VIPsight - September 2012
COMPANIES
Investigations against Deutsche Bank in the Libor scandal
The U.S. Department of Justice is stepping up its investigation into the Libor manipulations by major international banks. The Deutsche Bank is one of the institutions being intensively investigated. The authorities are stilI checking whether and to what extent different institutions’ traders colluded over the years in the definition of reference rates such as Libor or Euribor. Banks allegedly put their funding costs too low in order to appear as healthy as possible. Thus the Libor came out lower than it should have been. Besides Deutsche Bank, Barclays, Citigroup, HSBC, JP Morgan Chase, RBS and UBS have received written orders from the attorneys general of the states of New York and Connecticut. Anshu Jain has described the Libor interest-rate manipulation scandal as “a very serious matter.” At the same time, he assured there would be a comprehensive account from his Bank. The Deutsche Bank had expended significant resources to investigate the operations, said the co-CEO in Berlin.
EADS knew of bribes
A division in the European Aeronautic Defence and Space Company (EADS) is under suspicion of bribery. UK regulators are investigating the company in connection with a telecommunications transaction on behalf of the Saudi Arabian National Guard. This is responsible for the protection of the royal family, and commissioned from EADS subsidiary GPT Special Project Management, a group division which provides monitoring and communication devices, communication services for over 3.3 billion dollars. A spokesman for the Serious Fraud Office (SFO) said on 9 August that the office had begun an investigation. Mike Paterson – at the time Controller at GPT – had informed his superiors in 2007 of payments that a subsidiary of EADS in Saudi Arabia paid into an account in the Cayman Islands. He first contacted the manager of GPT and the head of GPT’s parent Paradigm, which in turn belongs to Astrium, the space division of the aviation and aerospace group.
Semi-annual ProSieben teleconference omits provisions
At ProSiebenSat.1 competition watchdogs had agreed arrangements with the RTL group, according to which previously free programmes should have only encrypted access for a fee. The quarterly report shows that the Munich firm in July agreed in principle with the Bundeskartellamt on an amicable termination of the antitrust process spanning many years. During this process the media group set aside 27.5 million euros. Experts had not expected this provision until a later quarter. For the settlement ProSieben must milk its self-imposed budget, specified in the 2011 Annual Report at up to 30 million euros, almost dry. However, the management said not a word of these provisions in the otherwise detailed conference call presenting the half-year figures. This is even though the amount represents 20 percent of pre-tax profit and thus has capital-market relevance.
Asklepios stocks up further at Rhön-Klinikum
Asklepios wants to prevent a Fresenius takeover of Rhön-Klinikum at all costs. The hospital operator had registered a preliminary inquiry on a minority stake in its competitor, wanting to know what the consequences of an increase to an amount of 10.1 percent and more might be, said a Bundeskartellamt spokesman on 31 August . With a blocking minority it could block such major decisions as capital measures or charter amendments in the MDAX Group, since according to the statutes the agreement of more than 90 percent of the capital represented is necessary for this. Asklepios had surprisingly bought into Rhön-Klinikum at the end of June with just over five percent, thus wrecking the proposed acquisition of Rhön by Fresenius for the time being. The family firm wants to push for the independence of the Rhön group and increase its share. Asklepios also demanded that core functions of Rhön not be outsourced, nor profits abstracted.
Buhlmann's Corner
Corruption or “just” conflict of interest?
Not everyone asks – but anyone who does ask me what corporate governance is gets told: look at the Sermon on the Mount (Matthew 5-7), or at the Khutbat al-Wada‘a – Muhammad’s Farewell Sermon before his death in 632 AD in the Uranah Valley. There is more than one answer there to what today is called conflict of interest.
There is a growing impression that the concept of corruption is tending to degenerate into another revenue source for the coffers of the criminal justice authorities, especially since any form of definition is tricky, if only because there is no consensus on the substantive limits. But be that all as it may, what really irritates me as a mere observer is the way the topic is kept at a distance.
