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Victor Muller’s Chinese investors for Saab are evaporating

October 12, 2011

Victor Muller is still carrying on with the Saab circus and has been constantly talking up the Chinese investments due to be paid in at any moment. But this has been going on for a long time and now Reuters reports that the Chinese application to make the investment has not even been submitted to the Chinese  National Development and Reform Commission (NDRC) for approval. Such approvals can take a long time and if the application has not even been submitted it totally undermines all the “fairy stories” that Muller has been spinning.

Muller is contradicting Reuters but I am afraid his statements are bordering on fantasy and I prefer to believe that Reuters have got it right.

Reuters reports today:

Pangda Automobile Trade Co , China’s largest listed auto dealer, said on Wednesday its investment agreement with Saab had become void after the Swedish car maker sought bankruptcy protection.

But the Dutch owner of the troubled firm later offered conflicting details, saying the 245 million euro ($352 million) deal with Pangda and Zhejiang Youngman Lotus Automobile Co was still valid. ….

…  Speaking to reporters on the sidelines of an industry forum in Chengdu, Pangda chairman Pang Qinghua said, “Now that it’s in bankruptcy protection, all the previous pacts are not valid. It’s up to the court to decide. It can also find a new partner”. Pang added that the Chinese side has not yet submitted a proposal to the Chinese government regarding the Saab deal.

But in a text message sent to Reuters, Swedish Automobile NV CEO Victor Muller said simply: “On track with both Pangda and Youngman”. In June, Saab’s owner had signed a non-binding memorandum of understanding for Zhejiang Youngman Lotus Automobile Co to take a 29.9 percent stake in the company and Pangda to take a 24 percent stake for a combined 245 million euros.

Saab has still not received a vital bridge loan of 70 million euros ($96 million) that was secured by Youngman, money that is key to its short-term survival. The investment hinges on approval from the Chinese and Swedish governments and a green light from the European Investment Bank and Saab shareholder General Motors . Asked on Wednesday whether the deal had been submitted to China’s National Development and Reform Commission for approval, Pangda’s chairman said: “Youngman’s Pang Qingnian is the one that is supposed to send the application to NDRC. As far as I know, he is soliciting opinion among industry experts regarding the deal, they are not done with it yet.”

Pangda had already paid 45 million euros to Saab for a separate deal to purchase 2,000 cars but had not received any cars due to a production halt since April.

“As for the cash injection (into Saab), I can do that only after the government approves the deal,” Pang said on Wednesday.

So with Youngman and Pangda not submitting their application to NDRC and since they need to have such approval, the only conclusion that one can draw is that any new Chinese investment money is never going to come and that Victor Muller is continuing to play a game. The Swedish Courts were remarkably lenient in allowing Muller to attempt another reconstruction of the company just after the earlier attempt at reconstruction had failed. Hopefully the courts will now have had enough of Muller’s representations of forthcoming support and investments which always seem to be grossly exaggerated and – in some cases – just untrue.

Related:

Volvo owner Geely denies reported interest in Saab 

Saab being pimped around the world by Victor Muller

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Posted in Automobiles, Business, Sweden | Comments Off on Victor Muller’s Chinese investors for Saab are evaporating

Even subsidies fail to stimulate electric vehicle sales in Europe

September 30, 2011

The fundamental problem with using subsidies for political purposes is that something that is fundamentally unsound and not viable is supported by tax-payer money in the hope that it will become viable. I take it for granted however that subsidies are nearly always misplaced, subject to and induce gross misuse and are generally counter-productive for the political objectives they have. In my experience subsidies tend to hinder rather than help the development of new technologies. They particularly reduce the pressure on the developers to reduce costs for new technologies and are too easily misused. The emphasis always becomes the maximisation of the subsidies that can be extorted rather than the proper commercialisation and deployment of the new technology.

