China arrests over HK sex scandal

Mr Chen has apologised to anyone affected by the images

Police in the southern Chinese city of Shenzhen have arrested 10 people in connection with a sex scandal that has generated intense public interest.

The arrested are accused of copying and distributing explicit pictures showing Hong Kong film star Edison Chen in encounters with a series of actresses.

The several hundred images have been widely viewed on websites since they were posted at the end of January.

It is believed they were taken from Mr Chen's computer when it was serviced.

The pictures, apparently taken by Mr Chen himself, show the actor in bed with a series of famous actresses.

They were published across the internet including on China's most popular search engine, Baidu.

Censorship

A police official told China's Xinhua news agency that the authorities would "severely crack down on the criminal activities of manufacturing, selling and spreading discs of Hong Kong's celebrity photos and other pornography productions".

The Beijing Association of Online Media, a government-backed watchdog, has praised some sites for removing the images and demanded that Baidu apologise for allowing its users to find them.

"Baidu still hasn't implemented effective blocking and obscuring of the photos," it said, adding that the search engine had "become defensive" and "procrastinated".

Edison Chen has issued a video statement in which he apologised to anyone affected by "this strange, strange ordeal."

Pornography is officially banned in China and the internet is restricted and closely monitored by the government.

Our correspondent says that public curiosity over the pictures has been a real test for internet censors.

Owen Wilson returns for dog film

Owen Wilson asked for privacy after being admitted to hospital

US actor Owen Wilson is returning to work for the first time since a reported suicide attempt last August.

The 39-year-old star will join Jennifer Aniston on 10 March to film Marley & Me for 20th Century Fox, a comedy revolving around a naughty dog.

Wilson dropped out of filming a cameo for this summer's Tropic Thunder and was replaced by Matthew McConaughey.

After being admitted to hospital last year, Wilson asked to be allowed "to heal in private".

Wilson's previous hits include Starsky and Hutch, You, Me and Dupree and The Wedding Crashers.

The latter film, which also starred Vince Vaughn and Isla Fisher, took around $285m (£146m) at the global box office in 2005.

He received an Oscar nomination in 2002 for scripting The Royal Tenenbaums with long-time collaborator Wes Anderson.

But, last year, Wilson had to drop out of the Venice premiere of Anderson's The Darjeeling Limited to recuperate at his home in Santa Monica, California.

Marley & Me, based on the bestselling book by John Grogan, is due out in the US on Christmas Day 2008.

Spears is barred from seeing sons

Spears and ex-husband Kevin Federline did not attend the hearing

Pop star Britney Spears has failed in a court bid to regain visitation rights to her two children.

A spokesman for Los Angeles Superior Court confirmed that no change had been made to an existing order denying Ms Spears visits to her sons.

The pop star was banned from monitored visits last month after refusing to hand the children back, resulting in a stand-off with police at her house.

Ms Spears was taken to hospital in an ambulance following the incident.

She spent another six days in a psychiatric unit earlier this month.

Paparazzi presence

The singer's ex-husband Kevin Federline was awarded primary custody of two-year-old Sean Preston and Jayden James, aged one, in October.

At Tuesday's hearing, the singer's lawyer Anne Kiley was denied a request for an order to gag other lawyers in the case from discussing it with the media.

She had argued that the coverage was "emotionally and physically" a strain on the star, and requested that times of hearings could not be disclosed to the press.

Mr Federline's lawyer, Mark Vincent Kaplan, said the two children were not being put at risk and that Ms Spears was more concerned about the constant presence of paparazzi.

Mr Kaplan addressed reporters outside the court

He added that he hoped there would no longer be "pre-leaking of information to favoured media outlets as to where they [Ms Spears and companions] are going and how they will get there."

Mr Kaplan was referring to the development that the singer's father James has taken charge of her affairs by order of the courts.

Superior Court Commissioner Scott Gordon, who has been presiding over the lengthy child custody dispute, granted Ms Spears' request to replace Ms Kiley with another lawyer.

Outside the hearing, Mr Kaplan told reporters that Mr Federline would like his former wife to see their children.

"Both sides want to see the day that visitation can resume. It's a question of working out the details of how that can happen," he said.

"Mr. Federline looks forward to his children having their mom in their life."

Take That scoop Brit Award double

Take That, the Arctic Monkeys and the Foo Fighters were the big winners at this year's Brit music awards in London, scooping two prizes each.