The UN Convention against Corruption (UNCAC) of 16 September 2005 has still been not ratified by Japan, Saudi Arabia or Germany. In Germany this is simple and easy to understand: because “the parliamentarians would be hindered in the free exercise of their [Bundestag – author’s note] mandate”. Perhaps the tax-saving Republic should be guided more by Switzerland, which launched the procedure on 21 September 2007. That’s just how it is: in 18th-century feudal States corruption was a third of the officials’ and diplomats’ incomes – some are simply not yet at home in today’s world.
Corruption is clearly of benefit – for the corrupter, and for a short time. Just like trade barriers against China in the solar world ....
Corruption is clearly of benefit to the collectors of the American justice authorities (the German ones get at most the Sermon on the Mount’s tithe) ....
But then what? Then, why then?
Today it is legally established that high-value car racing and high-value football (in Germany) are organized within corrupt structures. It is clear that listed companies (Daimler, E.ON, Deutsche Telekom and many others) sponsor, fertilize and support such structures: they support corruption. Do the shareholders want that? Do the owners?
They cannot say they want to be positive and active because they think they can benefit from it, e.g. more sales, more customers or ....
Or can they say they are positive and active by giving discharge to corruption-running boards every year. In virtue of §120 AktG, discharge does not end their liability.
Or investors in German equities tell themselves something else, the Americans among them maybe that their judicial authorities have creamed off billions from Siemens, Daimler, MAN & Co. Here and now, the question is not whether those judicial authorities apply the same criteria at home and to the deep pockets of Europe. Here all that is to be asked is whether those investors also apply the same criteria to sponsor spending. No one wants to assume that investors themselves want to promote corrupt systems so that their investments will (still) sponsor corrupt organizations.
It is now legally established that SLEC as Grand Prix operator acted corruptly, but Daimler is still sending money? And FIFA as ruling organization of the Bundesliga acted corruptly, but Telekom, Volkswagen & Co go on sponsoring it?
ACTIONS CORNER
K+S is to be allowed to continue its current release of saline production and stockpile waters from its Werra plant till 2015. In November 2011, Kassel Regional Council had granted the North Hessian salt and fertilizer company permission to release further wastewater. The municipalities of Herleshausen, Gerstungen, Witzenhausen, the Lower Werra fishing cooperative, the citizens’ initiative “For a Werratal worth living” and the Thuringia Fishing and Conservation Association had unsuccessfully sued against the disposal of the saline waste water. The plaintiffs were not entitled to bring proceedings because they were not injured in their “subjective and individual rights,” said a spokesman explaining the court decision.
After two years of investigative work into possible unauthorized collaboration and collusion on prices for automobile wiring harnesses, the European Commission has opened proceedings against automotive suppliers. Among those affected is LEONI. “We are cooperating with the EU Commission,” said a spokesman for the Nuremberg cable and wiring systems manufacturers. It would also continue working together with the U.S. Department of Justice on the assessment of past antitrust violations. Because of the current proceedings, LEONI would not specifically comment on the allegations. The EU too did not specify the status of the proceedings or the defendants, which would be threatened with heavy fines if convicted.
The bribery trial of Anton Weinmann before Munich District Court was continued on 29 August, after an amicable settlement between the court, prosecution and defence did not materialize in the morning. The presiding judge did not however rule out a possible agreement in future. The indictment accuses the former MAN Commercial Vehicles board member of abetting bribery, Weinmann rejects this. The prosecution is trying to prove that the former board member had received knowledge of bribery operations in Belgium and Slovenia without acting.
METRO has won the shareholders’ dispute as to who is to call the shots at Media-Saturn Holding (MSH). First, on 8 August, the arbitral tribunal gave the parties just a model decision. However, it largely followed the majority shareholder’s ideas. Thus, the Düsseldorf retail giant may put in an advisory board that can take important business decisions for Media Markt and Saturn by simple majority and without Erich Kellerhals. The Munich Court of Appeal also confirmed the legality of the Advisory Board on 9 August. While for Olaf Koch “the deconsolidation debate is off the table,” from the perspective of Kellerhals the business group is “not an inch closer to its self-declared goals and cannot control the company (MSH).” The minority shareholder was to that extent reasonable when he declared that the conflict could not be solved by legal means. However, he still wanted to consider an appeal against the decision now.
