Tag: Business

ONE of the more extreme recent cases of corporate bribery is that of LafargeHolcim, a giant Swiss-French cement-maker which was accused in 2016 of funnelling money to armed groups controlling roads and checkpoints around a factory in Syria. The firm still cannot be sure who pocketed its payoffs, via middlemen, that were intended to keep its facility running at all costs. The money may well have ended up funding Islamic State terrorists.

The investigation into LafargeHolcim is one sign of a wider change. The era when European firms could talk up lengthy “ethics codes” at home and behave badly abroad is over. Long gone are the days when German law counted bribes paid by the country’s industrial champions as tax-deductible. A spate of scandals in Europe suggest that prosecutors, as well as the politicians who influence how much freedom judicial investigators enjoy, are becoming ever less tolerant of corporate corruption.

Another big firm under pressure is Novartis, a Swiss drugmaker….Continue reading

WORK is like a capricious lover whose incessant demands are resented but who is missed terribly when they are not there. The relationship is long-term; an average person spends more than half their life at work. Work defines people’s social status, sets income levels and generates a circle of friends.

Attitudes to management, as to work, are double-edged. The modern economy has become immensely complex. Coordinating the production of goods and services across international supply chains represents a huge achievement. Becoming a manager is usually seen as a promotion, yet the role of a “middle manager” is often despised as a useless layer of bureaucracy. Workers simultaneously blame managers for not providing enough leadership and for interfering too much with their daily tasks.

For their part, managers desperately want to improve their performance. Enter “management books” as a search term on Amazon and you get more than 100,000 results. Budding executives solemnly learn the…Continue reading

FEW firms have more power to heat up the cauldron of global geopolitics like Gazprom, the state-backed Russian energy producer. It supplies more than a third of the natural gas that Europeans use for power generation, heating and cooking, creating what many—especially Americans—see as an unhealthy dependence (see chart). It has used its strength to bully countries which are out of favour with the Kremlin, such as Ukraine and Poland. And it is engaged in a growing rivalry with American exporters of liquefied natural gas (LNG) to Europe and China, a competition which potentially adds to the world’s trade tensions.

The firm also revels in its bad-boy image. When its…Continue reading

MOBSTERS, gangsters and bent cops have all been tried under America’s Racketeer Influenced and Corrupt Organisations (RICO) Act. Might consultants be next? McKinsey, a management consultancy, is being sued under the law by Jay Alix, the founder of AlixPartners, a competitor in the field of bankruptcy advice. Mr Alix alleges that McKinsey knowingly misled courts in order to land clients. The firm denies any wrongdoing.

Bankruptcy is lucrative, for those doling out the advice. According to Debtwire, a data provider, corporate bankruptcies generated $1.3bn in fees in 2016, with lawyers taking home over half, and the rest going to consultants, accountants and financiers. McKinsey is a relative newcomer: it set up its restructuring arm, which turns around companies in financial distress, in 2010. Though its share of the market is smaller than those of the top players, AlixPartners and Alvarez & Marsal, its entry has stiffened competition. Its clients have included American Airlines,…Continue reading

Intrepid data gatherers

UBER’s fleet of autonomous vehicles has been parked up since one of its self-driving cars struck and killed a woman in Tempe, Arizona in March. That death highlighted once again the industry’s rush to develop self-driving cars. Waymo, a sister company of Google, plans to launch a robotaxi service in Arizona this year. General Motors says it will launch a fully autonomous taxi service, using cars with no steering wheel or pedals, in an American city in 2019. Volkswagen will make autonomous vehicles available through its new ride-hailing service, Moia, in 2021. Ford says it will be mass-producing fully autonomous cars by then, too.