Take That won the trophies for best British live act and British single.

The Arctic Monkeys took best British group and album - both for the second year in a row - while Foo Fighters won best international group and album.

The ceremony saw performances from Amy Winehouse and Sir Paul McCartney, who received a lifetime achievement honour.

Kate Nash won best British female and Mark Ronson was named best British male.

Producer Ronson, who performed with Winehouse and Adele at the Earl's Court show, is the first non-singer to have scooped the solo artist prize.

"I've never felt so British or male in my entire life," he told the crowd.

As well as singing with Ronson on their hit Valerie, Winehouse sang one of her own numbers, Love Is A Losing Game.

It was the first public performance from the troubled star, who recently won five Grammy Awards, since being admitted to rehab.

During her solo performance, Winehouse mouthed "I love you" into the camera - presumably at husband Blake Fielder-Civil, who is currently on remand in Pentonville Prison.

Addressing the crowd at the end of her song, the star said: "Make some noise for my husband, my Blake."

The Arctic Monkeys, who did not turn up to the awards last year, attended Wednesday's show dressed as country gents.

The Sheffield band wore tweed waistcoats, breeches, flat caps, and blew a hunting horn on stage.

The Arctic Monkeys donned tweed suits and caps for the ceremony

As Take That accepted their award for best live act, band member Jason Orange said he had an arthritic knee and said: "We appear before you bruised and battered, but dead chuffed.

"We are so honoured. We've worked so hard over the years."

Their second award, which was presented for the single Shine, was chosen by a live public vote that continued throughout the show.

Kylie Minogue won best international female. The Australian star, who performed her single Wow, said she was "extremely grateful and thankful".

Mika, who kicked off the show with his songs Love Today and Grace Kelly, was named best British breakthrough act.

Sir Paul McCartney performed a medley of hits

He also performed with Gossip singer Beth Ditto.

Will Young presented the Critics' Choice award to Adele, a graduate of the Brit School in Croydon, south London.

Accepting the prize, the Londoner said: "My heart's beating so fast." She also thanked her "beautiful" mother.

US star Kanye West, who was unable to attend the ceremony, was named winner of the best international male prize.

"I'm sure there's someone who deserves this more than me, but I just don't know who they are," he said in his acceptance video.

Rihanna followed with a performance of her number one single Umbrella, accompanied by Klaxons.

Former Beatle Sir Paul McCartney performed a medley of hits, including Live and Let Die, Hey Jude and Lady Madonna.

He was honoured with an outstanding contribution award at the ceremony, which was hosted by Sharon and Ozzy Osbourne.

Doctor Who star David Tennant, actor Sir Ian McKellen, Bionic Woman actress Michelle Ryan were among the guest presenters.

Microsoft steps up Yahoo campaign

There is currently a stalemate between Yahoo and Microsoft

Microsoft has hired a firm that specialises in proxy battles in a move which suggests it could try to oust the current board of Yahoo directors.

The Yahoo board rejected a takeover offer from Microsoft worth more than $40bn (£20.6bn) saying it was too low.

A proxy fight would see Microsoft nominate a group of directors sympathetic to a deal for shareholders to vote on at Yahoo's annual meeting.

The move would be cheaper than raising its $31-a-share offer, analysts say.

Microsoft's offer was 62% above the level at which Yahoo stock was trading when the bid approach was made on 1 February, and Microsoft has called the price "full and fair".

Microsoft is doing the smart thing. It's giving both the carrot and the stick Toan Tran, Morningstar analyst

However, one of Yahoo's biggest shareholders, Bill Miller, an asset manager at Legg Mason, recently said a fair price would be nearer $40 a share.

But it is thought that even offering an extra $1 a share would cost Microsoft an additional $1.4bn, while waging a proxy fight could cost between $20m and $30m.

"Microsoft is doing the smart thing. It's giving both the carrot and the stick," said Morningstar analyst Toan Tran.

"The carrot was the big premium on Yahoo stock and now the stick is the threat of a proxy fight."

Aggressive tactics?

A report in the New York Times on Tuesday said that Microsoft could authorise its proxy battle as soon as this week to put pressure on the Yahoo board.

Microsoft would have until a 14 March deadline to put forward its own choice of directors for shareholders to approve.

Microsoft declined to comment on the report.

