January 20, 2003

According to settlement agreement, Internal Revenue Service says New York City violated federal tax laws by withdrawing $177 million over seven years from municipal pension systems and using it to pay operating expenses; affected unions approved withdrawals starting in 1988 in exchange for additional benefits for retired city workers; any withdrawal of funds, other than to pay pensions or pension operating expenses, is illegal and can cause pension plan to lose tax exemption or subject it to significant penalties, but IRS has waived sanctions, citing city's financial crisis; although city agrees to terms of settlement, officials dispute contention that action was improper, saying city was authorized to receive funds (L)

Chief at Kmart Resigns After Less Than Year in Job With its reorganization incomplete, Kmart's chief executive, James B. Adamson, selected in March to lead the company out of its financial distress, is stepping down, the company said. Mr. Adamson, who will leave his post immediately, will remain chairman of Kmart's board.

Senior Bush administration officials are traveling country collecting written promises from industries to curb emissions of gases linked to global warming, hoping to show that Pres Bush's voluntary climate strategy can work and that mandatory reductions are unnecessary; have rejected written offers from some industry groups to take nonspecific actions, insisting on concrete commitments measured in tons of gases; object is to meet Bush's stated goal for 2012: 18 percent reduction in emission of greenhouse gases for each unit of gross domestic product; overall emissions would continue to grow, but more slowly; some company officials and other opponents of regulation have criticized administration's effort as mandatory program disguised as voluntary one; many scientists, environmental groups and political foes of Bush say his target is so modest that no matter what industries do to achieve it, it will not help stem climate change; graph (M)

Defense Sec Donald H Rumsfeld, Sec of State Colin L Powell and Condoleezza Rice, Pres Bush's national security adviser, hint that they would consider allowing Saddam Hussein to find safe haven from Iraq if that would avoid war, but they reject calls for delay before confronting him militarily; say moment of decision is fast approaching on whether Hussein's government has complied with disarmament demands from United Nations (M)

Tampa Bay Buccaneers defeat Philadelphia Eagles, 27-10, to win National Football Conference title and advance to Super Bowl; photos (M)