Saturday, April 23, 2016

German automakers face huge costs, new probe; Don't blame Panama for the Panama Papers; German beer law marks 500 years

1 German automakers face huge costs, new probe (San Francisco Chronicle) It's been a bad week for German automakers. Volkswagen said that a diesel emissions-cheating scandal would cost it an astounding $18.2 billion just for 2015, while Daimler revealed that US authorities are sniffing around its tailpipes.

Both companies saw a niche with US buyers who wanted performance, gas mileage and clean air. So they marketed their diesels as alternatives to boring hybrids. But there is growing evidence that neither was able to back up the claims without violating pollution standards. Some management experts put the blame partly on ambitious, top-down corporate structures.

VW already has admitted to programming diesel cars so they pass US emissions tests in labs but spew illegal amounts of pollution on real roads. On Thursday, Daimler said the US Justice Department asked the company to investigate irregularities in diesel emissions in its Mercedes brand vehicles.

There also could be some complicity on the part of European governments. Karl Brauer, senior analyst for Kelley Blue Book, said governments, as well as Mercedes, VW and other automakers, have known for years that diesels could meet emissions standards in the lab, but not on real roads.
Germany's transport minister said five automakers agreed to recall 630,000 diesel vehicles in Europe following an investigation into emissions levels. The recalls include Mercedes, Opel and Volkswagen and its subsidiaries Audi and Porsche.

Analysts at Warburg Research think the direct cost of fines, recalls and settlements worldwide will reach 28.6 billion euros — and that's excluding any impact on sales and market share. Volkswagen CEO Matthias Mueller said the company remains "fundamentally healthy" and that he is "convinced that Volkswagen has what it takes to overcome its challenges."


2 Don’t blame Panama for the Panama Papers (Isabel Saint Malo de Alvarado in The Guardian) A trove of leaked documents relating to offshore corporations with ties to the rich and famous has shed light on the extent to which the world’s financial and corporate centres are vulnerable to abuse by those seeking to hide their wealth.

The affair has unfairly come to be known as the Panama Papers, even though, as the documents show, tax evasion and financial crimes are global problems to which no nation is immune. The 11.5m documents revealed by the leak show that the majority of corporations formed by Mossack Fonseca, a law firm headquartered in Panama and with affiliates around the world, are in reality incorporated in countries other than Panama.

While we must maintain a presumption of innocence, Panama recognises our role and responsibility to fully investigate and penalise any illegal activities in full accordance with our laws. Such investigations are currently being carried out through the proper institutions in our country, and are aided by the fact that in recent years, particularly the last 20 months under President Juan Carlos Varela, Panama has strengthened its legal mechanisms relating to money laundering.

Panama is setting up an independent commission, co-chaired by the Nobel laureate Joseph Stiglitz, to evaluate our financial system, determine best practices, and recommend measures to strengthen global financial and legal transparency. We expect its findings within the next six months, and will share the results with the international community.

The term “Panama Papers” is more than an unfair misnomer – it reflects a deep misunderstanding of Panama’s financial system. As an international business hub, Panama treats foreign and domestic corporations the same. The notion that Panama is a “tax haven” for international corporations comes from the fact that we only tax income derived from Panama, not from outside.

Many forget that Panama is now a stable democracy after years of being ruled by a dictatorship. Our efforts to transform our country into a global economic hub have resulted in the establishment of the regional headquarters of over 100 transnational corporations.

It is our hope that through Panama’s reform efforts and increased international cooperation, our country will become even more attractive to multinational companies that seek to act as responsible global citizens. Panama’s path to financial transparency is irreversible, but on a global scale the march must be a collective one. Panama stands ready to play our part.


3 German beer law marks 500 years (BBC) This weekend marks 500 years since the Duke of Bavaria introduced the "Reinheitsgebot" or purity law - strict rules controlling what can go into beer. And beer lovers across Germany will be celebrating at events to mark the anniversary of the famous food law.

The decree known as the Reinheitsgebot, issued in Ingolstadt in 1516, had three aims: to protect drinkers from high prices; to ban the use of wheat in beer so more bread could be made; and to stop unscrupulous brewers from adding dubious toxic and even hallucinogenic ingredients as preservatives or flavourings.

They included herbs and spices such as rosemary and caraway, henbane, thorn-apple, wood shavings, roots, soot or even pitch, according to the German Brewers' Association (DBB). Duke Wilhelm IV's beer purity regulation of 1516, which was preceded by earlier rules on beer production, was gradually implemented in other parts of southern Germany.

It eventually became law in the north and thus the whole country in 1906. The DBB claims that the Reinheitsgebot is the oldest currently valid consumer protection law in the world. The original law limited ingredients to just barley, hops and water. The exact role of yeast in alcoholic fermentation was not understood at the time and it was only later that brewers were able to add the micro-organism as a specific ingredient.

The production of wheat beers remained limited in Bavaria for centuries but is now allowed. So the law now states that malted grains, hops, water and yeast may be used - but nothing else. Beers brewed according to the Reinheitsgebot have special status under European Union laws as a protected traditional foodstuff.


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