Change Rattles Leading Health-Funding Agency

Major changes erupted at one of the world’s leading health-funding agencies Thursday as it hired a new director, dismissed the inspector general who had clashed with a previous director and announced a new approach to making grants.

Alex Wong/Getty Images

Dr. Mark Dybul, who led the President's Emergency Plan for AIDS Relief, in 2007.

Dr. Mark Dybul, the Bush administration’s global AIDS czar who was abruptly dismissed when President Obama took office, was named the new executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria.

Dr. Dybul, who was selected over candidates from Canada, Britain and France, was backed by the United States, which donates about a third of the fund’s budget, and by Bill Gates, who helped the fund through a cash crisis earlier this year.

He is respected by many AIDS activists in the United States, though there is some lingering controversy about his time in the Bush administration related to abstinence policies and anti-prostitution pledges imposed by conservative lawmakers as well as concerning strict licensing requirements for generic drugs.

The fund, which is based in Geneva and has given away more than $20 billion since its founding in 2002, has been in crisis for more than a year. Some donors shied away after widely publicized corruption scandals, while others, notably Mr. Gates, said the scandals were exaggerated and increased donations.

Its last executive director, Dr. Michel Kazatchkine, quit in January after the day-to-day management duties of his job were given to a Brazilian banker, Gabriel Jaramillo, who was charged with cutting expenses.

By some accounts, 40 percent of the employees soon left, although Seth Faison, a fund spokesman, said the total number of employees declined by only 8 percent. The fund also dismissed its inspector general, John Parsons, on Thursday, citing unsatisfactory work.

Mr. Parsons and Dr. Kazatchkine had privately clashed. Mr. Parsons’s teams aggressively pursued theft and fraud, and found it in Mali, Mauritania and elsewhere. But the total amount stolen — $10 million to $20 million — was relatively small, and aides to Dr. Kazatchkine said the fund cut off those countries and sought to retrieve the money. The aides claimed that Mr. Parsons, who reported only to the board, went to news outlets and left the impression that the fund was covering up rampant theft.

The fuss scared off some donor countries that were already looking for excuses to cut back on foreign aid because of the global economic crisis.

Mr. Parsons did not return messages left for him Thursday.

Dr. Dybul’s appointment was welcomed by the United Nations AIDS program, the Bill and Melinda Gates Foundation, the Elizabeth Glaser Pediatric AIDS Foundation, Malaria No More and Results.org, an anti-poverty lobbying group. By contrast, Jamie Love, an American advocate for cheaper AIDS drugs who works in Washington and Geneva, said he expected Dr. Dybul “to protect drug companies.”

The fund also announced a new application process, which it said would be faster and focus more on the hardest-hit countries rather than all 150 that received some help in the past.

In an interview, Dr. Dybul said he felt the fund was “on a strong forward trajectory” after changes were put in place in the last year by Mr. Jaramillo, and now would focus on “hard-nosed implementation of value for money.”

Both the President’s Emergency Plan for AIDS Relief and the fund spend billions, but in different ways.

The fund supports projects proposed by national health ministers and then hires local auditors to make sure the money is not wasted or stolen. Pepfar usually gives grants to American nonprofit groups or medical schools and lets them form partnerships with hospitals or charities in the affected countries.

The conventional wisdom is that the Global Fund’s model is more likely to win the cooperation of government officials but more vulnerable to corruption — and also spends less on salaries and travel for American overseers.

Dr. Kazatchkine said he did not expect Dr. Dybul to “Pepfarize” the Global Fund.

“I hope that, after a year of turbulence, the fund finds the serenity needed to move forward again,” he said.

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McDonald's USA president to step down; successor named

The head of U.S. operations for McDonald's Corp. is on her way out amid the burger chain's efforts to counter intense competition and a string of uncharacteristically sour financial results.

Jan Fields will depart Dec. 1 as president of McDonald's USA, a position she has held for more than two years. She will be replaced by Jeff Stratton, currently McDonald's global chief restaurant officer. Both are 57.

"The time was right for this leadership change," company spokeswoman Lisa McComb said. She called it "a business decision by our senior management team" and said it was "not related to one isolated thing or a short-term viewpoint."

Quiz: How well do you know fast food?

McComb said Fields is "looking forward to spending time with her family and friends."

Most industry analysts doubted that Fields was directly responsible for the company's financial misses, but they believed that top management and directors had lost confidence in her ability to turn around the U.S. division of the world's biggest burger chain.

"There weren't any major alarms, any perception of management problems," said Nima Samadi, a restaurant analyst with IBISWorld. "There's no fire or even that much smoke. This looks more like a preventive measure than anything else, a recognition that McDonald's needs someone more aggressive."

Fields backed efforts to modernize the chain and make its food more healthful. But many of those programs — once considered innovative — have since been copied by competitors, and, worse, consumers' enthusiasm didn't last.

Last month, McDonald's same-store sales tumbled 2.2% in the U.S. and 1.8% globally compared with a year earlier, the company's first such slide in nine years.