But Innisfree M&A Incorporated, which specialises in corporate actions, confirmed that it had been hired by Microsoft.

Separately, Yahoo has put in place severance benefits for employees who are made redundant if the company is sold within two years.

Details in a securities filing show that they include top executives getting two years worth of salary, while all staff will receive at least four months.

Some analysts believe the move is aimed at winning round rank-and-file employees and fuel an exodus of talent if Microsoft succeed in a hostile quest for Yahoo.

Toshiba drops out of HD DVD war

There is no way of winning the competition Atsutoshi Nishida Toshiba president

Toshiba has said it will stop making its high definition DVDs, ending a battle with rival format Blu-ray over which would be the industry standard.

Following a review of its business, Toshiba said it would stop production of HD DVD players and recorders.

The HD DVD format has suffered as major US film studios backed the Blu-ray format, which is being developed by electronics firm Sony and partners.

Analysts said the move would allow Toshiba to focus on other products.

"It was an agonising decision for me, but I thought if we kept running this business it would have grave ramifications for the management of our company," Toshiba president Atsutoshi Nishida said.

"We made a quick decision, judging that there is no way of winning the competition," he said.

Tipping point

Toshiba said the tipping point came last month when Warner Bros' followed a number of other film studios in deciding to release its movies only in the Blu-ray format.

"It shows what a highly competitive market it is. When it comes to video, it is the person with the most content that wins," Gartner analyst Paul O'Donovan said.

FOR BLU-RAY Sony Matsushita (Panasonic) Warner Bros Wal-Mart Walt Disney 20th Century Fox Blockbuster Netflix

Warner Bros' decision means an estimated three quarters of new film releases will be available on Blu-ray discs. Other major studios backing Blu-ray include 20th Century Fox, Walt Disney and MGM.

Last week, Wal-Mart, the world's largest retailer, announced it would sell high-definition discs only in the Blu-ray format at its 4,000 US stores.

In the UK, DSGI, which owns the Currys chain, said it would stop selling HD DVD players after Toshiba's announcement.

Video rental firms Blockbusters and Netflix will also offer customers only Blu-ray.

Universal, Paramount and DreamWorks studios signed up to produce movies in HD DVD, but Toshiba's withdrawal is expected to significantly reduce the number of films available in the format.

Industry boost

The end of the battle is expected to give the industry a boost, as it removes uncertainty for consumers over which format to buy.

"The industry can now focus on getting the right product to the consumer, at the right price and in the volumes required," Paul O'Donovan said.

FOR HD DVD Universal Studios Paramount Pictures DreamWorks Animation Intel Microsoft HP

Toshiba will continue to supply retailers with HD DVD machines until the end of March this year.

After that, Toshiba will provide technical support to the estimated one million people worldwide who own HD DVD devices.

Microsoft offers an HD DVD drive with the Xbox 360 games console. The company told the BBC it did not believe the apparent end of the format would have an impact on Xbox sales.

"It is games that sell the consoles and the Xbox has the largest next-gen games library," a Microsoft spokesperson said.

Toshiba also makes HD DVD drives for PCs and laptop computers.

The HD DVD versus Blu-ray battle has been likened to the VHS versus Betamax war of the 1980s.

'Hacker' launches iTunes copying

The software will allow the sharing of music bought on iTunes

The release of software from a firm run by a notorious Norwegian hacker is likely to cause waves in the music and film download world.

Jon Lech Johansen became the "enfant terrible" of the DRM industry when he released software which cracked the encryption codes on DVDs, aged just 15.

His firm, DoubleTwist, has now released software allowing users to share digital media files across devices.

It would allow songs bought on Apple's iTunes to be shared on other devices.

At the moment, the only portable music player which can store content downloaded from the iTunes store is Apple's iPod.

Users can copy downloaded songs to a CD and then copy the disc back on to the computer so that the songs can then be moved to other portable devices - but the quality of the music is affected.

In 2003 Mr Johansen distributed a program which bypassed Apple's Fairplay system, the software that enforces this relationship between iTunes and the iPod. Since then he has had several other well-publicised run-ins with the firm.

Tower of Babel

The new software from his San Francisco-based company DoubleTwist will allow users to share both user-generated and professionally created music, photos and video clips between computers, mobiles and game consoles.

Media which lives on a computer can be moved to a variety of mobile devices by dragging and dropping the files to a desktop folder which then drops copies on the external device over the web.

