released."

The latest revelations about SNC-Lavalin come after the company was awarded a prize last week from the Canadian Institute of Chartered Accountants for best corporate reporting.

• Scandal first engulfed the Montreal-based engineering and construction giant SNC-Lavalin following the November 2011 arrest in Mexico City of Cyndy Vanier. The Ontario mediator is facing trial there on accusations she masterminded a plot to smuggle deposed Libyan dictator Moammar Gadhafi's son Saadi and members of his family to a life in hiding in Mexico.
• Vanier told CBC News in an exclusive interview inside prison in Chetumal, Mexico, that she was hired by SNC-Lavalin last year to charter planes to fly staff into North Africa on their travel to and from Libya. She said she met with then SNC executive vice-president Riadh Ben Aissa in Montreal and signed agreements with his vice-president finance Stéphane Roy. Vanier maintained her work was strictly to help the company arrange transport and support for employees in and out of Libya once the civil war that toppled the Gadhafis subsided.
• Then, after the demise of the Gadhafi regime —which had provided billions in contracts to SNC-Lavalin — SNC employees and insiders began levelling allegations of criminal activity tied to the company's Libyan business dealings, which had been under the direction of Ben Aissa.
• One insider sent a damning "poison pen" letter to SNC-Lavalin executives as well as members of the board of directors in December 2011 levelling a string of unproven allegations and accusing Ben Aissa of funnelling tens of millions of dollars out of the company.
• Ben Aissa and Roy were forced to resign from the company on Feb. 9, 2012. Then CEO Pierre Duhaime was forced to resign on March 26, 2012, when SNC revealed that external auditors had discovered problems with payments of $56 million by the company.

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Greece bankruptcy averted with new deal

Greece has avoided imminent bankruptcy after its international creditors finally agreed to give it the money it urgently needs but the cash-strapped country's economic distress is likely to drag on for years to come.

After three weeks of negotiations, Greece's euro partners and the International Monetary Fund agreed to release vital loan payments totaling $56.8 billion Cdn and introduce a series of measures designed to reduce the country's massive debts to a more manageable level within a decade. These include reducing the interest rates Greece has to pay on the loans and a bond buyback program.

Greek Prime Minister Antonis Samaras hailed the agreement in Brussels early Tuesday as a victory that heralds "a new day for all Greeks," but the reaction in the markets was a bit more cautious.

Most stock markets in Europe were modestly higher. The Stoxx 50 index of leading European shares was up 0.4 per cent, but the main stock index in Athens fell 1.4 per cent as investors had hoped for some more debt relief for the country. The euro also gave up earlier gains to trade 0.4 per cent lower at $1.2947.

"There remains the potential for this deal to fall apart in the medium term as there are a lot of moving parts and it is a long way away from the permanent fix that the IMF had been insisting upon," said Gary Jenkins, managing director of Swordfish Research. "Instead it is just one more big kick of the can down the road."

Unemployment at 25 per cent

For three years, Greece has been struggling to convince markets as well as its creditors that it can get a grip on its public finances, which spiralled out of control. The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25 per cent.

The so-called troika of the European Central Bank, IMF and the European Commission has twice agreed to bail out Greece, pledging a total of $309.6 billion in rescue loans — of which the country has received about $193.5 billion so far. In return for its bailout loans, Greece has had to impose several rounds of austerity measures and submit its economy to scrutiny.

Without the bailout money, the country would be staring bankruptcy in the face together with a possible exit from the 17-country eurozone, with potentially chaotic repercussions for the world economy.

The meeting agreed to release $44.4 billion in loans to Greece in December, with the remainder issued in three installments in the first quarter of 2013. The money will be used to help recapitalize Greece's struggling banking industry and pay back suppliers.

Greek Finance Minister Yannis Stournaras said the deal was "very important for it keeps Greece in the euro, offers it a significant opportunity to exit the vicious cycle of recession and over-indebtedness, and contributes to its debt reduction."

But opposition leader Alexis Tsipras, whose Radical Left Coalition wants Greece to scrap its bailout commitments, accused the conservative-led governing coalition of failing to defend the country's interests.