The numbers spooked investors already wary over the chain's slumping profits, which fell 3.5% in the third quarter, to $1.45 billion, and sank 4.5% the previous quarter compared with the same periods last year.

Shares slipped 57 cents Thursday to $84.05. The stock has fallen more than 16% so far this year. Before this year, though, it had soared about 60% during Fields' tenure.

Analyst Andy Barish at the brokerage Jefferies & Co. recently said the stock probably would continue its decline as investors question how quickly McDonald's can regain momentum globally and in its U.S. business.

The U.S. region is the company's largest by number of restaurants; Europe is the chain's top region by sales. Five years ago, McDonald's U.S. operations accounted for 60% of the company's operating profit, a percentage that fell to 40% last year.

Analysts doubt that McDonald's can outperform last year's strong sales, which were aided by unseasonably warm weather. They also think the chain's global expansion plans and multibillion-dollar remodeling push may have stretched its cash thin.

Fields, who started out making French fries at McDonald's 35 years ago, rose through the ranks and has been called one of the world's most powerful women on lists compiled by Forbes, Fortune and other financial publications.

In 2010, she replaced Don Thompson as president of U.S. operations. Thompson became McDonald's chief executive five months ago.

Fields was credited with helping to expand McDonald's McCafe premium beverage menu, updating its restaurants, reworking the Happy Meal to be more healthful and disclosing calorie counts at the chain's 14,000 American outlets.

All were "universally successful initiatives" and often the first of their kind in the industry, analyst Samadi said.

In recent months, McDonald's rolled out its popular Monopoly promotion, pumped up Dollar Menu advertising, teased the upcoming return of the McRib and launched new products such as the higher-end Cheddar Bacon Onion sandwich.

But the Oak Brook, Ill., burger behemoth has struggled to overcome the competitive pressures that have emerged since the recession, losing ground to rivals ramping up their efforts to refresh their brands.

Burger King, for instance, unveiled a menu mirroring many of McDonald's more healthful, higher-end options, such as salads, smoothies and wraps. Wendy's, under the leadership of its new chief executive, has taken similar steps.

Coffee and breakfast chains such as Starbucks, Krispy Kreme and Dunkin' Donuts have boosted their marketing dollars, threatening to poach customers of McDonald's McCafe line.

Kids meals with toys — a McDonald's mainstay at a premium price — are losing their clout as young families pinch pennies and children turn more to digital games, according to a report this year by research firm NPD Group.

"Kids are so advanced in terms of technology that the premium that comes with a kids meal today isn't as appealing to them as it once was," NPD analyst Bonnie Riggs said.

McDonald's recent efforts to disclose more nutritional data met with mixed reactions from parents and health advocates and have become "a double-edged sword" by making it "more obvious that the food is not that good for you," said Jason Moser, an analyst with the Motley Fool.

The weaknesses have allowed upscale fast-casual brands such as Smashburger and Five Guys Burgers and Fries to draw customers away with promises of sustainably sourced ingredients and more well-rounded meals.

"For a long time, McDonald's was the only one consistently innovating and introducing new products," IBISWorld's Samadi said. "They were far and away ahead of all their competition.

"But that gap is starting to close, and now there's much less differentiation for McDonald's."

tiffany.hsu@latimes.com

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L.A. County sheriff's deputy held in fatal off-duty shooting

A veteran Los Angeles County sheriff's deputy was arrested Wednesday for allegedly shooting and killing a man in Sylmar while off-duty in June, authorities said.

The deputy, Francisco Gamez, 41, has been with the department for 17 years and was last working as a station detective in West Hollywood.

Law enforcement sources told The Times that the deputy's son got into a dispute with another person. The son, they said, called his father to the scene. The deputy allegedly drove up soon after and exchanged words before opening fire from inside his car, striking one man, the sources said.

He then allegedly drove a short distance before shooting at a second person, added the sources, who asked for anonymity because the investigation is ongoing.

That person was not injured, according to authorities.

The other victim, Armando Casillas, 38, was taken to a hospital, where he was pronounced dead from a gunshot wound to the chest just before midnight on June 17.

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FOR THE RECORD:
An earlier version of this article misspelled the victim's first name as Armondo.

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Neighbors said Gamez and Casillas lived a block apart.

In August, a person who identified himself as the victim's brother commented on the website of the Los Angeles Times, saying he suspected a deputy was responsible.

"We think he is a L.A. COUNTY SHERIFF," the comment stated. "The reason we think he is a Sheriff is that he shouted to my Brother "L.A. COUNTY SHERIFF WHERE YOU FROM" as if the sheriff was in a gang."

The person who wrote the comment could not be reached Wednesday evening.

At the time of the killing, authorities said the victim got into an argument with an unknown person. At some point, the other person left the area only to return and shoot Casillas in a drive-by, authorities said then. Now they are saying that the shooter was not the same person who initially got into the argument.

LAPD officers arrested Gamez on suspicion of murder, attempted murder and use of a firearm in the commission of a felony. He was booked into the LAPD's 77th Street station Wednesday in lieu of $4-million bail, officials said. He has not been charged.