Subsidies for electric vehicles are equally misplaced and sales in Europe demonstrate that these incentives are particularly ineffective.  It is probably time to dismantle all such subsidies which only distort the market and to let the development and commercialisation of electric vehicles follow a more healthy course.

Incentives fail to stimulate European electric vehicle sales

New research from JATO Dynamics finds that despite a variety of subsidy programs, electric vehicle (EV) sales in Europe remain stubbornly unresponsive to financialincentives during the first six months of 2011.

Europe has a wide range of incentives in place, but they do not appear to correlate closely with sales of electric vehicles.  For example, Spain (€6,500) and Great Britain (€6,400) have almost identical subsidies, but Great Britain registered almost five times the volume of EVs (599 versus 122) during the first half of 2011. Sweden registers an almost identical volume as Spain (111) but subsidizes each vehicle by only €470.

Denmark offers tax breaks that can potentially amount to €20,588 per vehicle, but there were only 283 registrations in the first half of 2011.

“The discrepancies highlight the apparent low influence of price on purchase decisions across the region,” says Gareth Hession, vice-president for Research at JATO. “It’s reasonable to conclude that sales are more affected by other factors such as the degree of urban geography, market maturity and charging infrastructure than was previously thought.”

Total registrations were only 5,222 in the first half of 2011.

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Posted in Automobiles, Behaviour, Business, Politics | 1 Comment »

Spotify undone

September 30, 2011
Image representing Spotify as depicted in Crun...

Image via CrunchBase

I have just returned after a weeks travel on an assignment and was disappointed to find the Spotify decision that new users must have an account with Facebook in order to sign up at all.

My son had introduced me to Spotify 6 months ago and I found it interesting and a channel for music that I used from time to time. I had always expected to increase my usage of Spotify. But I find their Facebook connection coercive and manipulative and – in my opinion – unethical.

I am much too old and much too old-fashioned to be in their target audience and my actions will not have any impact on them or their success or failure. But then I do not find the use of Facebook or Twitter to be a vital or a valuable or a necessary part of my daily life. No doubt their main target audience do not find Facebook intrusive and voyeuristic and manipulative as I do.

And since I find their actions unacceptable I have cancelled my account and uninstalled Spotify.

I shall have to get around to closing my Facebook account and clearing my computer of all their intrusive cookies.

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Posted in Behaviour, Business, Ethics | 4 Comments »

How many years of global cooling are needed to disprove AGW?

September 26, 2011

I am travelling this week.

I had an interesting – if rather depressing – discussion with a fellow traveler (a patent lawyer) at the airport yesterday. The discussion turned to the manner in which science which happened to be “in fashion” became political movements and  the manner in which science itself took on politically correct dimensions.

Sometimes – as with eugenics – the political movement came first and the science followed to fit the movement.  In fact, his contention was that even where the science had come  first, the development of a political movement would always lead to subsequent science being constrained to support the imperatives of the movement.

I brought up the caase of AGW and how  an uncertain science – in my opinion – had been hijacked by a political movement such that one particular hypothesis – which has still to be proven – had become the only politically correct or allowable science. I suggested that real observations might change what was considered politically correct. Since global temperature – if such a thing can be defined – has been declining for the last decade even though carbon dioxide has been increasing,  I expected that new science would have to take these real observations into account in their mathematical modelling and that the strength of the dogma would eventually decrease.

My companion however disagreed. He suggested that all political movements had to be fundamentally and economically viable to survive. If the movement was lucrative – as AGW had become – then there would be a vested interest in maintaining the science it was based on  even if the facts said otherwise. This would be achieved, he argued, by the “Science” allowing or accounting for some deviations – as for example with explanations made up for why a decade or two of cooling could occur without disturbing the central thesis of the “Science”. He cited medical science and examples of purported treatments which were continued for long periods after they were discredited because of the revenues that they were generating. He suggested that the chemical industry was the prime driver for the banning of some refrigerants (based on now outdated ozone depletion science) just so that they could shift production to newer refrigerants having much higher margins. Similarly he felt that the environmental benefits of switching to low energy lamps was minuscule but the lighting industry much preferred the margins and revenues generated by these to those generated by incandescent light bulbs which were suffering from intense competition.