"The solution does not include a viable program for Greece, therefore it is no solution," he said. "(It follows) successive failures of a program that has destroyed our society and meets none of the targets it sets."

Third time's a charm

The meeting in Brussels was the third time in the last two weeks that finance ministers from the 17 European Union countries that use the euro had tried to hammer out a deal on the next installment of bailout money for struggling Greece.

The main aim of the bailout program is to right Greece's economy and get it to a point where it can independently raise money on the debt markets. It has been clear for months that the country is far from achieving that goal. The talks have centred on trying to get Greece back on the path to sustainability by reducing the country's debt load.

Tuesday's meeting reached an agreement where Greece's debt level would be reduced from the 190 per cent of its economic output predicted for 2013 — some $262 billion — to 124 percent by 2020 and below 110 percent by 2022. The IMF had originally insisted on a debt-to-GDP ratio of 120 percent by 2020.

To reach this level, the meeting agreed on a raft of measures. These included:

• A cut of 100 basis points on the interest rate charged to Greece by other eurozone member states — excluding those that are also receiving bailouts.
• A 15-year extension of the maturities of loans from other countries and the eurozone's bailout fund, the European Financial Stability Facility, and a deferral of interest payments by Greece on EFSF loans by 10 years.
• A program whereby Greece could buy back some of its debt from private investors. The details of this program are still to be agreed by the eurogroup and IMF.

The deal still requires the authorization of a number of Parliaments in Europe, including Germany's, where patience with repeated Greek rescues has been running low.

However, Rainer Bruederle, the caucus leader of the Free Democrats, the junior coalition partner, said he expects broad approval this time on Thursday.

"Conditions have been put together which maintain a tough mechanism toward Greece, but still save us from a collapse of the Greek economy possibly having consequences that could pull down the whole of Europe," he said.

Greek newspapers were divided on whether the agreement would give the country breathing space to right its economy, or keep it trapped in years of recession and austerity.

The broad-circulation Ta Nea daily argued in an editorial that the deal affords Greece "a last chance" to escape the crisis.

The left-wing Efimerida ton Syntakton carried the headline "A poisonous (loan) installment," arguing that the agreement "condemns Greek society to a slow death."

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Corporate profits rebound, up 3.7% in third quarter

Statistics Canada says corporations earned $72.2 billion in operating profits in the third quarter, up 3.7 per cent from the previous quarter.

The increase during the July to September period follows a 7.0 per cent decrease in the second quarter.

The agency says operating profits increased in 14 of 22 industries, with manufacturing leading the overall rise, accounting for nearly 30 per cent of the $2.6 billion rise in operating profits over the second quarter.

In the non-financial sector, third-quarter operating profits rose 3.7 per cent to $52.9 billion, after a 5.7 per cent decrease in the previous quarter.

In the financial sector, operating profits increased 3.7 per cent to $19.2 billion, following a 10.5 per cent decline in the second quarter.

On a year-over-year basis, operating profits for corporations were 3.1 per cent higher in the third quarter.

On that basis, profits fell 2.5 per cent in the non-financial sector, while they rose 22.7 per cent in the financial sector.

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Canada's economy held back by slow global growth

The Organization for Economic Cooperation and Development says weak global demand is keeping Canada's economy in the slow lane.

The Paris-based group said in a report Tuesday it expects Canada's economy to grow by only 1.5 per cent in the last three months of the year.

For 2013 as a whole, the OECD expects Canada's economy to expand by 1.8 per cent and increase to 2.4 per cent in 2014.

All those figures are under what the Bank of Canada and officials at the Department of Finance are projecting. Earlier this month, Finance Minister Jim Flaherty said he expects two per cent growth next year.

The OECD also cites poor productivity and Canada's housing market for having the potential to knock the economy to its knees — which could throw a wrench in Ottawa's plans to get back to balanced budgets as soon as possible.

Two things the group says are working in Canada's favour are the booming natural resources sector and the ongoing turnaround in the United States, Canada's largest trading partner.

For the first time since 2007, economic growth in the United States is expected to surpass that of Canada this year.