But not every carmaker is going at the same speed. Toyota, one of only three car companies that sells over 10m vehicles a year, has made no equivalent commitments. The Japanese firm is instead concentrating on using artificial intelligence (AI) and automation to make conventional cars safer and more enjoyable to…Continue reading

IN A recent video Jeremy Sciarappa, a YouTuber, flips the lid off a red box in his living room to reveal a silver machine the size of a shoebox, whining noisily. The contraption is an Antminer S9, sold by Bitmain, a Chinese firm. Its job is to help validate transactions conducted in bitcoin, the world’s best-known crypto-currency. Because bitcoin has no central authority, it relies on its users to keep things humming along. Those who help out are granted bitcoins, in a process called mining. The Antminer s9 is beloved of hobbyist miners worldwide. Nestled inside are 189 application-specific integrated-circuit (ASIC) chips, designed by Bitmain to solve bitcoin’s cryptographic puzzles as quickly as possible. They were made by TSMC, a giant Taiwanese semiconductor firm.

Mr Sciarappa and his fellow enthusiasts are a 21st-century version of the “49ers”, the young men who rushed to California in 1849 to try their luck digging and panning for gold. Few hit it rich, but the businesses that helped them…Continue reading

SHOULD Europeans worry that China Three Gorges (CTG), a state-owned firm, wants to buy EDP, a utility that is Portugal’s biggest company? It is three years since one local banker, Fernando Ulrich, called Portugal “a Chinese aircraft-carrier in Europe”—back then, Chinese buyers were already snapping up stakes in “strategic” local companies as quickly as the government could privatise them. CTG’s offer of €9.1bn ($10.8bn) for EDP, which was made on May 11th, will further unsettle those suspicious of China’s desire to snap up European assets.

The country is unusually welcoming to investors from the east. Its national airline, TAP Air Portugal, and Redes Energéticas Nacionais, the monopoly power transmitter, both have Chinese investors. CTG is already EDP’s largest owner, with a stake of 23%, after a €2.7bn investment in 2012. Now the Chinese want outright control.

To get that, CTG will probably have to raise its offer; EDP’s board rejected the price…Continue reading

ON THE face of it Samsung, South Korea’s biggest chaebol, as the country’s family-controlled groups are known, has had a good couple of months. In April it was name-checked in a report by the country’s antitrust body for good progress on corporate reform. It also posted record profits for the fourth quarter in a row, thanks mainly to its booming memory-chip business as well as its Galaxy range of smartphones. But on May 15th prosecutors spoiled the mood. They raided Samsung’s offices outside Seoul and arrested Choi Pyeong-seok, head of human resources at the after-sales subsidiary of Samsung Electronics, the group’s main earner, on allegations that he had been involved in sabotaging labour-union activities and might destroy evidence unless he was jailed (he has not responded to the allegations).

Mr Choi’s arrest is part of an attempt by prosecutors to prove systematic breaches of labour law at the company’s highest levels. (Samsung says it is unable to…Continue reading

“DONALD TRUMP is the sort of guy who punches you in the face and if you punch him back, he says ‘Let’s be friends’. China punched back and he retreated. The Europeans told him how beautiful he was, but they got nothing.” This is how an American official-turned-executive describes the latest twists in the Trump administration’s sanctions policy, which this year has roiled business from America to Europe, Russia, China and Iran. What business leaders see, analysts say, is a punitive approach that is capricious, aggressive and at times ill-prepared. But unless companies or their governments take the fight all the way to the White House, they have little choice but to abide by the long—and sometimes wrong—arm of American law.

The capriciousness was evident on May 13th when President Trump executed a handbrake turn on ZTE, the world’s fourth-biggest telecoms-equipment maker, which is strongly supported by the Chinese government. It had been brought to the brink of bankruptcy after the…Continue reading

“YOU only have one vote so use it wisely,” advised the captain of a lunchtime AirAsia flight from Singapore to Kuala Lumpur on May 9th. It was the third time he had reminded passengers of Malaysia’s election that day. Travellers delighted by the personal touch shook his hand as they disembarked.

The pilot was not freelancing. AirAsia had planned to provide 120 flights with reduced fares to help Malaysians get home to vote (in the end, half of the extra flights were approved by the airlines regulator). And the low-cost carrier’s political play went much further than encouraging people to vote. Tony Fernandes, the firm’s British-Malaysian boss, arranged for an AirAsia plane to be painted with the slogan of the ruling coalition of Najib Razak, the country’s prime minister at the time. Mr Najib duly posted pictures of it. Mr Fernandes also appeared in a video attributing the success of his business to the Malaysian government.

Then came the most astonishing political result…Continue reading