January 27, 1998

Northwest Airlines agrees to buy controlling stake in Continental Airlines for $519 million to create third-largest domestic and international airline network behind United Airlines and American Airlines; Northwest and Continental will merge flight schedules and frequent-flier programs but maintain separate identities and managements; consumers can expect larger choice of flights from new alliance, to virtually any spot from Latin America to Asia, but probably not lower prices, since two carriers do not now compete on many routes; merger is subject to approval by Departments of Justice and Transportation, and by Northwest's pilots; Northwest's proposal of an alliance, which would create jobs, was deciding factor for Continental's board; board rejected merger offer from Delta which would have resulted in widespread layoffs; map; chart (M)

Two high-ranking officials of Japanese Finance Ministry are arrested and charged with accepting bribes from banks they were regulating; Finance Min Hiroshi Mitsuzuka apologizes for incidents; his ministry has been under heavy criticism for mishandling economy and for banking crisis that has led to instability in financial system; two arrested officials are Koichi Miyagawa and Toshimi Taniuchi; they are accused of accepting tens of thousands of dollars of bribes in form of food and entertainment from banks, then showing favor to those banks, including advance information on when banks would be inspected; banks involved are Asahi Bank, Dai-Ichi Kangyo Bank, Sanwa Bank and Hokkaido Takushoku Bank; Finance Ministry has repeatedly warned its officials to be careful about accepting meals in exchange for information (M)

The Israeli Finance Minister will meet with Congressional and Administrative officials this week to discuss phasing out America's $1.2 billion in economic aid to Israel starting in the year 2000, according to Congressional officials and Jewish organizations.

Christian priests in Aksum, Ethiopia, claim to possess original Ark of the Covenant, most sacred object of Old Testament that rest of world has long believed is lost; say it has lain in country's most sacred city since time of Solomon, hidden among hundreds of other relics and old manuscripts; claim white stone tablet inscribed with Ten Commandments was carried down Mount Sinai by Moses; Biblical scholars say Ark appears to have been lost sometime between 995 BC, when Solomon built First Temple in Jerusalem to house it, and 557 BC, when Nebuchadnezzar's army razed city but reportedly failed to find it; legend of its arrival in Ethiopia is woven into fabric of country's national identity and lies at heart of its Christian tradition, which is heavily influenced by Old Testament; replicas remain at center of most Ethiopian Orthodox ceremonies, and are believed to contain spirit of God; photos; map (L)

Profile of Castle Rock Entertainment, television and movie production company that has known both fabulous good fortune and tough time; Castle Rock produced Seinfeld, but that is its sole success in television; movie division faces some tough questions; Castle Rock produced several hits in its first few years, but in recent years it has released films that did far better with critics than at box office; photo of Castle Rock principals: Glenn Padnick, Martin Shafer and Alan Horn (M)