Casillas' sister said that the family was thankful for the arrest, but that they were not prepared to discuss the events that led to the fatal shooting.

In a statement, Sheriff Lee Baca called the incident "deeply disturbing."

His spokesman Steve Whitmore said the department placed Gamez on leave July 3 after learning from the LAPD about the investigation.

"He's been stripped of all law enforcement power," Whitmore said. "It casts a pall over the scores and scores of deputy sheriffs that every day do their job."

robert.faturechi@latimes.com

richard.winton@latimes.com

Times staff writer Andrew Blankstein contributed to this report.

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RIM CEO sees new BlackBerry powering growth

WATERLOO, Ontario (Reuters) – A new line of BlackBerry 10 devices will provide Research In Motion with a framework for growth over the next decade, offering long-term value for unhappy shareholders, Chief Executive Thorsten Heins said on Wednesday.

In an interview with Reuters, Heins said RIM had identified $ 800 million of the $ 1 billion of savings it promised for the financial year ending in early March, and was confident of finding the rest as it gets ready to launch the new phones.

RIM is betting that the new smartphones will help it claw back the market share it has lost to the likes of Apple Inc’s iPhone and devices powered by Google’s Android operating system.

Both consumers and corporate customers have abandoned the BlackBerry in droves, even though the devices offer security features that rivals have been unable to match.

“There’s this high-level security that you cannot walk away from, and then there’s ‘good enough’ security,” Heins said in an interview at RIM’s Waterloo, Ontario, campus, a sprawl of low-rise buildings.

But analysts remain skeptical, especially after the botched 2011 launch of RIM’s PlayBook tablet computer, which the company had hoped would compete with Apple’s wildly popular iPad. The PlayBook had top-of-the-line hardware, but its software was far from complete at the launch and needed multiple updates.

RIM delayed the roll-out of the BlackBerry 10 phones to the first quarter of 2013 so as not to repeat the errors that surrounded the PlayBook launch.

Heins said the delay was the correct decision – the way to ensure the BB10 phones are a high-quality product rather than a rushed one that would not meet customer expectations.

“I think it’s all lining up. Sometimes you get the feeling that the universe is in disarray, and with BlackBerry 10 coming, I see the stars lining up,” Heins said.

SLEEK DEMO MODELS

Sleek demo models of the new phones look much like the high-end smartphones in the market today, and company executives proudly showed off a touch-screen version and a version with the miniature QWERTY keyboard popular with many BlackBerry users.

Users flick a thumb or finger to maneuver from one program to another and can sneak a look at an incoming email while browsing the Internet or using other applications, a multi-tasking ability that RIM says rival devices lack.

Personal and business profiles can be kept separately, something RIM calls BlackBerry Balance. Corporations can erase only their share of the data on a device if they need to do so for security reasons, leaving personal photos, contacts and emails untouched.

The app library available at launch will not match the vast number available on other devices. Heins said RIM had chosen to focus on providing those apps needed in different regional markets. It expects some 100,000 apps to be ready at launch.

The developer community has been broadly enthusiastic about the devices. But financial analysts have mixed views on their likely reception in an ultra-competitive market.

Pacific Crest analyst James Faucette warned last week that BlackBerry 10 is likely to be dead on arrival – with an operating system that gets “a lukewarm response at best,” due to the unfamiliar user interface and a shortage of apps.

SHAREHOLDER VALUE

Heins insisted morale was high at the company, despite 5,000 job cuts and a rapidly sliding market share ahead of the launch of the new phones.

RIM’s share price is down more than 90 percent from a 2008 peak of about $ 148. It has fallen even after Heins, a former Siemens AG executive, took over in January. The shares on Wednesday closed at $ 8.49 on Nasdaq.

“The message to our shareholders is that we understand this is and has been a difficult time for them and for us,” the tall, bespectacled CEO said. “But with the development of the BlackBerry 10 platform we are truly convinced that we will create long-term value for RIM’s shareholders and investors.”

RIM has already given the demo phones to developers and to carriers, and its new BlackBerry Enterprise Server 10, which runs the devices on corporate networks, is in beta testing with 20 key customers — both government agencies and corporates.

Next month, the company will give more than 50 top enterprise customers technical previews of both BES 10 and the devices.

Heins said the feedback he is getting from the customer base “is very encouraging.”

With the erosion of RIM’s base particularly strong in North America, there has been speculation the company could choose to launch the new phones in a region where the phones remain popular. Heins said that would not be the case.

“We cannot launch every carrier and every country on the same day, but what we have defined is a set of waves in the various regions,” he said. “It is going to be a global launch. There isn’t one preferred region. We are managing and planning it as we speak.”

(Reporting by Euan Rocha and Janet Guttsman; Editing by Frank McGurty and Leslie Adler)

Wireless News Headlines – Yahoo! News

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Erdrich wins National Book Award for fiction

NEW YORK (AP) — The National Book Awards on Wednesday honored both longtime writers and new authors, from Louise Erdrich for "The Round House" to Katherine Boo for her debut work, "Beyond the Beautiful Forevers."