Initially the system will allow file-sharing with Sony's PSP games console, Nokia's N-series mobile, Sony Ericsson's Walkman and Cybershot handsets and Microsoft's Windows Mobile smartphones.

The software converts media stored in one file format to those used by the other devices in a system that mimics the process of ripping a CD onto a computer.

One hundred songs can be converted in about half an hour, with a slight degradation in sound quality, according to the firm.

"With digital media such as video from a friend's cell phone or your own iTunes playlists, it's a jungle out there," said Monique Farantzos, co-founder of DoubleTwist.

"The digital media landscape has become a tower of Babel, alienating and frustrating consumers. Our goal is to provide a simple and well integrated solution that the average consumer can use to eliminate the headaches associated with their expanding digital universe," she said.

The company is confident there will not be any legal challenges from Apple.

"All we are facilitating are friends sending things to one another," Ms Farantzos told the Reuters news agency.

The software is available as a free download from the company's website.

Brain control headset for gamers

Gamers will soon be able to interact with the virtual world using their thoughts and emotions alone.

A neuro-headset which interprets the interaction of neurons in the brain will go on sale later this year.

"It picks up electrical activity from the brain and sends wireless signals to a computer," said Tan Le, president of US/Australian firm Emotiv.

"It allows the user to manipulate a game or virtual environment naturally and intuitively," she added.

The brain is made up of about 100 billion nerve cells, or neurons, which emit an electrical impulse when interacting. The headset implements a technology known as non-invasive electroencephalography (EEG) to read the neural activity.

Ms Le said: "Emotiv is a neuro-engineering company and we've created a brain computer interface that reads electrical impulses in the brain and translates them into commands that a video game can accept and control the game dynamically."

Headsets which read neural activity are not new, but Ms Le said the Epoc was the first consumer device that can be used for gaming.

"This is the first headset that doesn't require a large net of electrodes, or a technician to calibrate or operate it and does require gel on the scalp," she said. "It also doesn't cost tens of thousands of dollars."

The use of Electroencephalography in medical practice dates back almost 100 years but it is only since the 1970s that the procedure has been used to explore brain computer interfaces.

The Epoc technology can be used to give authentic facial expressions to avatars of gamers in virtual worlds. For example, if the player smiles, winks, grimaces the headset can detect the expression and translate it to the avatar in game.

It can also read emotions of players and translate those to the virtual world. "The headset could be used to improve the realism of emotional responses of AI characters in games," said Ms Le.

"If you laughed or felt happy after killing a character in a game then your virtual buddy could admonish you for being callous," she explained.

The $299 headset has a gyroscope to detect movement and has wireless capabilities to communicate with a USB dongle plugged into a computer.

The Emotiv said the headset could detects more than 30 different expressions, emotions and actions.

The headset could be used to improve the realism of emotional responses of AI characters in games Tan Le, Emotiv

They include excitement, meditation, tension and frustration; facial expressions such as smile, laugh, wink, shock (eyebrows raised), anger (eyebrows furrowed); and cognitive actions such as push, pull, lift, drop and rotate (on six different axis).

Gamers are able to move objects in the world just by thinking of the action.

Emotiv is working with IBM to develop the technology for uses in "strategic enterprise business markets and virtual worlds"

Paul Ledak, vice president, IBM Digital Convergence said brain computer interfaces, like the Epoc headset were an important component of the future 3D Internet and the future of virtual communication.

THOUGHT-CONTROLLED GAMING HEADSET Sensors respond to the electrical impulses behind different thoughts; enabling a user's brain to influence gameplay directly Conscious thoughts, facial expressions, and non-conscious emotions can all be detected Gyroscope enables a cursor or camera to be controlled by head movements The headset uses wi-fi to connect to a computer

Xbox to deliver community games

Little Gamers is one of the first community titles

Hobbyist game developers will be able to share their "home brew" titles over Microsoft's Xbox Live online service.

The company has launched a community driven service that will let amateur creators build and distribute games.

"Ten million people will be able to play your games," said Microsoft's Chris Satchell, at the Game Developers Conference in San Francisco.

Microsoft also announced a sequel to its four and a half million-selling game Gears of War.

"I think of this as gaming created by the community and managed by the community but enjoyed by everyone," said Mr Satchell of the new game distribution system.