But its outlook for Canada is still far stronger than for Europe, which is expected to remain in recession through most of 2013.

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Swiss probe $139M SNC-Lavalin laundering case

Prosecutors in Switzerland have formally indicted former SNC-Lavalin executive Riadh Ben Aissa on allegations he laundered vast sums of money tied to at least $139 million in mysterious payments by the company, according to Swiss public broadcaster RTS.

CBC News has also learned RCMP officials are working with Swiss police and have travelled to Switzerland to assist in the joint investigation.

Citing multiple confidential sources in Switzerland and North Africa, RTS investigative reporter Yves Steiner told CBC News that Swiss authorities have tracked money flowing from the Canadian engineering conglomerate to Swiss bank accounts registered to companies in the British Virgin Islands. Some of the funds then went directly into Swiss bank accounts controlled by Ben Aïssa, Steiner said his sources told him, and Swiss officials are working with the RCMP to get to the bottom of the mystery.

"Swiss investigators are interested in this network of companies and accounts, transfers that were allegedly authorized by Riadh Ben Aissa to obtain contracts in Tunisia and, especially, Libya," RTS reported Sunday.

The RCMP has not commented on these latest reports but has previously refused to answer questions, citing the ongoing investigation.

Ben Aissa was arrested in Switzerland last spring and remains in jail on suspicion of money laundering and corruption of public officials related to his business dealings in North Africa.

Prosecutors have also charged Geneva-based lawyer Roland Kaufmann with money laundering and corruption. According to RTS, authorities accuse him of helping Ben Aissa to set up two companies, Dinova and Duvel Securities, registered in the British Virgin Islands. The broadcaster reports investigators are probing millions of dollars in payments from SNC-Lavalin to those companies' Swiss bank accounts dating back as early as 2001.

CBC News placed multiple calls to Dinova and Duvel Securites last week but was unable to reach either of the lone directors listed on the company's registration records in the BVI.

Swiss authorities are still trying to sort out the exact movements of the $139 million, Steiner said, and have interviewed several SNC-Lavalin officials. CBC News has confirmed that some interviews were completed in April, and that Sami Bebawi, Ben Aïssa's predecessor as head of international construction projects, flew to Switzerland last week to talk to Swiss prosecutors.

"I have many, many sources who say, 'OK, there is a system of corruption, there is a system of money laundering — or could be used for this kind of thing at least — in fact based here in Geneva,'" Steiner told CBC News.

$139M more than double what SNC audit found

The RTS report that investigators are tracking $130 million Swiss francs ($139 million Cdn) only deepens the mystery around SNC-Lavalin payments to procure construction projects given the company's own announcement in March that audits had discovered only $56 million in improper payments.

Neither Ben Aïssa's Canadian nor his Swiss lawyer would comment on these latest allegations. Reached Saturday, Canadian lawyer Michael Edelson did say, however, that Ben Aissa is not pleased with a recently launched civil suit by his brother against SNC. On Nov. 5, orthopedic trauma specialist Rafik Benaissa filed a $5-million lawsuit against SNC-Lavalin accusing the company of using his brother as a scapegoat and damaging his family's name.

An RCMP officer watches over the lobby of SNC-Lavalin's Montreal headquarters during a police raid in April. (Graham Hughes/CP)

"SNC-Lavalin knowingly allowed and condoned the use of millions of dollars to fund lobbyists in the Middle East to get lucrative contracts with major leaders of some countries, particularly in Libya," the suit claims. None of its allegations have been tested in court.

The company declined CBC's request for an interview with its CEO and would not answer whether Riadh Ben Aissa could have singlehandedly approved and concealed the $139 million in payments.

"We continue to collaborate in all investigations with authorities as they are pursued," SNC-Lavalin spokesperson Leslie Quinton said in an emailed statement.

"Because these investigations are ongoing and we continue to cooperate, unfortunately there is nothing further that we are able to add at this time, except to reiterate that we hope that if anyone is found to have committed any wrongdoing, they are brought to justice," she said.

The ultimate purpose of the $139 million in SNC-Lavalin payments remains unclear.

