Rüstungsfirmen wegen mutmasslichen Schmiergelder untersucht

“Razzias Searched Weapons Manufacturers for Evidence in Bribe Accusations.” Bremen prosecutors confirmed police had searched the offices of two German arms manufacturers on 23 Aug 2013 for evidence in corruption charges brought against the firms. Rheinmetall Defence Electronics and Atlas Elektronik are being investigated for paying bribes to Greek politicians and bureaucrats and for not paying taxes in sales of German submarine equipment to Greece.

Süddeutsche.de said it’s thought each firm paid Greek officials about 9 million euros in bribes or “Schmiergeld,” shmear money, lubrication funding.  The bribery charges go back a long way in time, in Atlas Elektronik’s case to before the current owners’ purchase of the firm. Payments were made to a British “letterbox” company that belonged to a Greek company.

Despite the British background in this investigation, there’s a long history of corruption in German submarine sales to Greece according to Süddeutsche.de. Munich prosecutors have been investigating it for years because an Essen company Ferrostaal caught paying bribes to Athens used to be owned by MAN SE, a transport vehicles manufacturing company based in Munich. Most of the extra Ferrostaal submarines sold to Greece via the shmear were built at ThyssenKrupp shipyards, and Bremen prosecutors say Ferrostaal involvement hasn’t been ruled out yet in the current investigation of Rheinmetall and Atlas.

Prosecutors of multiple German districts have known about these problems for years but reportedly only found enough evidence to take action in 2012. For example, the Süddeutsche wrote that EADS (now Airbus) and ThyssenKrupp are joint owners of naval electronics specialist Atlas Elektronik. After buying the company in 2006 from the British firm BAE, they stopped payment of the bribes in 2007, bribes that had apparently started with a consultant contract in 2002. Atlas informed prosecutors about it in 2010 but nothing happened until further info was received from a 2012 tax audit at Rheinmetall Defence Electronics, they said. Rheinmetall denies all bribery charges.

(RISS toongs firm men   vay gen   moot MOSS lichh en   SHMEAR geld ah   oont ah ZOOCHHT.)

Den Anschein der Käuflichkeit erweckte

“Awoke the appearance of purchasability.”

What Germany’s penultimate Bundespräsident, Christian Wulff (C.D.U.), is on trial for in Hanover, to determine whether he did this by accepting ~700 euros in gifts from someone in the film industry during a weekend at the big Munich Oktoberfest in 2008 while Mr. Wulff was still governor of Lower Saxony. It was because of corruption charges from his days as governor that Mr. Wulff was forced to resign from office as president of Germany.

Germany’s president is supposed to be apolitical, party-neutral. They give speeches, judging and encouraging people in Germany and abroad. They attend funerals. If Germany were the U.S.A. the Bundespräsident might also take over some of the permanent fundraising work that can keep a leader from governing, but perhaps the proceeds would have to go to all (both) parties to preserve neutrality.

Great Bundespräsidents include Richard von Weiszacker and apparently Joachim Gauck.

There is only one Bundespräsident jokes are still told about: Heinrich Lübke. Famous Lübke quotes include, on a trip to Africa, “Ladies and gentlemen, and dear Negroes, …”

(Dane   ON shine   dare   COY flichh kite   ehh VECK teh.)

Mikajimeryo

Japanese word for protection money. A Guardian.co.uk article said a woman in Japan is suing the yakuza to recover a dozen years’ worth of the protection money she paid a “godfather” and his group to not burn down her restaurant. If she wins, the case will set a precedent; other small business owners are said to be queued, awaiting this verdict before filing similar complaints.

Wabern

Billow, waft, swirl. Onomatopoeiatically, this word sounds like how waves might propagate through a swimming pool filled with jello, suspended cornstarch or Amish apple butter, but apparently it’s used more for the lighter ethers, airs and vapors, tendrils of fog or smoke. Süddeutsche.de talked charmingly about rumors that wabern durch Bayern, waft through Bavaria.

(VOB urn   do rrchh   BUY urn.)

Selbstständig ausweichen, eigenständig ausweichen

Independently avoid, autonomously avoid.

The airspace regulation problem cited for why the European Aviation Safety Agency and the U.S.A.’s Federal Aviation Administration refused to allow the at-one-time largest remotely operated drone, the U.S./German Euro Hawk, to fly over U.S. and European airspace was the agencies’ requirement for “sense-and-avoid” technology ensuring drones avoid collisions with other aircraft as well as a human pilot would do. Wouldn’t guaranteed collision avoidance be impossible without first implementing Isaac Asimov-like laws of robotics to the extent that the drone would “want” to survive and protect just as much as a human pilot? Even Asimov’s laws of robotics might not fix drones’ vulnerability to remote hacking that could deliberately crash them, armed or unarmed. Supplementary to the air traffic rules preventing collisions with other aircraft, what regulations might help keep hacked or broken drones from colliding with objects on the ground or in orbit?

The situation may be evolving and toward deregulation of anticollision requirements in the U.S.A.: an FAA.gov press release dated 26 Jul 2013 announced a “giant leap” and “milestone” had been achieved because the Federal Aviation Administration was for the first time “type-certifying” unmanned aircraft for flight: the Scan Eagle X200 from Insitu and the PUMA from AeroVironment, each weighing ca. 55 pounds with ~3-meter wingspans. “A falcon flying blind,” that cannot “see” without its ground stations, the Euro Hawk was said to weigh 15 metric tons and be 40 meters wide. Its delivery flight was supposed to be at 20,000 meters altitude.