His conclusion was that since the AGW “industry” was generating large revenues whether through carbon trading schemes or by the extraction of subsidies from taxpayer money for so-called “green” energy or “green” fuels, then the vested interest in showing that any conflicting measurements were a temporary aberration would be very strong. Since the timescales of climate change were in the order of hundreds of years, he felt that a mere 20 or 30 years of inconvenient measurements would do little to dent the momentum of a successful revenue generating “science”!!!

He made some good points. I am afraid that even 3 decades of cooling or the start of a mini-ice age will probably not suffice to dampen the ardour of the global warming enthusiast as long as the revenues from growing bio-fuels or getting subsidies for “green” energy keep rolling in. The AGW religion and its corresponding “science” will stop only if the revenues stop.

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Posted in Alarmism, Business, Climate, Politics, Science | 2 Comments »

S. Korea acts to recover from Hwang Woo-suk stem-cell debacle

September 19, 2011

Hwang Woo-suk “is a South Korean veterinarian and researcher. He was a professor of theriogenology and biotechnology at Seoul National University (dismissed on March 20, 2006) who became infamous for fabricating a series of experiments, which appeared in high-profile journals, in the field of stem cell research. Until November 2005, he was considered one of the pioneering experts in the field, best known for two articles published in the journal Science in 2004 and 2005 where he reported to have succeeded in creating human embryonic stem cells by cloning”.

Now the S. Korean government has introduced new regulations and is pumping more money into stem-cell research in an effort to rebuild the pre-eminent position that the country once had. The potential  for financial benefits for the technology leaders in  stem-cell based medical treatment is enormous and the government is responding to pressure from the country’s health care industry. The government sees potential for revenues for the country from stem-cell based treatments equalling or surpassing even that from its IT industry.

FCB-Pharmicell is a leading Korean company trying to use stem-cell based techniques for medical treatments and in July their Hearticellgram-AMI treatment was approved by the Korean Food and Drug Administration for the clinical treatment of heart-attack victims.

InvestorStemCell: More than five years after South Korea’s scientific reputation was shattered by a cloning research scandal, the country has approved stem cell medication in the form of a treatment for heart attack victims for the world’s first clinical use. …. Unlike embryonic stem cells, the use of somatic — or adult — stem cells, as in this case, is not controversial as they are derived from adult tissue samples and not destroyed human embryos. ….

Countries such as the United States and Germany are using this radical form of treatment in a ‘research’ capacity. What puts the South Korean team ahead is that it has shown the treatment as being good enough to win regulatory approval and make it available for clinical use.

…. After six years of clinical trials, the KFDA said it had finalized all procedures needed to permit the sale of Hearticellgram-AMI, a stem cell therapy for acute myocardial infarction, commonly known as heart attack.

Now the government is taking regulatory action to strengthen the oversight provisions but also to simplify licencing. The objective is to try and regain the reputation and credibility of the S. Korean researchers and the companies poised to commercialise the new techniques:

Reuters: South Korea’s president vowed on Monday a series of regulatory reforms to help regain its place as a stem cell research powerhouse, trying to reclaim momentum five years after a cloning scandal. President Lee Myung-bak said that by breathing new life into the industry, it could become “core new growth engine” for Asia’s fourth biggest economy along the same lines as its lucrative IT sector.