However, an SNC insider — the same person who anonymously accused Ben Aissa of wrongdoing in a December 2011 "poison pen" letter to company directors and executives — told CBC News "more has to be done" within the company.

"There is no way that kind of money is moved without approvals" from people still within the company, the source said. "Employees who detested the rule of Ben Aissa are sympathetic to Ben Aïssa's [brother's] lawsuit that claims that the management knew and encouraged his acts.

"This is not a story of foreign criminals, but a sad story of Canadian greed."

• Scandal first engulfed the Montreal-based engineering and construction giant SNC-Lavalin following the November 2011 arrest in Mexico City of Cyndy Vanier. The Ontario mediator is facing trial there on accusations she masterminded a plot to smuggle deposed Libyan dictator Moammar Gadhafi's son Saadi and members of his family to a life in hiding in Mexico.
• Vanier told CBC News in an exclusive interview inside prison in Chetumal, Mexico, that she was hired by SNC-Lavalin last year to charter planes to fly staff into North Africa on their travel to and from Libya. She said she met with then SNC executive vice-president Riadh Ben Aissa in Montreal and signed agreements with his vice-president finance Stéphane Roy. Vanier maintained her work was strictly to help the company arrange transport and support for employees in and out of Libya once the civil war that toppled the Gadhafis subsided.
• Then, after the demise of the Gadhafi regime —which had provided billions in contracts to SNC-Lavalin — SNC employees and insiders began levelling allegations of criminal activity tied to the company's Libyan business dealings, which had been under the direction of Ben Aissa.
• One insider sent a damning "poison pen" letter to SNC-Lavalin executives as well as members of the board of directors in December 2011 levelling a string of unproven allegations and accusing Ben Aissa of funnelling tens of millions of dollars out of the company.
• Ben Aissa and Roy were forced to resign from the company on Feb. 9, 2012. Then CEO Pierre Duhaime was forced to resign on March 26, 2012, when SNC revealed that external auditors had discovered problems with payments of $56 million by the company.

With files from CBC's Brigitte Noel and Jeremy McDonald

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Cyber Monday, Black Friday sales could trump Boxing Day

As hype surrounding Cyber Monday and Black Friday spreads north of the border, experts say the burgeoning weekend-long holiday sales event could soon surpass Boxing Day as the busiest shopping period of the year.

With the frenzy of what could be Canada's biggest-ever Black Friday over, deal-seekers are turning their focus to Cyber Monday, a day of deep online discounts held the Monday after the busiest shopping day of the year in the U.S.

For years, both events were largely U.S. phenomena that had Canadians who wanted to participate visiting American websites or making cross-border trips on the day after U.S. Thanksgiving, which marks the start of the crucial holiday shopping season when retailers turn profits, or go "into the black."

But a combination of factors — U.S. competitors setting up shop in Canada, Canadian retailers trying to keep sales local, Canadians' shifting shopping habits and tight-fisted consumers with shaky confidence in the economy — are helping to establish the events on Canadian soil.

Willy Kruh, global chairman in retail markets at KPMG, said he wouldn't be surprised if the four days from Black Friday to Cyber Monday soon overtake Boxing Day, now expanded to Boxing Week, as the best period for retailers in Canada.

"On Boxing Day, Christmas is over and they've got to deep discount (merchandise), now you're selling to those who are looking for Christmas presents for deals," he said.

"I'd much rather kick start the season with significant sales this early and I know where my inventory's going to end up, I know where my margins are, I can calculate it more, I can create a greater excitement for the retail season doing it in November than when the season's over."

Cyber Monday growing faster than Black Friday

He says Cyber Monday — which cropped up in Canada just three years ago — is growing at an even faster pace in Canada than Black Friday, as retailers look for new ways to fight back against U.S. competitors eating into their profits.

Last year, Canadian Black Friday sales were up 8.5 per cent from 2010, while Cyber Monday sales grew at 15.4 per cent, according to KPMG research.

Cyber Monday emerged with the advent of online shopping in the 1990s as shoppers wanting to continue their Black Friday spree logged-in at home, as well as at work on the following Monday.

Retailers began to notice a spike in traffic on the day, which is now the busiest online shopping day in the U.S.