Germany’s Euro Hawk surveillance drone program was canceled in May 2013—and the sudden course correction may only have been caused by a concerned whistleblower who informed Bundestag member Hans-Peter Bartels (S.P.D.) in whose district they were going to base the crash-prone drones. Since then, Defense Minister Thomas de Maizière (C.D.U.) was caught lying about when he knew the Euro Hawk was a bust yet didn’t report this and continued paying for the program. If the German defense ministry under Thomas de Maizière (C.D.U.), Karl-Theodor zu Guttenberg (C.S.U.), Franz Josef Jung (C.D.U.) and Peter Struck (S.P.D.) ignored internal warnings for years saying this seemingly-unsolvable safety problem was unsolvable under the planned budget and schedule, then people in government appear to have been several hundred million euros certain they could eliminate the air traffic regulations rather than fix the engineering issue.

The Euro Hawk prototype delivered from California to Germany in 2011 twice lost contact with its operators, according to FAZ.net, for about ten minutes each time. When found again it had deviated from course and “even lost altitude.”

German voters already experience a frisson of angst if they see or hear military jets in the air because it reminds them of when hundreds of spectators were sliced and burned in the firey crash of fighter jets flying in formation at an air show over Ramstein air base. The notorious industrial band took the name Ramstein after the disaster as an act of provocation.

(ZELL bst shten dick   OW! ss vye chhen,   EYE geh n shten dick   OW! ss vye chhen.)

Autonome Tötungsroboter

Autonomous killer robots.

A Süddeutsche.de article said for years now billions have invested annually in research and development of these types of weapons by the U.S.A., United Kingdom, Israel and soon China as well. The U.S. Navy for example is working on unmanned killer submarines. The U.S. Air Force notoriously has its drones. Companies like iRobot Corp. have been delivering land-based battle robots for years, on wheels, caterpillar treads, four legs and they’re working on bipedal. Post-mounted or mobile Samsung sentries (“SGR-1”) have been erected along the North Korean border that can now be set to automatically shoot anything detectable by motion, heat or, presumably, video-analyzing software.

Opponents of the technology say it’s only a question of time until remotely operated killing machines become autonomous decision-makers. The time for people to decide on an international framework for these types of weapons is now, said a United Nations expert on extralegal killing.

Sweden, wrote Süddeutsche.de, has called for an international test ban [Testverbot] on L.A.R.’s, lethal autonomous robots, asking each country’s government to announce a national moratorium on them and to unilaterally decline to manufacture and test autonomous killer robots.

(Ow! toe NOME ah   TƏ TOONGS roe BOT ah.)

Amtshilfe

Administrative cooperation.

Switzerland said they will provide administrative cooperation to governments seeking evidence about tax cheats even if the governments are using “stolen” data. However, Switzerland said, it does not want to cooperate with governments that “actively” acquired stolen data (such as the German state of Rhineland-Palatinate, der Spiegel suggested) but will now cooperate with governments with which those “actively” acquired data have been shared.

(OMTS hill fah.)

Anklagebehörde

“Prosecuting authority,” prosecutors’ office.

The Bavarian state bank BayernLB (Bayerische Landesbank), owned by the state of Bavaria and the Sparkasse banks (the largest German public bank), bought the Austrian bank HypoGroup Alpe Adria in 2007 and lost billions of euros as a result. On 07 Aug 2013 the Munich regional court Münchener Landgericht I announced it would not permit prosecution of charges brought against the entire Landesbank’s management board [Vorstand] while criticizing that charges hadn’t been brought against members of the higher-level overseeing “administrative board” [Verwaltungsrat], which gave permission for the sale. The supervisory Verwaltungsrat contained important C.S.U. politicians who might have been thus being protected by Bavarian prosecutors, the Bavarian judges imputed. Bavarian opposition parties S.P.D. and Freie Wähler [Free Voters] had filed complaints against BayernLB Verwaltungsrat members and state ministers Erwin Huber, Günther Beckstein and Kurt Faltlhauser plus some less important C.S.U. politicians for breach of trust of bank assets [“Veruntreuung von Bankvermögen”] in the Austrian acquisition, according to Süddeutsche.de and tagesschau.de.

BayernLB’s management board allegedly cited a falsely inflated purchase price to the supervisory administrative board, so theoretically criminal charges should be brought against management board members, according to tagesschau.de. But the Munich Landgericht I court denied prosecution of that on 07 Aug 2013, citing the latitude enjoyed by managers in negotiating sales. This allegedly angered Bavarian state prosecutors. Also angered by accusations they’d protected C.S.U. politicians by not bringing charges against members of the higher-level Verwaltungsrat [administrative board] supposed to monitor or do “controlling” of BayernLB’s management board, Bavarian state prosecutors responded that the management board members had failed to adequately inform the higher-level administrative board; indeed the supervisory Verwaltungsrat was deliberately defrauded with malice aforethought (“vorsätzlich arglistig getäuscht”) by members of the BayernLB management board, in the opinion of the prosecutors. The supervisory administrative board that okayed the deal consisted of people from the Bavarian state government (ruled by the C.S.U. since 1946) headed by Edmund Stoiber and people from the Sparkasse banks.