ProSiebenSat.1 and RTL cannot implement their plans for a joint open portal, according to a decision of the Düsseldorf Higher Regional Court (OLG). The court on 8 August dismissed a complaint by the TV corporations against a spring 2011 ban imposed by the Bundeskartellamt. The proposed video platform would further strengthen the already dominant position of the groups. The authority’s chief Andreas Mundt described the decision as “an important signal for the protection of competition in the field of the new media.” The OLG judgment is however not yet final.
In their bitter dispute SAP and Oracle have settled restitution for the Tomorrow Now data theft in the amount of 306 million dollars (250 million euros), plus existing legal fees in the amount of $120 million, if the current proceedings are terminated. The step allows the two archrivals to shorten the course of justice cleanly and quickly start the appeal process, which the Californians will most likely do in the next four weeks. According to analyst estimates Oracle is concerned not just about money but also about damaging the competitor’s reputation. Together with attorneys’ fees accrued over the years, the Germans needed to pay “at least $ 426 million,” said Oracle General Counsel Dorian Daley.
A former Siemens manager in the medical technology sector was sentenced on 1 August in connection with the group’s bribery scandal to one and a half years’ probation. The 68-year-old must also pay a fine of 130,000 euros, decided the 5th Criminal Court of Munich. He was responsible the mistakes alleged against him in the indictment, the accused confessed through his lawyers. The commercial sector executive had admitted to having, along with other defendants, diverted more than ten million euros to foreign shell companies.
AGM Dates
| Company | Event | Date | Time | Place | Address | Veröffentlicht am |
| MDAX | ||||||
| Kabel Deutschland Holding AG | ord. AGM | 11.10.2012 | 11:00 | 80333 München | Max-Joseph-Straße 5, im Haus der Bayerischen Wirtschaft | 29.08.2012 |
| The Agenda for the ordinary AGM of Kabel Deutschland Holding AG starts with the usual items, like presentation of annual accounts and discharge to the company bodies. Kabel Deutschland Holding AG earned balance-sheet profits of €135m last business year. Of the profits, €132.78m is to be paid out as dividend and €2.22m carried forward to a new account. Elections to theSupervisory Board are to be held. Additionally, a profit-transfer agreement between Kabel Deutschland Holding AG and Kabel Deutschland Vertrieb und Service GmbH in favour of Kabel Deutschland Holding AGis to be agreed to. | ||||||
Politics
FDP torpedoes Schröder’s Flexi-rate
Kristina Schröder sees no chance of laying down in law her Flexi-rate for more women in management positions before the federal elections in 2013. The responsible party was the coalition partner. The FDP was not prepared to go the legal route, said the family minister. The coalition committee of CDU, CSU and FDP leaders had taken a clear position in this regard. She would, however, continue to fight for her beliefs. Commissioner Viviane Reding has now indicated that instead of Schröder the European Commission might act. The FDP welcomed Schröder's admission as a success for the Liberals. The Flexi-rate provides that companies can themselves decide to what extent they want to increase the number of women. There would be no fixed value. Nevertheless, there are companies for which a target rate of twelve percent is already ambitious, because the proportion of women in their entire workforce is only ten percent, according to the minister.