Experts and retailers expect this Cyber Monday to be the biggest Canada has ever seen.

"The level of awareness around Cyber Monday last year was fairly limited, savvy web shoppers would know about it, but in terms of mass appeal in the Canadian population…it was nowhere near where we expect it to be this year," said Thierry Hay-Sabourin, director of e-commerce for Future Shop and Best Buy Canada.

Cyber Monday is becoming nearly as popular in Canada as Black Friday, said Kelly Askew, managing director of retail management consulting at Accenture in Canada.

And while e-commerce penetration is lower in Canada than in the U.S., "we're seeing a bit of a tidal change in how Canadians regard internet shopping now," he said, adding that selection, security and shipping at Canadian retailers are improving.

And Canadian chains are seizing opportunities to pull some of their sales forward, he said.

"I suspect we may start to see some declines in the heavy reliance that Canadian retailers have traditionally had on Boxing Day to make their annual numbers."

10% of retail sales online

Kruh pointed out that online shopping makes up just 10 per cent of total retail sales in Canada, but he sees it growing at a much more rapid pace this year and over the next few years.

Canadian consumers are adopting the trend, in part by shopping at sites south of the border that ship across the border, and a growing number of Canadian retailers are realizing they need to offer similar promotions to keep their customers.

This year marks the first time Toys 'R' Us Canada is putting a big emphasis on Cyber Monday, as the company strives to be one of the first in Canada to jump on board in an effort to keep spending local.

"For the past three to four years, Toys 'R' Us, and Canadian retailers in general, have been upping the ante every year…to entice Canadian consumers to stay local and make purchases on .ca and not .com," explained Toys 'R' Us Canada spokeswoman Victoria Spada.

As both Canadians' shopping habits and retailers' online offerings evolve, e-commerce is becoming a real force that could threaten bricks and mortar shops that don't adapt.

A recent American Express poll found that 56 per cent of Canadians plan to shop online for at least some of their gifts this season, up five per cent from 2011. And 23 per cent of those surveyed appeared so averse to crowded malls, long lineups and busy parking lots that they would rather clean their toilets than visit a mall the week before Christmas.

I think it's indicative of the fact that Canadians are becoming more comfortable shopping online," says consumer technology expert Marc Saltzman.

Saltzman believes online shopping will eventually eclipse trips to the mall as a web-savvy generation of young people comes of age.

"I think its a generational thing and increasingly as the younger generation grows up shopping online they're going to be very comfortable doing it, and there's going to be less of a reason to go in and touch and feel the product."

With files from The Canadian Press

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Onex offers $2.3B for American insurer USI

Toronto-based conglomerate Onex Corp. has an agreement to acquire U.S. insurance company USI in a friendly deal valued at $2.3-billion US.

USI is a privately held affiliate of Goldman Sachs with more than 3,300 employees in about 100 offices across the United States, including a headquarters in the New York City area.

It deals in property and casualty insurance, employee benefits and retirement consulting.

Goldman Sachs, the New York-based investment banking giant, acquired USI in 2007. There had been media reports since September that it was seeking to sell the company.

USI owns division of TD insurance

Sumit Rajpal, a managing director at GS Capital Partners said, in a statement on Monday that "we are pleased with the company's performance over the last several years."

"Since our take-private in 2007, USI has successfully integrated operations and developed a common operating platform with industry-leading margins, differentiated acquisition capabilities, and a strong platform for organic growth," Rajpal said.

Onex is a Canadian conglomerate involved in a wide range of industries, including manufacturing, real-estate, movie theatres and sugar refining. It typically invests a relatively small amount of its own capital in friendly deals on behalf of itself and institutional partners.

The USI deal includes a $700-million equity investment in USI through Onex Partners III. Onex owns about 25 per cent of the partnership and manages it on behalf of itself and the other partners.

Once the acquisition is completed, USI will be co-owned by Onex, Onex Partners III and employees of USI.

Robert Le Blanc, an Onex managing director. said USI "is well positioned to continue to grow both organically and by building on its track record of successful acquisitions."