The German bank manager Bernie Ecclestone was accused of paying a bribe to was a member of BayernLB’s management board [Vorstand], not supervisory board [Verwaltungsrat].

In its 07 Aug 2013 announcement in the ongoing discussion about whom to prosecute at BayernLB, the Munich Landgericht noted that this sale of banks between state governments was partially a political act. But because no one could have foreseen events, the Munich Landgericht was only going to look into the BayernLB management board’s criminal culpability in overpayment of an additional 75 million euros lost by subsequently purchasing additional shares, and not into the BayernLB management board’s overpayment of 550 million euros in the 1.7-billion-euro deal as the prosecutors originally proposed.

Prosecutors filed a complaint about the Landgericht’s decision not to allow a criminal trial against the BayernLB management board for the lost half billion; the Munich higher regional court [Oberlandesgericht] “will now have to decide the dispute taking place in its own house.”

Before Bavaria bought it, according to the Guardian.co.uk, the Carinthian state government-owned Hypo Alpe Adria “acted as financier” for the horrifying Jörg Haider, charismatic leader of a terrifying populist racist Austrian political party that promoted hatreds in order to surf them to power. WienerTageszeitung.at wrote that HGAA had had to help support Haider’s Carinthian state government’s “patronage policies” [“gönnerhafte Politik”]. The recent Munich Landgericht I court decision about how to prosecute the Bavarian side did allow prosecution of an accusation that Jörg Haider, Kärntner Landeshauptmann [“Captain of Carinthia”] at the time of the sale, received a soccer stadium sponsorship bribe from BayernLB (2.5 million euros). An Austrian website also talked about overpayment for the expert opinion of an Austrian tax adviser associated with Haider as another possible bribe to him from the deal (6 million euros for six pages). No details found yet about money improperly funneled to Haider & Co. before the sale, when his party controlled the government that owned the bank.

According to the Manager-Magazin.de article, a 2007 audit by the Österreichische Nationalbank [Austrian National Bank] reported that Hypo Alpe Adria was shuffling fake capital around as early as spring 2006 to hide its losses, through obscurant Liechtenstein entities, and selling stock to itself to create the illusion of solvency. There was no Austrian regulatory follow-up on the audit report apparently.

BayernLB’s purchase of HGAA has already sparked multiple trials, with more to come. For example, Manager-Magazin.de wrote that Munich prosecutors initiated a criminal trial against BayernLB management board members on 05 May 2011—that trial hasn’t started yet—and BayernLB sued its former management board members for 200 million euros in damages in a civil trial that actually did start, on 19 Jun 2012. An Austrian criminal trial sentenced a Carinthian state party chief to five years in prison on 10 Oct 2012 for diverting money from the sale to his political party (a state government coalition partner with Jörg Haider’s FPÖ). The current head of the Bavarian C.S.U. party, Horst Seehofer, is to testify in Vienna before a commercial court [Handelsgericht Wien] about the schlamassel. When they gave Hypo Alpe Adria back to the country of Austria, did BayernLB sign a paper saying they would not sue for damages? The Vienna trial is about 3 billion euros of Bavarian taxpayer money that now-nationalized Hypo Alpe Adria does not want to return; this would be in addition to the 3.7 billion euros Bavaria already spent to bail out the bank.

Update on 24 Oct 2013: Bavarian prosecutors won their appeal! The Munich Oberlandesgericht overturned the Munich Landgericht’s decision and will be allowing full prosecution of ex-C.E.O. Werner Schmidt and six of the seven members of the BayernLB management board on the counts sought, for breach-of-trust losses of 550 million euros in the 2007 purchase of Hypo Alpe Adria in addition to the 75 million lost on extra HGAA stock bought after the purchase.

Update on 27 Feb 2014: Three former management board members of Hypo Alpe Adria were given prison sentences by an Austrian court for granting investors buy-back guarantees and thus, the court said, costing the bank several million euros. The Klagenfurt court [Schöffensenat] said they held back important information when they sold Hypo Alpe Adria to Bavarian state bank BayernLB. A 2.5-million-euro dividend they issued was also not in order, the court said.

In this breach of trust trial, former management board member Josef Kircher was sentenced to three years, some of which was changed to probation because he was willing to testify. Former management board member Siegfried Grigg was sentenced to three and a half years. The Flick Foundation was fined 600,000 euros. Former H.A.A. C.E.O. Wolfgang Kulterer was sentenced to one year. He has already been sentenced to several years in a related Hypo Alpe Adria matter in January 2014, when he admitted having kept mumm about side agreements. Former Hypo manager Tilo Berlin is also a defendent in the breach of trust trial but was unable to appear for health reasons, delaying resolution.

(ON clog ah beh HEARD ah.)

Seltene Sprachen und Dialekte, die über Crowdsourcing aufgenommen und gedolmetscht wurden

Researchers at the University of Melbourne have created a free app that lets speakers of endangered languages, whether encountered by academics doing field work or self-selected in networks of colingual neighbors and friends, use relatively cheap Android phones to record their speech. After the sound file is uploaded, people anywhere can listen, stop the playback at any point and record voice translations of the sentences into another language. The translation sound files are linked to the source sound files in the database, creating a vast verbal Rosetta stone that doesn’t require literacy to accomplish preservation and sharing. This archive of vocabulary, grammar and content—tales and histories—will be available for future linguists to explore, centuries from now.