'Democratisation'

Microsoft freely distributes tools, called XNA, which gives amateur developers the chance to build games for the Xbox 360 and for Windows.

But until now the games could not be shared. The tools have been downloaded 800,000 times and more than 400 universities worldwide are using the XNA package.

Mr Satchell said it was the democratisation of development and distribution.

"There are tens of thousands of developers out there chomping at the bit; we need to unlock that potential," said John Schappert, head of Live services.

Microsoft also announced that it was planning a revenue sharing model for the community games distributed over Xbox Live.

US warns India over nuclear pact

The senators warn that the situation is getting critical

A US delegation has warned India it must finalise a nuclear deal by July if Congress in Washington is to ratify it before presidential polls.

The civilian nuclear energy deal between the two countries has been delayed because of opposition from India's communist parties.

The parties provide key support to PM Manmohan Singh's minority government.

They argue that the accord would give the US undue influence over India's foreign and nuclear policy.

Under the terms of the deal, India would get access to US civil nuclear technology and fuel, in return for opening its civilian nuclear facilities to inspection.

But its nuclear weapons sites would remain off-limits.

The deal will also eventually need to be approved by the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), as well as by the 45-nation Nuclear Suppliers Group, which regulates global civilian nuclear trade.

'Difficult to ratify'

The delegation of three US senators arrived in Delhi on a day-long visit after monitoring Pakistan's elections.

"Time is of the essence," Joseph Biden, one of the senators, said, urging India to confirm its support for the nuclear deal.

The left-wing parties have been protesting against the nuclear deal

The visiting Americans say the deal is running out of time because of the tight legislative agenda for 2008 ahead of November's US presidential elections.

"If we don't have the deal back with us clearly prior to the month of July, it will be very difficult to ratify," Mr Biden said.

Whatever the merits of the deal, passing it through Congress after July would be harder because of "the mechanics on which our system functions", he said.

Mr Biden also said it was "highly unlikely" the next president would be able to authorise the same deal, if it did not reach Congress in time.

"It will be renegotiated," Mr Biden said.

"It is critical, if India want that deal, they move on relatively soon, within a matter of weeks,'' he said.

Mr Biden and senators John Kerry and Chuck Hagel met Prime Minister Singh on Wednesday to express their concerns over the issue.

India tested nuclear weapons in 1974 and 1998 and consequently is banned from buying fuel for atomic reactors and related equipment.

The deal has already been pronounced dead by some analysts because of India's domestic political rivalries.

Pakistani leaders set for talks

The opposition PPP is celebrating the election result

The leaders of the two parties that won the most seats in Monday's elections in Pakistan are due to meet to discuss forming a coalition government.

Such a government could force President Pervez Musharraf from power.

The Pakistan People's Party leader, Benazir Bhutto's husband Asif Zardari, will have talks with Nawaz Sharif, who heads the Pakistan Muslim League.

Mr Sharif has said he wants Mr Musharraf to go, but Mr Zardari's party has been less clear-cut on the issue.

Mr Musharraf has said he wishes to stay and work towards stable democratic government in Pakistan.

He said the polls had strengthened moderate forces inside the country.

Correspondents say the most likely coalition government is between Mr Zardari and Mr Sharif's parties, as they would have more than half of parliament's seats between them.

If a new governing coalition manages to muster a two-thirds majority in parliament, it could call for Mr Musharraf to be impeached.

No guarantees

Mr Sharif has said he is prepared to discuss joining a coalition with Mr Zardari's party in order "to rid Pakistan of dictatorship forever".

But a coalition between the two is the most likely option, there are certainly issues on which they disagree and there are no guarantees an alliance will emerge.

Separately, Mr Zardari has ruled himself out as prime minister, despite his party's success at the election.

He has said his PPP party would choose another candidate to lead a coalition government that opposition parties are expected to form.

Mr Zardari, a deeply divisive figure in Pakistani politics who has spent several years in prison on corruption charges, is not an MP and is therefore not currently eligible to serve as prime minister.

But there had been speculation that he might enter parliament via a by-election.

Major ally

Mr Zardari has said his party could work with the MQM, a Sindh-based regional party which supports Mr Musharraf.

Mr Sharif has urged Mr Musharraf to resign, and a PPP statement cited alleged remarks by the president that he would step down if the parties supporting him were defeated in elections.

In an earlier interview for the US newspaper the Wall Street Journal, Mr Musharraf said he would not resign or retire.