Campus
Enlightenment in the interest scandal will take time
In the course of the interest scandal new requirements are likely to be placed on banks involved in the fixing of the Euribor rate. Observers expect that the German Federal Financial Supervisory Authority (BaFin) will soon adopt specific guidelines for reporting procedures. Eight German banks which are or have been involved in the determination of the European reference rate Euribor must by 26 July disclose in writing their internal processes for calculating the interest and monitoring their mechanisms. Should grounds for suspicion emerge they could be threatened with a special audit. Among those Involved in the determination of the Euribor are Deutsche Bank, Commerzbank, DZ Bank, LBBW, BayernLB, Helaba, NordLB and Landesbank Berlin. The German financial authority expects no quick results from the ongoing investigations, however. Millions of records, e-mails and documents would have to be checked first, said BaFin boss Elke König . At the end of the ongoing investigation into possible Euribor manipulation the duty to integrate compliance, not yet prescribed in Germany, could be introduced.
Stock investments experience a renaissance in Germany
The total number of domestic shareowners and mutual fund holders rose a surprising degree in the first half year. Overall, according to the latest survey by the German Share Institute (DAI), 10.2 million people were investing, including three million directly in individual stocks and more than five million in funds. That is equivalent to 15.7 percent of the population, and is 17.1 percent, or 1.5 million, more investors than in the second half of 2011. There was a still greater increase only in the exceptional year 2000, with 3.6 million new equity investors. Share ownership has thus reached its highest level since 2007 and completely recovered from the Lehman crisis. In 2001, the record of 13 million shareholders was set, but with the end of the "bull market" the number fell again. The low interest rates on conventional investments, such as day and time deposits, and the fear of the debt crisis, are driving the citizens despite sometimes violent fluctuations on the Exchange.
DAX CEOs earn significantly more
For the eleventh year shareholder association Deutsche Schutzvereinigung für Wertpapierbesitz (DSW) has presented its highly regarded study on the remuneration of directors in DAX companies. DSW has here for the first time in this survey, produced jointly with the Chair of Management at the Technical University of Munich, sifted annual reports for the potential maximum remuneration of the CEO. At 28 DAX companies the shareholder association found what it was looking for. Only Merck and Volkswagen did not have caps. The carmaker did however make clear at the last AGM that it did have a cap, and according to DSW the pharmaceutical and chemical company introduced one in 2012. Overall, the DAX-30 executives earned an average of 7.9 percent more in 2011 than in 2010. While growth compared to 2010 stands out as 22 percent lower, the overall trend continues upward unabated. On an international comparison the salaries of German executives are now at a high level, the study says. DSW country director Christiane Hoelz is appealing to the Code Commission to regulate salary limits still more clearly.
Capital News
Siemens is borrowing three billion euros in the capital market to finance a share buyback of the same amount this year. The Group announced this in a release in the night of 3 August. Here, the historically low borrowing costs for German companies are to be exploited. For equity, the company currently has to pay about 4.3 percent interest in the form of dividends. By tightening the amount of shares, the stock market value of more than 63 billion euros soon be distributed ove fewer shares, thereby increasing the price and the earnings per share. From 3 August to 24 August in total 8,801,500 securities had been acquired, the company said.