Erdrich, 58, has been a published and highly regarded author for nearly 30 years but had never won a National Book Award until being cited Wednesday for her story, the second of a planned trilogy, about an Ojibwe boy and his quest to avenge his mother's rape. A clearly delighted and surprised Erdrich, who's part Ojibwe, spoke in her tribal tongue and then switched to English as she dedicated her fiction award to "the grace and endurance of native people."

The works of two other winners also centered on young boys — Boo's for nonfiction, and William Alexander's fantasy "Goblin Secrets," for young people's literature. David Ferry won for poetry.

Boo's book, set in a Mumbai slum, is the story of a boy and his harsh and illuminating education in the consequences of crime or perceived crime. The author, a Pulitzer Prize-winning journalist currently on staff with The New Yorker, said she was grateful for the chance to live in a world she "didn't know" and for the chance to tell the stories of those otherwise ignored. She praised a fellow nominee and fellow Pulitzer-winning reporter, the late Anthony Shadid, for also believing in stories of those without fame or power.

Boo was chosen from one of the strongest lists of nonfiction books in memory, from the fourth volume of Robert Caro's Lyndon Johnson series to Shadid's memoir "House of Stone" and Anne Applebaum's "House of Stone." Finalists in fiction, which in recent years favored lesser known writers, included such established names as Dave Eggers and Junot Diaz. Publishers have been concerned that the National Book Awards have become too insular and are considering changes, including expanding the pool of judges beyond writers.

Winners, chosen by panels of their peers, each will receive $10,000.Judges looked through nearly 1,300 books.

Ferry is a year older than one of the night's honorary recipients, Elmore Leonard. Ferry, 88, won for "Bewilderment: New Poems and Translations," a showcase for his versatile style. He fought back tears as he confided that he thought there was a chance for winning because he "was so much older" than the other nominees. Attempting to find poetry in victory, he called the award a "pre-posthumous" honor.

Alexander quoted fellow fantasy writer Ursula K. Le Guin in highlighting the importance of stories for shaping kids' imaginations and making the world a larger place than the one they live in.

"We have to remember that," Alexander said.

The ceremony was hosted by commentator-performer Faith Salie and went smoothly even though Superstorm Sandy badly damaged the offices of the award's organizer, the National Book Foundation, whose staffers had to work with limited telephone and mail access.

Honorary prizes were given to Leonard and New York Times publisher and chairman Arthur O. Sulzberger Jr.

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I Was Misinformed: The Time She Tried Viagra

I have noticed, in the bragging-rights department, that “he doesn’t need Viagra” has become the female equivalent of the male “and, I swear, she’s a real blonde.” Personally, I do not care a bit. To me, anything that keeps you happy and in the game is a good thing.

But then, I am proud to say, I was among the early, and from what I gather, rare female users.

It happened when the drug was introduced around 1998. I was 50, but after chemotherapy for breast cancer — and later, advanced ovarian cancer — I was, hormonally speaking, pretty much running on fumes. Whether this had diminished my sex drive I did not yet know. One may have Zorba-esque impulses when a cancer diagnosis first comes in; but a treatment that leaves you bald, moon-faced and exhausted knocks that out of your system pretty fast.

But by 1998, the cancer was gone, my hair was back and I was ready to get back in the game. I was talking to an endocrinologist when I brought up Viagra. This was not to deal with the age-related physical changes I knew it would not address, it was more along the feminist lines of equal pay for equal work: if men have this new sex drug, I want this new sex drug.

“I know it’s supposed to work by increasing blood flow,” I told the doctor, “But if that’s true for men, shouldn’t it be true for women, too?”

“You’re the third woman who asked me that this week,” he said.

He wrote me a prescription. I was not seeing anyone, so I understood that I would have to do both parts myself, but that was fine. I have a low drug threshold and figured it might be best the first time to fly solo. My memory of the directions are hazy: I think there was a warning that one might have a facial flush or headaches or drop dead of a heart attack; that you were to take a pill at least an hour before you planned to get lucky, and, as zero hour approached, you were supposed to help things along by thinking beautiful thoughts, kind of like Peter Pan teaching Wendy and the boys how to fly.

But you know how it is: It’s hard to think beautiful thoughts when you’re wondering, “Is it happening? Do I feel anything? Woof, woof? Hello, sailor? Naaah.”

After about an hour, however, I was aware of a dramatic change. I had developed a red flush on my face; I was a hot tomato, though not the kind I had planned. I had also developed a horrible headache. The sex pill had turned into a bad joke: Not now, honey, I have a headache.

I put a cold cloth on my head and went to sleep. But here’s where it got good: When I slept, I dreamed; one of those extraordinary, sensual, swimming in silk sort of things. I woke up dazed and glowing with just one thought: I gotta get this baby out on the highway and see what it can do.