In an interview about the project on Australian ABC Radio National, Dr. Bird said once the person demonstrating the software has explained how it works, it is older people especially in the village who are delighted and start recording story after story in these rare languages.

(ZELL ten ah   SHPRRROCHHH en   oont   dee ah LECKED ah,   dee   über   KRAUT sourcingk   ow! f geh nome en   oont   geh DOLE metched   voor den.)

Kommentariat annotiert

The Commentariat is annotating.

The new marginalia commenting and the documented discussions it produces could turn ebooks into new social media silos, as online discussion moves to new places.

When online newspaper articles, blog posts and, now, ebook comments too, migrate from end notes to text-specific marginalia, new software visualizations could display online conversations as if in 3D, letting readers spot sapling/mangrove forest discussions at a glance and swoop along topic threads as if they were roller coaster tracks branching sideways off what used to be 2D text. Might make it easier to follow a discussion for some of us and for others be thoroughly distracting.

Non-anonymous I.D.’s could be taken from Twitter. Reddit tools could be useful as well. In addition to rating and flagging each other’s texts, commenters could tag their own comments, helping address and organize them.

(COM en tar ee OTT   on oh TEE at.)

Wirtschaftsspionage

“Economic espionage,” industrial espionage. June 2013 reports that Germany was the N.S.A.’s most-spied-on country in the E.U. created German misgivings that financial advantages might be being sought.

The Guardian.co.uk’s “heat map” for the NSA’s “Boundless Informant” surveillance system indicated only countries like Iran, Pakistan, Jordan, Egypt and India were being monitored more than Germany.

This fear was not alleviated by Süddeutsche Zeitung and Norddeutsche Rundfunk reporting on 02 Aug 2013 describing Snowden-trove British General Communications Headquarters docs from 2009. It listed U.K. telecoms that “assisted” G.C.H.Q. (with each company’s code name): Verizon Business (“Dacron”), British Telecommunications (“Remedy”), Vodafone Cable (“Gerontic”), Global Crossing (“Pinnage”), Level 3 (“Little”), Viatel (“Vitreous”) and Interoute (“Streetcar”); some of these telecom companies even developed software to help spy on their customers and were paid for that by G.C.H.Q. “For the good of the British economy” was a reason given in a G.C.H.Q. PowerPoint presentation for why these telecoms were selling their customers’ communications.

Update on 19 Jan 2014: ZDF heute journal reported the listening post atop the U.S. embassy in Berlin was indeed used for economic espionage: they were interested in the Chancellor’s opinions about the euro currency, for example.

In 2003, the company Ferrostaal, headquartered in Essen, was competing with a U.S. company for a contract to deliver radio monitoring equipment to Nigeria. The U.S. embassy in Berlin supplied Ferrostaal’s U.S. competitor with data from Ferrostaal’s secret bid, according to an embassy cable found in the Wikileaks trove. Details ZDF showed in a copy of the cable included the German company’s offered price (24 million euros) and financing (“5.1 to 7.0 percent for possibly 5 years”). The U.S. company won the contract.

(VEE at shofts ess pee own OJ.)

Totalüberwachung: Londoner Verhältnisse

“Total surveillance: London conditions.” The U.K. situation.

What the Bavarian state data protection officer mentioned as undesirable in a newspaper interview earlier this month. Even the act of putting cameras in public places, which England has notoriously taken to new levels, creates a social selection process, he said. He did not want a society that produces only conformists.

(Tote OLL über VOCHH oong:   Lun done ah fur HAIL t niss eh.)

Asservatenkammer

Evidence room.

Supposedly, according to a 2011 Spiegel.de article describing results from the then-unpublished Humboldt University sports history study on unethical performance-enhancing drug use in West Germany from 1950 to 1990, some researchers in the early 1970’s were investigating the sexual side-effects of steroid use. They had an instrument called a “phallograph” but couldn’t find enough film material for their studies because pornography was illegal in West Germany at the time. Police in Düsseldorf helped by supplying confiscated films from their Asservatenkammer.

(Ossah VOT ten com ah.)

Mit Steuermitteln geförderte Dopingforschung

Taxpayer-funded performance-enhancing-drug research.

In 2011 historians from Humboldt and Münster universities finished an 800-page report called “Doping in Germany from 1950 to the present” that remained unpublished supposedly because of data privacy concerns for the many West Germans named in it. It found that a West German institute called the Bundesinstitut für Sportwissenschaft (“German Institute for Sports Science,” B.I.Sp.), founded in 1970, systematically with politician support researched performance-enhancing substances. At the time the researchers said they were trying to prove substances did not enhance performance, but when they found one that did it was then widely administered to West German athletes. The sports medicine physicians conducting the human experiments and administering the substances to athletes said West German politicians explicitly wanted this. This was not a reaction to East German doping; it was done in parallel, starting as far back as the 1950’s even before the East-West Germany conflict, according to sport historian professor and pundit Giselher Spitzer.