“Just a decade ago, Korea took the lead in stem cell research in the world along with the United States,” Lee said in a bi-weekly radio address. “Unfortunately, there was a disappointing incident, which caused inevitable damage to the entire stem-cell research community in Korea,” Lee said, referring to the scandal involving the pre-eminent scientist, Hwang Woo-suk. … As a result of the scandal, South Korea all but put stem cell research into the deep freeze. Lee said the lapse had allowed other countries such as the United States, Japan, Britain and China to get the jump on South Korea, depriving the country of valuable revenue. “While we were faltering in our quest for stem cell research, other nations streamlined their regulations and aggressively expanded their investments in research,” he said.

Lee said the government would invest nearly 100 billion won ($90 million) in stem cell research next year and that it would reform related regulations to make clinical and licensing procedures easier. He said the reforms would help the Korea Food and Drug Administration (KFDA) and other agencies “to ensure that they proactively adapt to the changes in the international environment”. 

“The government has decided to foster the stem cell industry as a core new growth engine following the footsteps of the IT industry,” he said.

 

 

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Posted in Business, Medicine, Science, Scientific Fraud | Comments Off on S. Korea acts to recover from Hwang Woo-suk stem-cell debacle

Jaguar Land-Rover thrives under Tata and fuels Tata Motors profits

September 18, 2011

When the Tata Group with Ratan Tata acquired Jaguar Land-Rover (JLR) in 2008 there were many disturbing and even depressing omens. The financial crisis of 2008 was just beginning to emerge. JLR was bleeding cash and Ford Motor Company were happy to bail out for the $2.3 billion that the Tata Group paid. In India Tata shareholders and analysts were concerned that they had bitten off more than they could chew. The Tata Group had relatively low debt and the levels of debt that they would have to take on not only for the acquisition but almost as much again for investment in JLR raised the fears that JLR could bring not only Tata Motors but the whole group down. The price was seen as being too high for what was considered a “vanity” acquisition. In the UK there were fears that the strong Jaguar and Land-Rover brands would be hurt badly by coming under Indian ownership. Jobs would be lost to Mumbai and technology would be stolen the story went. The company culture would be destroyed and innovation would come to an end. How could an Indian company messing around with a car like the Nano have the audacity to think that they could offer anything to two thoroughbred brands such as Jaguar and Land-Rover?

But 3 years on the story of JLR under Tata is an island of optimism in a gloomy sea. And it is not just optimism. The “vanity” acquisition has a gilded edge. JLR profits are up sharply and it contributes more than 50% of Tata Motors profits. An Indian company that dealt primarily with cheap small cars and trucks succeeded where Ford Motor Co and few others before had failed.

The Telegraph: Jaguar Land Rover is poised to deliver a major boost to the Government’s plans to boost growth by confirming this week that it will build a £400m engine plant in the Midlands that will potentially create up to 2,000 jobs.

JLR’s fortunes have undergone a dramatic transformation under the ownership of Indian group, Tata Motors, which bought Jaguar and Land Rover from Ford in 2008. …. 

The company was forced to turn to the Government for support in 2009 when car sales around the world crashed, but walked away from negotiations when Lord Peter Mandelson, the trade secretary, demanded strict terms including the right to appoint the chairman. The company then secured debt from commercial lenders and was able to reap the benefits of a surge in demand for Jaguars and Land Rovers in Asia.

In the year to March 31, JLR made a record pre-tax profit of £1.1bn after increasing sales by 26pc to 243,621. Under the leadership of chief executive Ralf Speth and Tata chairman Ratan Tata, JLR is investing £1.5bn a year in new products and has ambitions to drive production at its three Midland plants to 500,000 vehicles a year. The company has already hired 3,000 staff this year, including a record 350 graduates, and now employs almost 21,000 people in the UK.

JLR’s engines are currently supplied by Ford from plants including Bridgend and Dagenham in the UK…… 

Mr Tata also played down the loss of Carl-Peter Forster, who has stepped down as Tata Motors chief executive. He said: “The credit for the turnaround of Jaguar Land Rover goes to the management team and workforce. No single person can or should take credit.”