A few months later I am fixed up with a guy, and after a time he is, under the Seinfeldian definition of human relations (Saturday night date assumed) my official boyfriend. He is middle aged, in good health. How to describe our romantic life with the delicacy a family publication requires? Perhaps a line from “Veronika, der Lenz ist da” (“Veronica, Spring Is Here”), a song popularized by the German group the Comedian Harmonists: “Veronika, der Spargel Wächst” (“Veronica, the asparagus are blooming”). On the other hand, sometimes not. And so, one day, I put it out there in the manner of sport:

“Want to drop some Viagra?” I say.

Here we go again, falling into what I am beginning to think is an inevitable pattern: lying there like a lox, or two loxes, waiting for the train to pull into the station. (Yes, I know it’s a mixed metaphor, but at least I didn’t bring in the asparagus.) So there we are, waiting. And then, suddenly, spring comes to Suffolk County. It’s such a presence. I’m wondering if I should ask it if it hit traffic on the L.I.E. We sit there staring.

My reaction is less impressive. I don’t get a headache this time. And romantically, things are more so, but not so much that I feel compelled to try the little blue pills again.

Onward roll the years. I have a new man in my life, who is 63. He does have health problems, for which his doctor prescribes an E.D. drug. I no longer have any interest in them. My curiosity has been satisfied. Plus I am deeply in love, an aphrodisiac yet to be encapsulated in pharmaceuticals.

We take a vacation in mountain Mexico. We pop into a drugstore to pick up sunscreen and spot the whole gang, Cialis, Viagra, Levitra, on a shelf at the checkout counter. No prescription needed in Mexico, the clerk says. We buy all three drugs and return to the hotel. I try some, he tries some. In retrospect, given the altitude and his health, we are lucky we did not kill him. I came across an old photo the other day. He is on the bed, the drugs in their boxes lined up a in a semi-circle around him. He looks a bit dazed and his nose is red.

Looking at the picture, I wonder if he had a cold.

Then I remember: the flush, the damn flush. If I had kids, I suppose I would have to lie about it.

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Looming 'fiscal cliff' bringing Wall Street, Obama back together

NEW YORK — There are growing signs that Wall Street is trying to mend its rocky relationship with a president who castigated them as "fat cats" and ushered through tough new regulations after the financial crisis.

JPMorgan Chase & Co. Chief Executive Jamie Dimon has recently been in contact with the White House and congressional leaders, while Goldman Sachs CEO Lloyd Blankfein publicly called for a new "spirit of compromise and reconciliation." CEOs of 12 major American companies also held a closed-door meeting with President Obama on Wednesday.

The looming "fiscal cliff" is bringing businesses and Obama back together. Both sides are worried that Congress won't strike a deal to avoid the automatic budget cuts and tax increases that economists fear will plunge the nation into a recession early next year.

"He is the president — the election is over," said Kathryn Wylde, president and chief executive of the Partnership for New York City, a nonprofit organization that represents major financial firms and other companies. "The Wall Street community wants to unite behind a strong president."

Wall Street might have overwhelmingly supported Mitt Romney's presidential campaign with donations, but executives have been quietly working behind the scenes with administration officials for months, Wylde said.

Quiz: How much do you know about the "fiscal cliff"?

They have been helping build support for raising revenue — higher taxes — as part of a deal that would include spending cuts and entitlement reform. Getting CEOs on board could help provide "political cover" to congressional Republicans who in previous fiscal fights have thwarted deals with Obama.

"That's where their charm is real," said Jeff Connaughton, a former lobbyist and congressional aide who wrote the book "The Payoff: Why Wall Street Always Wins." "If they actually helped soften up the Republicans on being OK with raising revenue, that's where they could pile up some real brownie points with Obama."

Wall Street executives have been reaching out to both sides of the aisle now that the contentious election is over.

In an opinion piece published in the Wall Street Journal, Goldman CEO Blankfein urged corporations and the Obama administration to work closer together. He also backed tax increases for wealthy Americans so long as the government is serious about cutting government spending.

Dimon, who has sometimes been a critic of Obama, met with White House Chief of Staff Jack Lew last month. He also has reached out to congressional leaders about preventing a fiscal crisis, according to a person familiar with the matter who was not authorized to speak publicly.

As part of that charm offensive, Dimon even called Elizabeth Warren to congratulate her on being elected a U.S. senator from Massachusetts. Warren has been a fierce critic of the banking industry, and earlier this year called for Dimon to step down as a New York Federal Reserve board member because of a perceived conflict of interest.

Warren declined to comment on her phone call with Dimon. But she — like others on Capitol Hill on Wednesday — welcomed the Wall Street executives' urgency to resolve the fiscal cliff. "I think they have enormous value to add to the discussions," she said.

CEOs talking about a willingness to accept more taxes is crucial in helping to reduce the overall rancor in Washington, Sen. Charles E. Schumer (D-N.Y.) said. When Republicans start talking about additional tax revenue, "We need somebody else to have their back, and the business community is a great place" to do that, he said.

Sen. Lamar Alexander (R-Tenn.) said business leaders can help spur a deal by warning of the economic consequences of allowing the government to go over the fiscal cliff.