Among USI's recent deals was its purchase of a U.S. insurance subsidiary of TD Bank. That deal, announced in September, was expected to contribute $582.2 million in annual revenue to USI. Other terms weren't disclosed.

Mike Sicard, USI's chief executive officer, said in a statement that "we look forward to our next phase of growth in partnership with Onex."

Founded in 1994, USI operates in 26 states and has its headquarters in Briarcliff Manor, N.Y. It's ranked as the ninth largest insurance broker in the United States and 13th largest in the world.

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CIBC ups RIM target price to $17

Research In Motion has received another vote of confidence from the investment community, this time from CIBC.

The bank's capital markets arm has raised its price target for the Canadian smartphone maker's stock to $17 — up from CIBC's previous estimate of $8 per share.

CIBC has also RIM stock a "sector outperform" rating — an improvement from the "sector underperform" rating it has had due to skepticism about RIM's ability to come out with a new generation of products that will beat back the competition.

Research In Motion shares closed Friday at $11.61 in Toronto and at $11.66 US on the Nasdaq market.

A morning note from CIBC World Market analyst Todd Coupland says he thinks RIM's stock is "materially undervalued."

He points to the base of existing subscribers to BlackBerry smartphones as a source of strength for the company.

There have been several similar upgrades ahead of RIM's launch of the BlackBerry 10 operating system that's scheduled to be launched Jan. 30.

CIBC's revised price target is $2 above an estimate last week from National Bank Financial.

The BB10 devices are seen as a make-or-break development for the Waterloo, Ont.-based company as it competes against Apple's iPhones, devices using Google's Android operating system and a refreshed Microsoft smartphone system..

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Inflated Quebec construction contracts got federal tax dollars

Taxpayers across the country had their money spent on Quebec construction projects identified at an eye-opening corruption inquiry as suffering cost overruns through collusion schemes, a review of contracts by The Canadian Press has revealed.

A search through public contracts tabled at the province's corruption inquiry has revealed numerous cases where federal money went to projects whose price tag was, according to witness testimony, inflated by scams.

The 91 contracts reviewed had been tabled at the inquiry in recent weeks as a pair of witnesses — a disgraced construction boss and Montreal city official — walked the commissioners through their role in the bid-rigging process.

A subsequent scan through those contracts has shown that at least 15 received federal funding, with the federal contribution in each case ranging from under $200,000 to more than $700,000.

And that could be merely the tip of the iceberg. The Canadian Press only examined documents tabled during the testimony of two early inquiry witnesses, only in the City of Montreal, only for sewer work, and linked to only one federal program.

The corruption inquiry has been shedding light on collusion tactics that raised the cost of Quebec projects by as much as 35 per cent — as the Mafia, certain political parties, construction companies and corrupt city officials all cashed in on the illicit spoils.

The inquiry is still underway but it has already prompted the resignation of the mayors of Montreal and the big suburb next door, Laval.

Asked about those 91 contracts, the federal government has insisted that no new safeguards are necessary for the transfer of infrastructure dollars.

The Government of Canada says it sets a budget for infrastructure, but it's provincial governments that are responsible for choosing suitable projects.

A number of contracts qualified for funding under the Canada-Quebec Infrastructure Program Agreement, which started in 2000 and under which Ottawa contributed one-third of the costs.

That specific federal-provincial program sent $505 million to Quebec over a decade, before wrapping up in 2010, and did not include historic multibillion-dollar stimulus programs after 2008.

The Canada Economic Development for Quebec Regions, which oversaw the Canada-Quebec IPA program, says there is no indication in audits that any money was misspent.

"Each year, the governments of Quebec and Canada agreed on an audit plan. The plan is carried out by an external audit firm and the results have shown no irregularities," said Stéphane Dufour, director of business development for the federal agency.

The inquiry has heard that collusion is difficult to detect.

While testifying, one crooked Montreal bureaucrat even bragged that his own bosses might have failed to catch him, had they wanted to, because he was so good at hiding inflated costs.

And the federal audits did not look as closely at the projects as the Charbonneau Commission is currently doing. Contracts are now being projected onto overhead screens while witnesses are asked to comment on them, one at a time.