And the culture-clash that was feared just did not happen. Instead a new spirit seemed to be infused into JLR. Kevin Stride, the chief engineer of the highly-acclaimed XF program said in 2009

“There’s a real buzz around the brand at the moment, Even in a difficult world, there’s a buzz because we’re feeling empowered, we’ve got the right product line-up to go and tackle the world and we’re gaining some confidence. 
“If you went to people at different function levels in Jaguar Land Rover and asked what they thought of Tata, you’d get a big thumbs-up. It’s a good place to be at the moment. For individuals like myself, it’s changed for the better. We had a great relationship under Ford. People were cynical about that, but they were a very good company to work for. With Tata, it’s different, but different in a good way. …. We are held accountable very clearly as an independent company, whether in engineering or marketing or finance, we are held accountable for proper business performance, which in the old regime was a little filtered. It was very difficult to see cause and effect. We were not able to be as focused as we are now. ….. Tata has a very healthy way of approaching all the businesses they own. They don’t centralise it, they don’t put layers of bureaucracy in it. They evaluate the business model; if they like it, they buy the company and demand that they deliver on the business plan. You can’t just meander off and fail. ……. Cultural change is the hardest thing to do. It does take time. But we’ve been with Tata for a year, we are more agile already, people (within JLR) are questioning why we do things and if it adds value, and we are feeling more empowered to go and attack it. If it doesn’t make any sense and it adds another layer, let’s not do it any more.

…. Since Tata have come in, we’ve now got an insight into how they deal with Indian sources and sources within the whole of South-East Asia. My perception is that they are extremely focused businessmen and extremely principled in what they do, which is great coaching for us as a company. We’ve gone and looked at how they operate as a company – how they source components, how they design them, how they manufacture them – and we’ve got quite a bit to learn from them on the business side.

Jaguar is able to offer an insight into quality processes in the premium world. In terms of our engineering simulation and development, we’re pretty advanced for a company the size of Jaguar Land Rover. That’s something we’ll be able to provide benefit to the Tata Group in years to come”.

And the story is far from over yet. While cash management is the mantra of the moment, there are ambitious plans for the introduction of new models and upgrades of the existing ones in a long-term plan that runs until 2014. Tata Motors and JLR are now in “very intensive discussions” with a leading Chinese car maker about forming a historic joint venture that would see the company also produce its luxury cars in China.

CarAdvice: With tough economic times hurting sales of Tato’s famous Nano, Jaguar Land Rover are now generating a massive 57 percent of Tata’s revenue. The British brands have seen their pretax profit increase 20-fold to 1.12 billion pounds ($1.76 billion) for the fiscal year. As it stands today, Tata and its Jaguar Land Rover division is valued at over $12 billion.

It wasn’t just a matter of good fortune that the brands have become successful, in fact, Jaguar is still striving to improve with sales down 27 percent for the last quarter. Land Rover on the other hand, has seen significant growth (up 22 percent for last quarter) following strong demand for its upmarket SUVs.

The Range Rover Evoque  has already seen more than 20,000 pre-orders, despite not going on sale till September.

Tata is investing a massive $2.5 billion into Jaguar Land Rover product development each year to keep the flow of new products coming. This should see Jaguar offer a significantly larger range to turn the sales slide around. The multi-billion dollar annual investment will see the development or upgrade of 40 new vehicles across the two brands over the next five years. The two that we look forward to the most are the Jaguar C-X75 supercar and an entry-level sedan to rival the Mercedes-Benz C-Class and BMW 3 Series.

The C-X75 is meant to showcase Jaguar’s engineering prowess and build its brand credibility to compete with its German rivals. The hybrid supercar can accelerate from 0-100km/h in under three seconds and run on electric power alone for around 50km: image CarAdvice.com.au

It will be tough for Jaguar to mount a serious challenge to Audi, BMW and Mercedes-Benz but perhaps with Tata Motors this is not impossible. And it will be a healthy and welcome development for the car industry.