He was re-elected to the presidency last October, in a parliamentary vote boycotted by the opposition as unconstitutional.

He has been a major US ally in the "war on terror" but his popularity has waned at home amid accusations of authoritarianism and incompetence.

With votes counted in 258 out of 272 constituencies, the PPP has won 87 seats, according to the Election Commission of Pakistan.

The Pakistan Muslim League, or PML-N, is in second place with 67 seats so far.

Kenya 'at risk of fresh violence'

The report comes as yet more mob violence erupted in a Nairobi slum

Further violence could erupt in Kenya unless a solution to the country's political crisis is found urgently, an international think tank has warned.

Armed groups on both the opposition and government sides are mobilising for fresh attacks, according to the International Crisis Group (ICG).

Its report calls for legal, electoral and constitutional reforms and for aid to be conditional on a peaceful result.

Ex-UN chief Kofi Annan has been leading mediation talks in Nairobi.

The two sides agree on a grand coalition in principle, but deadlock remains over how it should work in practice.

Opposition leader Raila Odinga wants powers vested in a new post of prime minister - but this needs MPs to amend the constitution and is opposed by President Mwai Kibaki.

The ICG report comes as Kenya's opposition warned it would relaunch mass protests in a week's time if the talks do not break the political deadlock.

Using aid

Ethnic and political violence broke out after President Kibaki was declared the winner of December's presidential election.

The current uneasy calm in Kenya should not be misunderstood as a return to normalcy International crisis group

At least 1,000 people have been killed across the country and hundreds of thousands of people have been displaced.

The ICG report warned "serious obstacles" to peace remained and made 12 recommendations.

These included sanctions to be targeted at those responsible for inter-ethnic violence.

And the group said international aid should be made dependent on a satisfactory outcome to negotiations.

"The current uneasy calm in Kenya should not be misunderstood as a return to normalcy," said the report.

Roots of conflict

In an interview with the BBC, the ICG's Donald Steinberg said he thought the negotiations to establish a transitional government were going quite well.

"It's very important, however, that the negotiations go deeper than that," he said.

Can opposition leader Raila Odinga and Mwai Kibaki govern together?

"We are very concerned that the efforts to reach that short-term agreement come at the expense of very long-term and fundamental changes that need to occur.

"If all we get is a short-term agreement on power-sharing and transitional arrangements, it's uncertain that the instigators of the violence will deem that as acceptable," and the violence might resume, he said.

At the root of the violence, said Mr Steinberg, were the tribal divide-and-rule policies of Kenya's previous ruler, Daniel arap Moi, which had not been addressed under Mr Kibaki.

The report noted that Kenya was the platform for relief operations in Somalia and Sudan and a haven for refugees from throughout the region.

The think tank also said Kenya was a vital regional trade hub and a key anchor for prospects of long-term stabilisation in Rwanda, Uganda and Burundi.

It concluded: "The quicker a comprehensive solution to the crisis in Kenya is found, the better the prospects will be for the entire region.

"The alternative - a collapsed economy, the evisceration of the democratic process and ethnic and territorial conflict - would have severe consequences for the whole of east Africa, and well beyond."

S Korea president-elect cleared

President-elect Lee Myung-bak always denied the allegations

South Korean President-elect Lee Myung-bak has been cleared of fraud allegations following an inquiry.

"We found the president-elect was not involved in stock manipulation," Special Prosecutor Chung Ho-young said.

The announcement comes four days before Mr Lee, who won a general election in December 2007, is due to be sworn in.

During the campaign he had denied allegations linking him to a 2001 share-rigging scandal, for which an ex-business partner of his is on trial.

He was alleged to have links to the investment firm at the centre of the scandal.

Prosecutors had already ruled that they had no evidence against Mr Lee in early December.

LEE MYUNG-BAK PROBE 5 Dec: Probe by prosecutors clears Mr Lee 19 Dec: Mr Lee wins landslide victory in polls 10 Jan: Constitutional court orders special investigation 21 Feb: Probe by special prosecutor clears Mr Lee

But lawmakers subsequently voted to re-open the case when a video emerged in which the president-elect was shown apparently saying he had established the scandal-hit company.

Mr Lee said his words had been taken out of context.

The probe also cleared Lee Myung-bak of claims that he had purchased a plot of land under a false name.

"Allegations that the president-elect owned the land by using borrowed names are groundless," Mr Chung said.