"The election's over and the issue is fixing the debt," Alexander said. "They can create an environment in which senators and congressman are willing to take difficult votes on fixing the debt, because it's going to be hard dirty work, very unpopular, once people see the details of it, but it absolutely has to be done."

At the White House on Wednesday, chief executives met with President Obama for more than an hour to discuss topics such as the fiscal cliff. They mostly listened and tried to give the president constructive feedback on issues facing America's biggest businesses, according to participants.

CEOs believe that the uncertainty is hurting the nation's business climate and preventing hiring. They have urged Congress to extend the tax cuts first championed by President George W. Bush. Obama wants to do so for all but the highest income earners.

Ursula Burns, the CEO of Xerox Corp., said the meeting did not get into specifics such as tax rates. But she noted that any deal would involve working through "some sticky issues."

"This is all about trying to make American business more competitive, trying to have a fair, balanced approach to tax reform, to spending cuts. And the president was very clear that he wants a fair, balanced approach," Burns told reporters after the meeting.

"We were very clear that if we can help him to get to a solution we are absolutely behind him, because going over the cliff is not something that any of us in the room could live with," she said.

andrew.tangel@latimes.com

jim.puzzanghera@latimes.com

Tangel reported from New York and Puzzanghera from Washington.

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David Petraeus scandal hits White House at awkward time

WASHINGTON— The messy scandal that forced CIA Director David H. Petraeus to resign and sparked a Pentagon investigation of the U.S. war commander in Afghanistan has thrown the Obama administration's national security team into turmoil.

The ripples continued to widen Tuesday as Defense Secretary Leon E. Panetta ordered an investigation of Gen. John Allen, commander of U.S. and international forces in Afghanistan, after the FBI informed the Pentagon that it had uncovered what may be inappropriate emails between Allen and Jill Kelley, a 37-year-old Florida socialite and friend of Petraeus, Allen and their wives.

Panetta said he had asked the Senate to place Allen's nomination as supreme allied commander in Europe on hold until the investigation was complete, delaying his shift to a key post overseeing all NATO military operations.

The upheaval comes at an awkward time for the White House, the Pentagon and the intelligence community. The administration faces hearings in Congress this week over the Sept. 11 militant attack in Benghazi, Libya, that killed the U.S. ambassador and three other Americans, and is debating whether to speed up withdrawal of U.S. combat troops from Afghanistan.

In addition, Panetta and Secretary of State Hillary Rodham Clinton, two of President Obama's most experienced and respected political veterans, are likely to step down early next year. Clinton's intention to leave has been public for more than a year.

White House spokesman Jay Carney said Obama "thinks very highly" of Allen. But Carney said he "wouldn't call it welcome" that a scandal erupted a week after Obama's reelection, when the president had been hoping to focus on a deficit-reduction deal with Congress.

Kelley was home with her children Tuesday evening and refused to see visitors at the family's red-brick mansion on elegant Bayshore Boulevard in Tampa, Fla. An SUV was parked in the driveway and fresh flowers sat in a front dining room. TV news crews loitered near the manicured lawn as joggers filed past.

Allen's contacts with Kelley came to light after FBI agents looked into her complaint that she had received anonymous emails warning her to stay away from Petraeus. The sender of the emails used aliases, and the messages included nonpublic information about the travels of Petraeus and other U.S. officials, a senior law enforcement official said. The FBI eventually traced the emails to Paula Broadwell, 40, an officer in the Army Reserve who wrote a fawning 2012 biography of Petraeus.

A review of Broadwell's emails showed she had engaged in an extramarital affair with Petraeus. The case took a new turn in September when she gave the FBI her computer, which turned out to contain several classified documents. Broadwell holds a top-secret clearance, but the discovery raised fresh concerns of a potential security breach. Petraeus denied being the source of the documents, and Broadwell said she did not get them from him.

Broadwell consented to an FBI search of her home in Charlotte, N.C., on Monday night, the official said, adding that no charges would be filed. "This is just running down the final alley, just trying to tie it up."

The initial FBI investigation also uncovered emails between Kelley and Allen, beginning when he was deputy head of U.S. Central Command at MacDill Air Force Base near Tampa from 2008 to 2011. Kelley and her husband, Scott, a prominent Tampa doctor, cultivated close social ties with senior officers, sponsoring events for wounded soldiers and galas for commanders and visiting delegations over the years, current and former officials and officers say.

The Kelleys were especially close to Petraeus and his wife, Holly, often attending parties and holiday events at each other's homes when Petraeus headed Central Command from 2008 to 2010. They remained in contact after Petraeus took command of the Afghan war and, when he retired from the military, moved to Washington to take over the CIA in September 2011.

In September of this year, Jill Kelley's twin sister, Natalie Khawam, needed character references to appeal to a judge in Washington over losing custody of her 4-year-old son. Allen and Petraeus composed letters on her behalf.