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Posted in Automobiles, Business, Engineering, India, Technology, UK | 1 Comment »

Was Tony Blair just doing Murdoch’s bidding on Iraq?

September 5, 2011

Even the distance of history may never reveal all the real reasons for the Iraq War.  That Rupert Murdoch through his media outlets was one of the most strident advocates of the Iraq war because of their (non-existent) weapons of mass destruction was always clear. But quite how close he was to Tony Blair is becoming apparent only now.

The latest revelations – let-slip by Wendi Deng Murdoch in an interview with Vogue – show that Tony Blair was very close indeed to Rupert Murdoch. The claim of Tony Blair being in Murdoch’s pocket is no longer so far-fetched. His just following Murdoch’s orders regarding the Iraq war would also explain Blair’s obduracy in “sexing-up” the Iraq dossier with a bunch of lies and half-truths.

BBC News

Former UK Prime Minister Tony Blair is godfather to one of Rupert Murdoch’s young children, it has emerged. Mr Blair was present last March when Mr Murdoch’s two daughters by his third wife, Wendi Deng, were baptised. The revelation comes in an interview with Ms Deng in a forthcoming issue of fashion magazine Vogue. Tony Blair’s office declined to comment on the report, which sheds new light on Mr Blair’s ties with the media mogul. Mr Blair, who is said to have been “robed in white” during the ceremony, is the godfather to Grace, the second youngest of Mr Murdoch’s six children.

As The Guardian puts it 

So much falls into place with the revelation that Tony Blair became godfather to one of Rupert Murdoch’s two young daughters and attended their baptism on the banks of the river Jordan last year. …. Murdoch’s third wife, Wendi Deng, who let slip the information in an interview with Vogue, described Blair as one of Rupert’s closest friends. Blair’s account of the relationship in his memoirs is somewhat different, portraying Murdoch as the big bad beast, who won his grudging respect. That is clearly disingenuous. As other memoirs and diaries from the Blair period are published, we see how close Murdoch was to the prime minister and the centre of power when really important decisions, such as the Iraq invasion, were being made.

image : guardian.co.uk

But bringing this back to what is known about Rupert Murdoch’s views and what was thought to be his staunch support of the neo-conservative cause suggests that Murdoch may have been a leader rather than just a supporter. And in that scenario Murdoch led Tony Blair by the nose into the quagmire of Iraq.

Before the Iraq war Murdoch declared that the war would ensure oil at $20 per barrel which would be the equivalent of a tax cut. The three members of the Coalition of the willing were Australia, the US and the UK — all countries where Murdoch is the most powerful media player. Spain was the tentative fourth member of the Coalition and when Spanish Prime Minister Jose Maria Aznar was defeated in 2004, Rupert showed his loyalty to those who backed the Iraq invasion by promptly installing him on the News Corp board.

After running the unsuccessful Tory campaign in 2004, former federal Liberal Party director Clinton Crosby publicly stated that News International backed one last term for Blair because of his support for the Iraq invasion. John Howard received similar treatment. Some Murdoch papers may have endorsed Kevin Rudd at the 2007 federal poll, but Howard was strongly supported by the Murdoch press in 1998, 2001 and 2004. Besides, News Corp’s Harper Collins book division ended up paying John Howard the biggest six-figure cheque of his career for his memoirs after leaving office.

Rupert Murdoch Profile

Considered a close ally of neoconservative activists, Murdoch has helped bankroll neoconservatism’s more important media outlets, including the William Kristol-edited Weekly Standard, the Wall Street Journal’s editorial page, and Fox News. A sign of Murdoch’s commitment to this rightwing faction’s causes was his willingness to support the Standard in spite of yearly losses in the millions. The magazine is widely credited as a pivotal force in building support for the 2003 invasion of Iraq. According to a report by Fairness & Accuracy in Reporting, “With a circulation of about 65,000 and annual losses estimated from $1 million … to $5 million … the Standard represented only a tiny fraction of Murdoch’s vast media empire.”