891 projects approved by the feds

The Canadian Press reviewed 91 tabled during the testimony of two witnesses who said they participated in bid-rigging: ex-construction boss Lino Zambito and retired city engineer Gilles Surprenant.

The result: more than a dozen dirty deals cited at the probe were funded by the feds.

The federal contribution to these questionable sewer deals represented 33.3 per cent of the winning bid. For example, Ottawa's share of a $2.29 million sewer contract in 2004 in the north-end borough of Ahuntsic was $764,636. In a 2003 example, the federal contribution for an almost $600,000 sewer deal in Rosemont, a district in eastern Montreal, was nearly $200,000.

The allegations made inside the inquiry have not been proven outside, and could be subject to contradictions in the remaining months of testimony.

A total of 891 projects were approved by the feds under that IPA program in Quebec.

The federal role was to review submissions for projects already accepted by Quebec, and to determine whether they met the criteria for the program.

While the federal government provided the cash, most of the responsibility for vetting and dealing with applicants fell to Quebec, Dufour said.

"The (federal) government doesn't deal directly with the project promoter — that's why it's not responsible for contracts," Dufour said.

Quebec's own audit of the program showed no irregularities. The inquiry has heard in other testimony that the province was ill-equipped to guard against corruption because of a shortage of qualified staff and heavy workloads.

Province not planning more safeguards

The province is now creating additional safeguards, such as hiring more engineers. As for the federal government, while the national Competition Bureau is examining corruption schemes in the province, it doesn't appear to be planning new safeguards.

Dufour says the federal government is confident that the existing ones work properly.

"For all our programs, checks and balances measures are already in place and ensure the sound management of our programs," Dufour said.

The federal government is being pressured to spend more money on municipal infrastructure.

Canadian cities are currently demanding a major increase in federal funding, by $2.5 billion a year to $5.75 billion, which they say is desperately needed to address aging infrastructure. The current federal funding regime ends in 2014 and the Conservative government is working on a new plan.

Dufour won't say whether the federal government is taking a second look at any past Quebec contracts. But he says it could.

"Each case is a particular case," Dufour said.

"In instances like the ones you are referring to we would analyze the situation, the available evidence, and then evaluate the remedies available under the existing agreements."

Since the contracts were between Quebec and the contractors, he said it would be up to the provincial government to seek legal recourse.

However, he said the federal government could call in the police: "In the event that there is a suspicion that a criminal act was committed, law-enforcement authorities will be informed."

The Canadian Taxpayers' Federation says the feds should just get out of funding projects better handled by other levels of government.

"Even if there were no allegations of corruption, it's just a dumb idea for the federal government to be mucking around with water plants and potholes and things for which they have no specific expertise," said Gregory Thomas, the organization's director.

Thomas said the funding process is flawed and lacks proper follow-up.

He said that there is a tremendous overhead cost in taking money from people in a province, then sending it back to them for provincially funded projects.

"It's a bad model and it doesn't enhance accountability," he said.

The Quebec inquiry will not examine the federal role. A spokesman for the probe has explained that any questions touching on the feds could be ruled out of bounds.

That includes questions about whether Ottawa had the proper oversight — and whether federal political parties also benefited from illegal donations from construction companies.

But Thomas said the probe should still interest the federal government. He said people across the country have a right to be angry about the allegations coming out of the inquiry.

"Every dirty transaction, every dime that goes to organized crime, undermines the fabric of the country," he said.

"[It's] not just the City of Montreal or the province of Quebec."

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Inflation unchanged as prices increase 1.2% in October

Consumer prices increased by 1.2 per cent in the 12 months ended in October, leaving Canada's inflation rate unchanged for three consecutive months.

Statistics Canada said Friday that smaller price increases for energy offset larger gains in food, air travel and property taxes.

The core index, which the Bank of Canada pays closer attention to in setting its policy decisions, was unchanged at 1.3 per cent.

The 1.2 per cent showing was stronger than expected by economists.

"With the sharp drop in prices recorded last December unlikely to be repeated, the inflation rates are likely to end the year higher than they were in October," RBC economist Dawn Desjardins said in a note following the release of the data.