"My wife, Kathy, and I came to know Natalie when I served at headquarters of U.S. Central Command as the Deputy Commander," Allen wrote on his official letterhead. A copy was obtained by the New York Post. "On multiple occasions we had the privilege of observing her … at command social functions.... She is a dedicated mother, whose only focus is to provide the necessary support, love and care for her son."

A senior U.S. official who is familiar with the investigation said Allen and Kelley "have never been alone together, ever." The official said they had exchanged several hundred mostly short emails over several years, denying reports that the emails filled 20,000 to 30,000 pages.

"She writes flattering emails like, 'You look great on TV,' and Allen writes back, 'Thanks, sweetheart,'" the official said. "Anyone who knows Allen knows he responds to every single email."

Most of the emails were "purely routine," the official said. In some, Kelley offered to host gatherings for Afghan or U.S. officials. Allied countries at Central Command gave her the unofficial title of "honorary ambassador," an unpaid position with no official duties, but Kelley was known to drop "honorary" from her title.

She angered some U.S. officers who complained that she made persistent attempts to forge close personal ties with successive four-star generals by deluging them with emails, a former Central Command aide said, and asking for headquarters staff to help her organize social functions.

The official said Allen, who was in Washington to prepare for his now-delayed confirmation hearings, was cooperating with the Pentagon's investigation. "They'll get a statement from Mrs. Kelley and they'll get a statement from Gen. Allen and that'll be the end of the story, except the smear on his reputation," the official said.

The FBI has referred the case to the Pentagon. That, along with Panetta's decision to allow Allen to continue as commander in Afghanistan pending outcome of the investigation, suggests that officials view the matter as a possible infraction of military rules rather than a violation of criminal law.

In addition to Allen and Petraeus, at least half a dozen senior military officers have come under investigation or been relieved of duty since 2008 over allegations of extramarital affairs, insubordination, improper use of government funds and, in one pending case, sexual assault of subordinates.

The last three U.S. commanders in Afghanistan — Petraeus, Allen and Gen. Stanley A. McChrystal — all came under scrutiny for their personal behavior. Obama fired McChrystal in 2010 after a Rolling Stone article portrayed his senior staff as criticizing and making crude jokes about Obama and his top civilian advisors.

On Tuesday, Panetta also demoted Gen. William "Kip" Ward, the former head of the U.S. Africa Command, to three stars in rank and ordered him to repay $82,000 after an investigation found he had used military aircraft for personal travel and had stayed with his wife in lavish resorts at government expense. The inspector general's investigation also found that Ward had accepted dinner and Broadway show tickets from a government contractor.

Petraeus, who has not appeared in public since he resigned Friday, is "a little bit stunned" over how quickly his career unraveled, said Peter Mansoor, his former executive officer in Iraq and now a professor of military history at Ohio State University.

Petraeus called his actions "morally reprehensible," said Mansoor, who has spoken to the former CIA director several times in recent days. "He deeply regretted it. He screwed up big time. He had the best job in the world at the Central Intelligence Agency. He liked it a lot, he had a good relationship with the president, and he threw that all away for this."

david.cloud@latimes.com

shashank.bengali@latimes.com

ken.dilanian@latimes.com

Cloud and Dilanian reported from Washington and Bengali from Tampa.

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Man who accused Elmo puppeteer of teen sex recants

NEW YORK (AP) — A man who accused Elmo puppeteer Kevin Clash of having sex with him when he was a teenage boy has recanted his story.

In a quick turnabout, the man on Tuesday described his sexual relationship with Clash as adult and consensual.

Clash responded with a statement of his own, saying he is "relieved that this painful allegation has been put to rest." He had no further comment.

The man, who has not identified himself, released his statement through the Harrisburg, Pa., law firm Andreozzi & Associates.

Sesame Workshop, which produces "Sesame Street" in New York, soon followed by saying, "We are happy that Kevin can move on from this unfortunate episode."

The whirlwind episode began Monday morning, when Sesame Workshop startled the world by announcing that Clash had taken a leave of absence from "Sesame Street" in the wake of allegations that he had had a relationship with a 16-year-old.

Clash, a 52-year-old divorced father of a grown daughter, swiftly denied the charges of his accuser, who is in his early 20s. In that statement Clash acknowledged that he is gay but said the relationship had been between two consenting adults.

Though it remained unclear where the relationship took place, sex with a person under 17 is a felony in New York if the perpetrator is at least 21.

Sesame Workshop, which said it was first contacted by the accuser in June, had launched an investigation that included meeting with the accuser twice and meeting with Clash. Its investigation found the charge of underage conduct to be unsubstantiated.

Clash said on Monday he would take a break from Sesame Workshop "to deal with this false and defamatory allegation."

Neither Clash nor Sesame Workshop indicated on Tuesday when he might return to the show, on which he has performed as Elmo since 1984.

Elmo had previously been a marginal character, but Clash, supplying the fuzzy red puppet with a high-pitched voice and a carefree, child-like personality, launched the character into major stardom. Elmo soon rivaled Big Bird as the face of "Sesame Street."