'Work harder'

In a statement, the president-elect welcomed the decision.

"I thank the people who have given me trust and support so far," he said.

"I think the way to repay this is to work harder and devote myself to serving the people and saving the nation's economy."

Mr Lee takes office on 25 February, following his landslide victory in polls late last year.

International leaders including Japanese Prime Minister Yasuo Fukuda and US Secretary of State Condoleezza Rice are expected to attend his inauguration.

Mr Lee, a former Hyundai executive who heads the conservative Grand National Party, has promised to revive the economy and take a tougher line towards North Korea.

US missile hits 'toxic satellite'

The Pentagon used a missile to shoot down the satellite (file pic)

The US has successfully struck a disabled spy satellite with a missile fired from a warship in waters west of Hawaii, military officials say.

Military operatives had only a 10-second window to hit the satellite - USA 193 - which lost control shortly after it was launched in December 2006.

Officials said they were worried fuel on board could pose a threat to humans.

But Russia suspects the operation was a cover to test anti-satellite technology under the US missile defence programme.

The US denies the operation was a response to an anti-satellite test carried out by China last year, which prompted fears of a space arms race.

Precision needed

This operation was hugely ambitious - like trying to fire a missile through the eye of a needle.

The operation went ahead hours after the space shuttle Atlantis landed, removing it as a safety issue for the military.

BROKEN SATELLITE Owner: National Reconnaissance Office Mission: Classified Launched: 14 Dec 2006 Weight: 2,300 kg (5,000lbs) 1,134kg (2,500lbs) could survive re-entry Carrying hydrazine thruster fuel

The satellite - believed by some commentators to be a radar imaging reconnaissance satellite - was passing about 130 miles (210km) over the Pacific.

Earlier the military said it would use an SM-3 missile fired from the cruiser USS Lake Erie, which is posted on the western side of Hawaii along with the destroyers USS Decatur and USS Russell.

But it is not yet known how successful the operation was - the missile needs to pierce the bus-sized satellite's fuel tank, containing more than 450kg (1,000lbs) of toxic hydrazine, which would otherwise be expected to survive re-entry.

The Pentagon said confirmation that the fuel tank has been hit should be available within 24 hours.

US officials said without an attempt to destroy the fuel tank, and with the satellite's thermal control system gone, the fuel would now be frozen solid, allowing the tank to resist the heat of re-entry.

If the tank were to land intact, it could leak toxic gas over a wide area - harming or kill humans if inhaled, officials had warned.

Debris

Officials expect that over 50% of the debris will fall to Earth within the first 15 hours after the strike - or within its first two revolutions of Earth.

USA 193 lost control a few hours after launch on a Delta II rocket

Left to its own devices, about half of the spacecraft would have been expected to survive the blazing descent through the atmosphere, scattering debris in a defined "corridor" which runs across the Earth's surface.

Professor Richard Crowther, a space debris expert with the Science and Technology Facilities Council (STFC), said that if struck with the missile, about 25% of USA 193 is likely to survive the fall to Earth.

"The smaller the debris is the more likely you are to get burn-through. So if you fragment something before re-entry, less mass will survive to hit the Earth," he told BBC News.

Russian suspicion

But Russia's defence ministry has effectively branded the US operation a cover for testing an anti-satellite weapon.

The Russian defence ministry argued that various countries' spacecraft had crashed to Earth in the past, with many using toxic fuel on board, but that this had never before merited "extraordinary measures".

Last year, China carried out a test using a ground-based ballistic missile to destroy a satellite in space, prompting international alarm and fears of a space arms race.

On Tuesday, a US State Department spokesman stressed that the action was meant to protect people from the hazardous fuel and was not a weapons test.

The US government has also denied claims that the main aim of the operation was to destroy secret components on USA 193.

Officials say classified parts would be burned up in the atmosphere and, in any case, that would not be a reason for shooting down the satellite.

SATELLITE DESTRUCTION PLAN 1 SM-3 missile launched from a US Navy cruiser in Pacific Ocean 2 The three-stage missile heads for collision location, where the relative "closing" speed will be 10km/s (22,000mph) 3 Satellite reaches desired altitude of 240km (130 nautical miles), close to edge of atmosphere 4 Missile makes contact and breaks fuel tank, freeing hydrazine into space 5 Debris scattered over hundreds of kilometres