Director's Dealings
| Person | Function | Buy / Sell | Total value in Euro | Number of shares | Date |
| Christian Tourres | Supervisory Board member | Sell | 6.200.028 | 100.000 | 14.-15.08.2012 |
| Friede Springer | Supervisory Board member | Donation (decrease) | 0 | 1.978.800 | 14.8.2012 |
| Dr. Mathias Döpfner | Administrative Board Chair | Donation (access) | 0 | 1.978.800 | 14.8.2012 |
| Uli Drautz | Supervisory Board member | Sell | 50.964 | 1.644 | 13.8.2012 |
| JJMR GBR | Sell | 1.375.246 | 24.150 | 6.8.2012 | |
| Walter von Szczytnicki | Supervisory Board Chair | Sell | 92.940 | 6.252 | 6.8.2012 |
| Klaus Weinmann | Administrative Board Chair | Sell | 477.968 | 32.594 | 06.-07.08.2012 |
| Daniel Hampel | Supervisory Board member | Buy | 6.670 | 5.256 | 28.8.2012 |
| Uwe E. Flach | Supervisory Board Chair | Sell | 20.290 | 1.439 | 6.8.2012 |
| Udo Kratz | Administrative Board member | Exercise of options | 18.274 | 166.125 | 3.8.2012 |
| Udo Kratz | Administrative Board member | Sell | 2.626.436 | 166.125 | 3.8.2012 |
| Mohamed Djadoudi | Administrative Board member | Sell | 1.252.777 | 78.186 | 06.-07.08.2012 |
| Mohamed Djadoudi | Administrative Board member | Exercise of options | 7.606 | 11.186 | 7.8.2012 |
| Christopher Burke | Supervisory Board member | Sell | 387.239 | 23.757 | 6.8.2012 |
| Christopher Burke | Supervisory Board member | Exercise of options | 28.994 | 23.757 | 6.8.2012 |
| Ralph Heuwing | Administrative Board member | Sell | 1.174.480 | 21.200 | 3.8.2012 |
| Regine Stachelhaus | Administrative Board member | Buy | 36.300 | 2.000 | 20.8.2012 |
| Dr. Werner Lanthaler | Administrative Board Chair | Buy | 50.000 | 20.000 | 24.8.2012 |
| Herbert Mai | Administrative Board member | Sell | 452.000 | 10.000 | 20.8.2012 |
| R + U Weber GmbH & Co. KG | Buy | 481.650 | 15.000 | 24.8.2012 | |
| Irene Arrago | Buy | 36.000 | 750 | 28.8.2012 | |
| Dr. Bernd Scheifele | Administrative Board Chair | Sell | 957.600 | 30.000 | 31.7.2012 |
| Dr. Bernd Scheifele | Administrative Board Chair | Buy | 1.055.400 | 1.000.000 | 31.7.2012 |
| Caroline Hamelmann | Sell | 256.247 | 4.391 | 2.8.2012 | |
| Christoph Henkel | Supervisory Board member | Closure of option | 17.625.868 | 346.097 | 17.8.2012 |
| Christoph Henkel | Supervisory Board member | Buy | 18.212.900 | 300.000 | 16.-17.08.2012 |
| Gisbert Rühl | Administrative Board Chair | Buy | 69.085 | 10.000 | 9.8.2012 |
| Dr. Jörg Schneider | Administrative Board member | Sell | 118.900 | 1.000 | 7.8.2012 |
| Dr. Wolfgang Ziebart | Supervisory Board Chair | Buy | 31.300 | 10.000 | 15.8.2012 |
| Roland Sackers | Administrative Board member | Sell | 175.000 USD | 10.000 | 23.8.2012 |
| Jutta Wiedemann | Sell | 14.074 | 70 | 9.8.2012 | |
| Gabriella Meister | Sell | 2.597.106 | 12.696 | 07.-10.08.2012 | |
| Dr. Günter Blaschke | Administrative Board Chair | Sell | 13.149.248 | 65.000 | 7.8.2012 |
| Eva Wirth | Buy | 127.507 USD | 6.500 | 15.8.2012 | |
| Carl Ferdinand Baasel | Administrative Board member | Buy | 89.885 USD | 5.000 | 6.8.2012 |
| Prof. Dr. Hermann Requardt | Administrative Board member | Transfer | 249.990 | 3.611 | 1.8.2012 |
| Markus Ehret | Administrative Board member | Buy | 897 | 507 | 20.8.2012 |
| Bernd M. Steidle | Administrative Board member | Sell | 237.688 | 7.300 | 6.8.2012 |
| Marcus Wolfinger | Administrative Board Chair | Sell | 237.688 | 7.300 | 6.8.2012 |
| Dr. Joachim Rauhut | Administrative Board member | Sell | 121.740 | 2.255 | 6.8.2012 |
| Burkhard Ley | Administrative Board member | Buy | 1.611.800 | 200.000 | 2.8.2012 |
| Burkhard Ley | Administrative Board member | Sell | 3.280.000 | 200.000 | 21.8.2012 |
VIPsight Shareholders
in August
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