Athletes were not told about side effects. The substances were given to children, “to test age effects.” Pro soccer players doped too (pervitin and then amphetamines), though apparently there were few sports not involved. Epo experiments were done as early as 1988. The scientists worked with national sports groups to help doped athletes elude capture in competition testing. Sponsoring money for the performance-enhancement research was considerable, flowing from the West German government and from private sports associations mostly to the Freiburg university hospital but also to sports medicine centers in Cologne and other cities.

The Humboldt University sports history study was ordered by the Bundesinstitut für Sportwissenschaften (B.I.Sp.) and sponsored by the Deutscher Olympischer SportBund. Its findings were kept unpublished for two years. After an 03 Aug 2013 Süddeutsche Zeitung article about the report a spokesperson for the Deutscher Olympischer SportBund said the failure to publish and resulting ongoing exclusion from public discussion and review was the researchers’ decision. On 05 Aug 2013 the B.I.Sp. finally published it and apparently Hans-Peter Friedrich (C.S.U.)’s Interior Ministry, which the B.I.Sp. is still a part of, also released it.

What we still don’t know: Before the evaluation, many important files were apparently shredded. Files requested in 1991 from B.I.Sp. to use to answer a parliamentary inquiry from the S.P.D. party turned out to have been destroyed, for example (and apparently the B.I.Sp. started the Humboldt University research project at about the same time??). Not all the relevant original files were apparently registered in a-or-the federal archive [“Bundesarchiv“?], so historians will be unable to find them there due to that library guerrilla move. The Deutscher Fussball-Bund reportedly set unacceptable conditions for access to its archives, so information they contain did not flow into the study. Joseph Blätter’s international soccer organization Fifa only recently (2011) stopped destroying World Cup soccer players’ test samples only three months after collection. People are upset that anonymity and lack of prosecution have been apparently enjoyed by West German sinners but not East German. The study was sponsored to investigate only up until the year 1990. Apparently the published version is missing several hundred pages.

Solutions: Justice ministers from several German states are demanding a federal-level anti-doping law making the use of banned performance-enhancing drugs a criminal offense; this has been under discussion for years now. The president of the Deutscher Leichtathletik-Verband called for more such research to prevent all West German athletes from that era from being suspected of having illegally taken performance-enhancing drugs. Also, as news anchor Claus Kleber pointed out, because the actors have never admitted culpability we can’t know whether the unethical practices were stopped. They might still be going on today.

(Mitt   SHTOY ah mitt ellll n   geh FUR dirt teh   DOPINGK for shoong.)

Das SIGAD-Sharing

Signals intelligence activity designator sharing, i.e. data-collection-site data sharing between intelligence agencies from different countries.

Germany: Spiegel and Süddeutsche Zeitung reported that the German foreign intelligence agency, the Bundesnachrichtendienst or B.N.D., has been sharing on a massive scale communications data collected at e.g. its Bavarian Bad Aibling S.I.G.A.D. site with the U.S.A.’s National Security Agency. The data include mobile phone numbers that the B.N.D. admitted they’ve been passing on to the N.S.A. for years now supposedly under the strict condition that said phone numbers must not be used to kill people (e.g. via phone towers triangulation + drone strike); the B.N.D. also denied that it’s technologically possible to use for location purposes the G.S.M. mobile phone numbers they’ve been passing on (“G.S.M.-Mobilfunknummern sind für eine zielgenaue Lokalisierung nicht geeignet”). The German foreign intelligence agency furthermore is said to have given software it developed to the N.S.A. And the N.S.A. gave the B.N.D. its X-Keyscore software and X-Keyscore software training, including in “behavior detection.”

In an interesting parallel, the Washington Post report on 15 Aug 2013 about an audit of just a few N.S.A. branch offices which found thousands of violations of U.S. privacy rules each year also included a similarly scarcely credible excuse saying phone technology limitations were keeping the N.S.A. from snooping more: “One major problem is largely unpreventable, the audit says, because current operations rely on technology that cannot quickly determine whether a foreign mobile phone has entered the United States.”

England: The N.S.A. has apparently been paying money, such as 100 million pounds, to Britain’s G.C.H.Q., a disproportionately über-representational intelligence-gathering partner for a country of that size. The N.S.A. receives so much communications data from the U.K. that reporters said “it’s almost the same thing” whether G.C.H.Q. or the N.S.A. initially collects it.

(Doss   ZIG odd   CHER ingk.)

Männerballett

“Men’s ballet.” Another gift from the internet is the very welcome wonderful wealth of videos showing male dancers gracing small-town German carneval celebrations.

Stääne

Stars, in the mardi gras-distributed dialect of the Roman-founded city of Cologne (Rhine).

(SHTAANE ah.)

Untreue wegen mangelndes Risikomanagement

Breach of trust due to inadequate risk management.

The entire former management board of northern German bank HSH Nordbank is on trial in Hamburg for approving a deal in 2007 allegedly without sufficiently informing themselves first (“bullwhipping it through in only three days right before Christmas” on the basis of a memo that did not contain the data required by due diligence, so the prosecutors). This is the first time an entire bank board has been put on trial in Germany, but it presumably won’t be the last.