Murdoch is frequently criticized for using his media empire to advance his political agenda. During the lead up to the U.S. invasion of Iraq, for example, the editors of Murdoch’s media holdings vociferously supported President George W. Bush and Prime Minister Tony Blair’s pro-war campaign. One British newspaper opined: “You have got to admit that Rupert Murdoch is one canny press tycoon because he has an unerring ability to choose editors across the world who think just like him. How else can we explain the extraordinary unity of thought in his newspaper empire about the need to make war on Iraq? After an exhaustive survey of the highest-selling and most influential papers across the world owned by Murdoch’s News Corporation, it is clear that all are singing from the same hymn sheet. Some are bellicose baritone soloists who relish the fight. Some prefer a less strident, if more subtle, role in the chorus. But none, whether fortissimo or pianissimo, has dared to croon the antiwar tune. Their master’s voice has never been questioned.”

It does begin to seem very plausible – and not just some conspiracy theory – that Rupert Murdoch – and not Bush or Cheney or Blair – was the “deep” force behind the entire Iraq adventure and all the hundreds of thousands killed there. And the price of oil at $80 – 100 in these days is a long way from $20.

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Posted in Business, Media, Politics | 1 Comment »

Chasing losses for Corporate tax planning

September 2, 2011

Loss making companies have acquired a new value in M & A activity, especially if they have accumulated losses which can be carried forward against future profits.  In some countries carry-forward losses are as high as 25% of GDP.

Shifting profits to tax havens has been used by corporates (and individuals) increasingly since the 1970’s, but shifting losses to high-taxed countries can be just as effective. A new report has just been issued by the OECD, Corporate Loss Utilisation through Aggressive Tax Planning, ISBN Number: 9789264119215, Publication Date: 12/08/2011, Pages: 92

An OECD press release  states:

30/08/2011 – Due to the recent financial and economic crisis, global corporate losses have increased significantly. Numbers at stake are vast, with loss carry-forwards as high as 25% of GDP in some countries. Though most of these claims are justified, some corporations find loop-holes and use ‘aggressive tax planning’ to avoid taxes in ways that are not within the spirit of the law.  

This aggressive tax planning is a source of increasing concern for many countries and they have developed various strategies to deal with it. Working cooperatively, countries can deter, detect and respond to aggressive tax planning while at the same time ensuring certainty and predictability for compliant taxpayers.

.. countries have identified financial instruments that create artificial losses or obtain multiple deductions for the same loss. They have also seen loss-making companies acquired solely to be merged with profit-making companies and loss-making financial assets artificially allocated to high-tax jurisdictions through non arm’s length transactions.

Reuters reports that

The OECD report, which singled out one industry — financial services — said banks headquartered in high-tax countries were buying and selling derivatives among operating subsidiaries in low-tax jurisdictions and then shifting losses to higher-tax jurisdictions to “manage large loss-making financial assets” held on their balance sheets.

Martin Sullivan, an economist at Tax Analysts, a trade publication, said he thought the majority of the loss-shifting described in the report “pertains to banks, since they are the ones that had huge losses in 2008 and now are making profits.”

The tax-boosting principle at work centers on loss carry-forwards, a legal accounting technique that allows corporations to apply their current year’s net operating losses to profits in future years. While the move is designed in part to help companies avert bankruptcy, it also allows them to reduce their tax bills. ..

The OECD report identified what it called three high-risk schemes designed to maximize the tax value of carry-forward losses. They are:

  • Corporate reorganizations, in particular those in which profitable companies buy money-losing companies solely for the tax benefits of their losses, which is illegal in the United States.
  • Certain financial instruments, including currency swaps and schemes that “refresh” soon-to-expire losses.
  • Non-arm’s-length transfer pricing, or the prices companies charge between subsidiaries for goods and services. This is not legal in the United States and is a subject of growing scrutiny by the Internal Revenue Service.