Though usually behind the scenes, Clash meanwhile achieved his own measure of fame. In 2006, he published an autobiography, "My Life as a Furry Red Monster," and he was the subject of the 2011 documentary "Being Elmo: A Puppeteer's Journey."

He has won 23 daytime Emmy awards and one prime-time Emmy.

___

Online:

http://www.sesamestreet.org

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Kidney Donors Given Mandatory Safeguards

ST. LOUIS — Addressing long-held concerns about whether organ donors have adequate protections, the country’s transplant regulators acted late Monday to require that hospitals thoroughly inform living kidney donors of the risks they face, fully evaluate their medical and psychological suitability, and then track their health for two years after donation.

Enactment of the policies by the United Network for Organ Sharing, which manages the transplant system under a federal contract, followed six years of halting development and debate.

Meeting at a St. Louis hotel, the group’s board voted to establish uniform minimum standards for a field long regarded as a medical and ethical Wild West. The organ network, whose initial purpose was to oversee donation from people who had just died, has struggled at times to keep pace with rapid developments in donations from the living.

“There is no question that this is a major development in living donor protection,” said Dr. Christie P. Thomas, a nephrologist at the University of Iowa and the chairman of the network’s living donor committee.

Yet some donor advocates complained that the measures did not go far enough, and argued that the organ network, in its mission to encourage transplants, has a conflict of interest when it comes to safeguarding donors.

Three years ago, the network issued some of the same policies as voluntary guidelines, only to have the Department of Health and Human Services insist they be made mandatory.

Although long-term data on the subject is scarce, few living kidney donors are thought to suffer lasting physical or psychological effects. Kidney donations, known as nephrectomies, are typically done laparoscopically these days through a series of small incisions. The typical patient may spend only a few nights in a hospital and feel largely recovered after several months.

Kidneys are by far the most transplanted organs, and there have been nearly as many living donors as deceased ones over the last decade. What data is available suggests that those with one kidney typically live as long as those with two, and that the risk of a donor dying during the procedure is roughly 3 in 10,000.

But kidney transplants, like all surgery, can sometimes end in catastrophe.

In May at Montefiore Medical Center in the Bronx, a 41-year-old mother of three died when her aorta was accidentally cut during surgery to donate a kidney to her brother. In other recent isolated cases, patients have received donor kidneys infected with undetected H.I.V. or hepatitis C.

Less clear are any longer-term effects on donors. Research conducted by the United Network for Organ Sharing shows that of roughly 70,000 people who donated kidneys between late 1999 and early 2011, 27 died within two years of medical causes that may — or may not — have been related to donation. For a small number of donors, their remaining kidney failed, and they required dialysis or a transplant.

The number of living donors — 5,770 in 2011 — has dropped 10 percent over the last two years, possibly because the struggling economy has made it difficult for prospective donors to take time off from work to recuperate. With the national kidney waiting list now stretching past 94,000 people, and thousands on the list dying each year, transplant officials have said they must improve confidence in the system so more people will donate.

The average age of donors has been rising, posing additional medical risks. And new ethical questions have been raised by the emergence of paired kidney exchanges and transplant chains started by good Samaritans who give an organ to a stranger.

Brad Kornfeld, who donated a kidney to his father in 2004, told the board that it had been impossible to find good information about what to expect, leaving him to search for answers on unreliable Internet chat rooms. He said he had almost backed out.

“If information is power,” said Mr. Kornfeld, a Coloradan who serves on the living donor committee, “the lack of information is crippling.”

Under the policies approved this week, the organ network will require hospitals to collect medical data, including laboratory test results, on most living donors to study lasting effects. Results must be reported at six months, one year and two years.

Similar regulations have been in place since 2000, but they did not require blood and urine testing, and hospitals were allowed to report donors who could not be found as simply lost.

That happened often. In recent years, hospitals have submitted basic clinical information — like whether donors were alive or dead — for only 65 percent of donors and lab data for fewer than 40 percent, according to the organ network. Although the network holds the authority, no hospital has ever been seriously sanctioned for noncompliance.

“It’s time we put some teeth into our policy,” said Jill McMaster, a board member from Tennessee.

By 2015, transplant programs will have to report thorough clinical information on at least 80 percent of donors and lab results on at least 70 percent. The requirements phase in at lower levels for the next two years.

Dr. Stuart M. Flechner of the Cleveland Clinic, the chairman of a coalition of medical societies that made recommendations to the organ network, said 9 of 10 hospitals would currently not meet the new requirement.

Donna Luebke, a kidney donor from Ohio who once served on the organ network’s board, said the new standards would matter only if enforcement were more rigorous. She noted that the organization was dominated by transplant doctors: “UNOS is nothing but the foxes watching the henhouse,” she said.

Another of the new regulations prescribes in detail the medical and psychological screenings that hospitals must conduct for potential donors. It requires automatic exclusion if the potential donor has diabetes, uncontrolled hypertension or H.I.V., among other conditions.

The new policies also require that hospitals appoint an independent advocate to counsel and represent donors, and that donors receive detailed information in advance about medical, psychological and financial risks.

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