"The low level of interest rates will likely spark a reacceleration in growth," she said. "This means that the bank's overnight policy rate will likely stay at one per cent until the middle of next year."

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Cyprus bailout talks make 'good progress'

Cyprus' potential international creditors said Friday they have made "good progress" in negotiations on a possible bailout for the crisis-hit country.

Despite earlier hopes that a deal was imminent, they said long-distance talks would continue on securing an agreement that will make Cyprus the fourth euro country to receive international help with its debts.

Representatives from the so-called troika of the European Commission, the European Central Bank and the International Monetary Fund said they are awaiting the preliminary results of an investigation into how much Cyprus' ailing banks will need to shore up their finances.

This will help determine the size of a bailout that won't push the country's debt to unsustainable levels.

"Discussions are expected to continue from respective headquarters with a view to making further progress toward a potential program," a troika statement said.

In its own statement, the Cypriot government said it had reached "a convergence" on proposals that will make up the bailout agreement. It said the preliminary estimate on the banks' recapitalization needs which is expected in early December will move negotiations forward so that Cyprus' euro partners can rubber-stamp a bailout accord when they meet next month.

The exact figure on the banking sector's needs is crucial, given its large size relative to the Cypriot economy.

Credit ratings agency Fitch said Friday that the banks' assets are worth four times the size of the country's €17.5 billion ($22.5 billion Cdn) economy.

'Decisive progress' made

The Cypriot government said parliamentary approval from eurozone member countries is expected to come at the end of January when Cyprus will be able to draw the cash it needs from the EU bailout fund to keep its banks and economy afloat.

It also said Cypriot President Dimitris Christofias would soon address the nation on the bailout deal.

The European Union's monetary affairs commissioner Olli Rehn welcomed the "decisive progress" made in bailout talks.

"I consider this an important step toward full agreement on an assistance program for Cyprus which can be finalized once the interim results of the due-diligence exercise are known and after agreement by the eurogroup," Rehn said in Brussels.

Cyprus sought international aid in June to save its banking sector from collapse after banks failed to replenish huge losses they suffered on bad Greek debt and loans.

The size of the bailout is estimated to range between €14-17.5 billion ($18-22.5 billion). Most of that is expected to go to recapitalizing banks, while around €7.5 billion will be channeled to refinancing the country's debt and to cover fiscal shortfalls over the deal's four-year implementation timetable.

Economy expected to shrink by 3.5%

Cyprus, which is one of 17 EU countries to use the euro, has been unable to borrow from international markets for over a year because of its junk credit rating.

Three other euro countries have received international help with their debts — Greece, Ireland and Portugal.

Separately, Spain has also been given a €100 billion loan facility to strengthen its banking sector. Like the previous bailout recipients, Cyprus will have to commit to a range of spending cuts and tax increases.

It is the terms of these austerity measures that the country and its international creditors have been thrashing out.

Cyprus government spokesman Stefanos Stefanou said the left-wing government had negotiated hard to safeguard key workers' benefits and to help the economy rebound from a projected contraction next year of 3.5 per cent.

Speaking on state broadcaster CyBC, Stefanou said the road to a deal opened after the troika yielded to a Cypriot demand to invest part of future proceeds from offshore natural gas deposits instead of using all the money to pay off the loan.

Stefanou said the government got the troika to back off from putting profitable, state-owned companies up for sale.

However, he said that could be re-examined if the country can't pay off its debt.

Government workers will also get smaller, inflation-linked salary increases when the country gets out of recession and keep a year-end bonus salary, but that will be offset by steep wage cuts.

Government workers' union boss Glafcos Hadjipetrou called public sector pay cuts of more than 15 per cent for some employees "devastating" and "one-sided" but conceded Cyprus had little option but to negotiate a bailout with international lenders.

The overriding sense in the country at news of an impending bailout agreement was one of relief that it would deliver a needed cash infusion to get the economy moving again.

"The fact that we've reached a point where we feel some sort of satisfaction because a memorandum is being signed illustrates how difficult things became for our economy which hung by a thread," said Averof Neophytou, deputy leader of the main opposition DISY party.

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