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Posted in Business, Economy, European Union, International Trade | Comments Off on Chasing losses for Corporate tax planning

David Cameron was “played” by News International

August 23, 2011

David Cameron’s judgement in employing Andy Coulson has already been brought into question. Apparently Coulson was also privy to confidential documents and meetings beyond his security clearance and that he was spared – or protected from – the highest level of security vetting. It has been suggested that his appointment may have been at the behest of Rupert Murdoch or Rebekah Brooks.

It now appears that Andy Coulson was working for two paymasters strengthening the impression that David Cameron was not just a “dupe” but that he was being “played” by News International. Presumably the real objective for News International was the acquisition of BSkyB.

The BBC breaks this story:

Coulson got hundreds of thousands of pounds from News Int

Andy Coulson, the former editor of the News of the World who has been arrested on suspicion of involvement in phone hacking and bribing the police, received several hundred thousand pounds from News International after starting work as the Conservative Party’s Director of Communications in July 2007.

These payments were part of his severance package, under what is known as a “compromise agreement”.

According to sources, Mr Coulson’s contractual leaving pay was given to him in instalments until the end of 2007 – which means he continued to be financially linked to News International for several months of his tenure as David Cameron’s main media adviser. ….. Mr Coulson also continued to receive his News International work benefits, such as healthcare, for three years, and he kept his company car. ………

Related: Phone hacking: PM’s defence of Coulson over the years

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Posted in Business, Ethics, Politics, UK | 1 Comment »

Where are Muller’s Saab shares going?

August 22, 2011

The end-game for Saab is being played out and I can’t help feeling that – unlike for Gaddafi – this end-game is still one designed by Vladimir Antonov and implemented by Victor Muller. Svenska Dagbladet reports today:

Confidence in Saab is faltering as two major car dealers have stopped selling Saab in Sweden and also in the U.S. 

Meanwhile Victor Muller is “lending” his private shares to the fund that recently bought newly issued and discounted Saab shares to raise cash to pay salaries. And  it seems that to avoid the dilution of shares a complicated deal is being done with Muller’s shares

Saab (actually the parent company Swedish Automobile) in August, in a last desperate measure, used cash from GEM fund to pay salaries. GEM’s business is to buy newly printed shares at a discount and then sell them at a profit on the open market. This provided Saab with a needed cash injection, but was also a dangerous dilution with the risk that the stock price would go down.

The Dutch financial agency AFM, has said that now Victor Muller has got rid of almost half of his shares, 3.3 million and converted them into stock options along with 2.5 million unlisted class A shares.

“I sold zero shares, but lent my shares to GEM to allow them to sell them. I get non-listed A shares of the Company as compensation” Muller said in a an SMS text message. According to the AFM, it means at this time that Muller’s influence has decreased from 8.5 million to 3.6 million voting shares. According to Muller, the options are now directly convertible into A shares. “There is an instant convert to A shares and there are no conditions associated with stock options” he writes in his SMS.

Worker’s wages are due on Thursday and white-collar employees should be paid on Friday. Saab itself has been emptied of cash and assets and this may be another ploy. Of course money Muller raises by lending his own shares is cash to his private account. It can only get into Saab’s coffers if he provides a secure loan of some kind to Saab and I am sure he will not lose out as other creditors will in the event of an insolvency.

In the meantime Swedish authorities – the Swedish Enforcement Administration, or Kronofogden – have launched an official debt collection probe of  Saab where unpaid bills have been piling up for months as a first step in what could end in bankruptcy. Kronofogden’s Hans Ryberg announced last week that the probe results from the unpaid bills of  Sweden’s Infotiv, owed 224,000 kronor, and of Norway’s Kongsberg, owed 145,000 kronor.

Production has been at a standstill since April.

Related: Saab being plundered by Victor Muller and his friends

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