In 2007, to avoid receiving a lower rating from the Wall Street ratings agencies one year before the bank’s scheduled stock market launch, prosecutors said, HSH Nordbank moved a collateralized debt obligation package that included risky real estate and commodities paper “away” into an entity called Omega 55, for which the French bank BNP Paribas guaranteed. In return, HSH guaranteed when BNP Paribas moved risky paper, valued at 2.4 billion euros and including Iceland government bonds from Lehman Brothers, into the Omega 55 entity [Zweckgesellschaft, “special-purpose vehicle” according to Bloomberg.com]. HSH’s guarantees for BNP Paribas securities ended up costing HSH >150 million euros in 2008; ultimately in the course of the global financial crisis the bank had to be bailed out by 30 billion euros that included taxpayer money from its majority owners, the German states of Schleswig-Holstein and Hamburg, and taxpayer money from the German bank bailout funds BaFin and SoFFin. Omega 55’s losses were in part kept off the bank’s books, which is why two of the six former HSH board members are further going to be tried for balance sheet falsification [Bilanzfälschung, “false accounting” according to Bloomberg.com]. Guilty verdicts in the breach of trust trial could also result in a civil lawsuit from HSH against its former managers.

Update on 23 Jul 2013: Bloomberg.com reported that charges were also brought against managers from Bayerische Landesbank (BayernLB), Sachsen LB and Landesbank Baden-Württemberg, but these cases have not yet gone to trial.

Update on 16 Dec 2013: HSH Nordbank has been accused of dividend stripping.

Update on 28 May 2014: Hamburg prosecutors are asking for probation and fines of up to 150,000 euros, after they reduced their estimate of damage done to the bank from ~150 million euros to ˜50 million. This is in the breach of trust trial, for signing off on what was a “circular transaction” in 2007, without questioning inconsistencies in the information presented to them.

Update on 09 Jul 2014: The entire former management board of HSH Nordbank was found innocent. Dubious deeds and dereliction of duty, said the judge from the Economic Crimes Court [Wirtschaftsstrafkammer], but he didn’t think there was enough evidence to prove serious dereliction of duty. Also there’s no evidence that the HSH Nordbankers profited financially from the damage they caused. Trials against managers from IKB and the Baden-Württemberg Landesbank for their risk management before the global financial crisis have also been canceled, said Spiegel.de. At the time, what those bankers did was neither illegal nor unusual.

The states of Hamburg and Schleswig-Holstein had to pump 13 billion euros into HSH Nordbank to bail it out.

Update on 10 Jul 2014: The judge gave the prosecutors the option of appealing this decision, and they will appeal it to the supreme court in Karlsruhe.

(OON troy ah   vague en   MON geln dess   REESE ee co men edge ment.)

Krankenpfleger-, Dolmetscher- und Übersetzerpreise

Prices of nurses, interpreters and translators.

A year or two after the second U.S. invasion of Iraq, Donald Rumsfeld said the occupation was having trouble finding enough nurses and translators and he was thinking about reinstating the draft but just for people in those professions. His proposal came as a bit of a shock, but the problem was no surprise. Marine Corps General Anthony Zinni for example had criticized in the run-up to Iraq II that Mr. Rumsfeld and his people had thrown out years of resource planning the Pentagon had researched for invasions into that (and any) corner of the world.

Consequences: No drafts for that one. Maybe the next one. General Zinni appeared to be punished for speaking out and forced to retire. He wrote books, became a decent television pundit and joined the private sector, at companies like Veritas Capital and B.A.E. Systems. Initially, colleagues and clients said translators of languages such as Arabic, Pashto and Urdu had started making six-figure annual salaries working for the federal government, but then word and hourly rates or annual salaries being mentioned to me went back down again as the jobs got sourced through several hops of companies, each taking their cut.

(CRONK en fleggah,   DOLE metchah   oont   ÜÜÜ bə ZETS ah prize ah.)

Heliumpreis

Price of helium. What caused the U.S.A.’s strange helium shortage after the second Iraq invasion?

(HAY lee oom PRIZE.)

Intransparente Preisgestaltung

“Intransparent pricing.”

The German supreme court in Karlsruhe [Bundesgerichtshof, BGH] found for the plaintiff in a case brought by the North Rhine-Westphalian consumer protection agency on behalf of natural gas customers against “intransparent price increase clauses in special contracts” of the utilities company R.W.E. Apparently “special contracts” [Sonderverträge, Sonderkundenverträge] in this case are contracts for customers who switched to their current utility from a prior utility. The court found insufficient reasons were cited for price increases on these customers’ utility bills. A ratepayer interviewed on tagesschau.de said when he asked about it R.W.E. fobbed him off by telling him their rates were raised for “responsible, suitable and well-grounded reasons” (“wir haben verantwortungsbewusst, angemessen und begründet kalkuliert”), still without citing them.

The BGH decision was based on a European Court of Justice ruling that the criteria for rate increases have to be notified to these customers when they sign their contract. It is not enough to merely notify European utility customers in advance of rate increases and give them a right to cancel their contract.

Clauses in “special gas contracts” must contain information about causes for, prerequisites for and scope of possible price increases, in a clear and understandable manner, the BGH judges said.

The German court’s decision applies retroactively for the past three years. Millions of German billpayers are now being encouraged to check their natural gas contracts’ price increase clauses for legality and apply for their money back if they don’t meet requirements. A press release about the decision from the North Rhine-Westphalian consumer protection agency said >70% of Germany’s 13.5 million gas customers are on these special contracts because they’ve switched utilities—encouraging market forces to rationalize prices for consumers!—and recommended the energy utilities provide “slender and consumer-friendly procedures” for the affected customers to ask for and receive their money back.

(Inn tronz par ENT eh   PRIZE geh SHTOLT oong.)

Preisagenturen, die den täglichen Referenzpreis von Öl ermitteln

“Price agencies that determine the daily reference price of oil.”

An F.A.Z. article described the way price agencies such as Platts, mainly Platts but also e.g. Argus and I.C.I.S., set a daily world reference price for oil using sales data provided by “market participants.” An expert commented to the newspaper that estimated data are also allowed to flow into those equations because not everyone makes a sale in every oil product type every day. Yet oil sellers have the unhealthy incentive of being able to sell their oil products at higher prices for the next 24 hours after submitting higher price data to the price agencies. Oil financial product sellers that are somehow involved with these price agencies, or somehow involved with the market participants supplying the data used in the agencies’ price-setting formulas, would presumably have similar inflationary incentives.

(PRIZE ogg en TOUR en,   dee   dane   TAY glichh en   ref ah RENTS prize   foor   ILL   ə MITT ell n.)

Alle Bürger sind in ihrer Würde gleich vor dem Gesetz, ohne Unterscheidung von Geschlecht, Rasse, Sprache, Religion oder politische Meinung

Fundamental rights defined in the current version of the Italian constitution read by a protester into a bullhorn before the Italian supreme court on the day that court upheld Silvio Berlusconi’s criminal conviction.

This might be from Art. 3, “Tutti i cittadini hanno pari dignità sociale e sono eguali davanti alla legge, senza distinzione di sesso, di razza, di lingua, di religione, di opinioni politiche, di condizioni personali e sociali.”

All citizens are in their dignity equal before the law, without differentiation of sex, race, language, religion or political opinion [or personal and social conditions].

(OLL ah   burgher   zint   in   ear ah   VOORD eh   gly chh   fore   dame   geh ZETS.)

Goldpreis, Silberpreis

Price of gold, price of silver.

In March 2013 the U.S.A.’s Commodity Futures Trading Commission was looking into, but not formally investigating, possible gold and silver price manipulations in London, the world’s largest gold market. The F.A.Z. mentioned they were especially interested in the “too-intransparent” way the spot price for a troy ounce of gold is set in London twice a day by five banks: Barclays, Deutsche Bank, HSBC Holdings, PLC, Bank of Nova Scotia and Société Générale S.A. The silver price in London is set once per day, at noon, by Bank of Nova Scotia, Deutsche Bank and HSBC. A March 2013 article in Rupert Murdoch’s Wall Street Journal mentioned that the market prices for these metals were important also for the estimated ~$198 million in derivative contracts held by commercial banks in the U.S.A. in September 2012, according to the Office of the Comptroller of the Currency (O.C.C.).

The C.F.T.C. started investigating whether the price of silver had been gamed in 2008 after the silver price fell sharply. No results were ever announced from that investigation, nor was it ever officially closed.

Update on 25 Sep 2013: The C.F.T.C. officially closed its five-year investigation into gaming of silver market prices “without bringing any enforcement actions” reported Bloomberg.com.

Update on 27 Nov 2013: Germany’s BaFin financial regulator announced they would be investigating possible manipulation of gold and silver prices, which Handelsblatt.com said would be called das Goldfixing and das Silberfixing in German. BaFin said that they could not comment on the ongoing investigation but that they were interested in benchmark manipulation in Europe, including benchmarks for the so-called noble metals, currencies and interest rates. Gold and silver prices had been being set by benchmarks controlled by only a handfull of European banks, the Handelsblatt said Wall Street Journal Deutschland said, and alleged that British financial authorities were looking into gold and silver price gaming as well.

Update on 09 May 2014: A wave of U.S. lawsuits is said to be rolling toward the five banks that set the gold price twice each day in London.
The Frankfurter Allgemeine reported on the findings of one analyst, who will be testifying for the plaintiffs, from examining publicly available gold price data from 2010 to 2013. The banks’ twice-daily phone conferences to set the price could take two minutes or two hours, but averaged 15 minutes. During that time, there were bigger fluctuations in the gold price than during the rest of the day when the phone conferences weren’t taking place. The price moved up and down but mostly downward. After the teleconference, the price settled back to where it was before the meeting. During the phone conferences, the banks had access to information their customers did not: the volume of gold being traded, and the prices at which they were trading. That information wasn’t supposed to be shared, but. The U.S. plaintiffs say, look at L.I.B.O.R.

Deutsche Bank is now withdrawing from the five banks, leaving four banks: Barclays, HSBC, Bank of Nova Scotia and Société Générale.

Update on 16 Aug 2014: The price of silver will now be set electronically by auction, in a service offered by the Chicago Mercantile Exchange and Thomson Reuters.

(GOALED prize,   ZILLLL beh prize)

Kupferpreis

Price of copper.

After lobbying by firms claiming reducing copper supply would not drive up copper prices, in December 2012 exiting U.S. Securities and Exchange Commission chair Mary L. Schapiro gave the banks Goldman Sachs, JP Morgan Chase and BlackRock the S.E.C.’s approval to buy up 80% of the copper available on the market and hold it in warehouses as backing for new copper-based investment funds. The NYTimes.com article went on to say copper is used in so many manufacturing applications that it is sometimes tracked as an indicator for the economy as a whole.

(COOP fur prize.)

Erdgaspreis

Price of natural gas. A March 2013 article in Rupert Murdoch’s Wall Street Journal mentioned that the Commodity Futures Trading Commission said the Libor benchmarks manipulation scandal came to their attention after “firms and traders” were sanctioned for reporting false data to energy index compilers in attempts to manipulate natural gas prices between 2003 and 2005.

(ED gauze prize.)

Ölpreis

In 2011 a Goldman Sachs study apparently stated that market speculation had indeed helped drive up the price of oil for consumers. In 2012 U.S. Commodity Futures Trading Commissioner Bart Chilton said, “Using the Goldman Sachs research figure, and multiplying 10 cents times 233.9 million, would mean that theoretically there’s a ‘speculative premium’ of as much as $23.39 a barrel in the price of NYMEX crude oil.” Mr. Chilton has also said that the commodities business is a possible loophole for banks in the U.S.’s new frequently-postponed “Volcker rule” intended to reseparate banking from investment gambling.

Potential oil bottleneck points persist in privately held and/or operated oil infrastructure. Oil traders now own oil refineries. Pipelines are included in the infrastructure large banks have somehow acquired part ownership of. U.S. bank Morgan Stanley invested in the “global oil tanker operator” Heidmar in addition to “fuel chain supply manager” TransMontaigne. An F.A.Z. article described how the world’s three largest oil trading firms, Switzerland-based Gunvor, Vitol and Glencore—”prescient” commodity markets pioneer Marc Rich’s old firm—work today, supposedly on the basis of fast-computer-based price arbitrage rather than speculation. Moving into production, Glencore is now invested in oil wells, coal mines and metals mines, after its late-2012 fusion with Swiss competitor Xstrata.

Apparently a landmark 2003 U.S. Federal Reserve decision allowed U.S. investment banks to start “trading oil cargoes.” In July 2013 the Fed announced it was “reviewing” that decision. Though Fed deregulation may have unleashed the Wall Street side of recent international commodities speculation problems, the Fed probably cannot fix it now without simultaneous coordinated reforms from other regulators around the world.

(ILL prize.)

Spotmarkt

Spot market, where financial instruments or commodities are sold for immediate delivery, unlike the futures market where they are sold for delivery at a later date. Wikipedia said a spot market can be an organized market, an exchange or over-the-counter (O.T.C.).

Regarding the spot market price of aluminum: Goldman Sachs was accused of bottlenecking aluminum at Goldman’s Metro International aluminum warehouses outside Detroit, increasing customers’ delivery wait times since purchasing M.I. in 2010 from six weeks to sixteen months by first lowering prices to attract a stockpile (“50,000 tons in 2008” to “~1.5 million currently”) and then, actually, trucking a minimum daily regulatory-defined shipment amount of 3000 tons back and forth among the 27 warehouses. There were also accusations of understaffing, reduced shifts and prioritizing putting aluminum into storage over taking it out. The shuttle-shuffled delays raised a premium added to the price of all aluminum, driving up the spot market price “according to an arcane formula” even for metals bought directly from mines or refineries to bypass these warehouses. While delaying delivery the warehouses also continued charging rent on the stored metal. Perfectly legal according to current international regulations, apparently set by the London Metal Exchange.

The London Metal Exchange might need more disentanglement from the entities it is supposed to regulate. According to the NYTimes.com article, it still receives 1% of the rents collected by the ~700 warehouses it regulates around the world. Until 2012 it was owned by its member regulees, including Goldman Sachs, JP Morgan Chase, Barclays and Citigroup. Many of its metals warehousing regulations were written by a board populated by executives from banks, trading companies and storage companies. In July 2012 the L.M.E. was sold to Hong Kong Exchanges and Clearing, part-owned by the Hong Kong government, for ~$2 billion. A NYTimes.com description of the 2012 sale said it “will allow the Asian company to control the world’s largest futures trading exchange for metals like aluminum, copper and zinc, as emerging market demand for commodities remains strong.” In 2012 Hong Kong Exchanges and Clearing was supposedly hoping to get an exemption from Chinese laws preventing foreign companies from owning these sorts of metals warehouses in China.

The U.S.’s Federal Reserve Board could, said NYTimes.com, quit extending exemptions that allow banks like Goldman Sachs to invest in nonfinancial enterprises. Though the Fed’s stated conditions in allowing banks to diversify into commodities investment were “only if there was no risk to the banking system” and if the deals “could ‘reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices,'” yet many people would say its deregulation achieves the opposite effects, that big “diversified” banks’ risk management still appears to endanger U.S. and world economies and now banks’ having bought up important infrastructure might be presenting them with irresistable temptations such as artificial bottlenecking or even information advantages not all traders always refrain from using.

Update on 25 Jul 2013: The U.S. Senate’s banking committee has criticized that the Federal Reserve is not communicating well with them. However, wrote the F.A.Z., the U.S. Congress could pass its own banking reregulation rules without waiting for the Federal Reserve.

It’s unclear whether shadow trades are involved here, but it’s also unclear why everyone hasn’t gone broke if this is how they’re doing business:

“Industry analysts and company insiders say that the vast majority of the aluminum being moved around Metro’s warehouses is owned not by manufacturers or wholesalers, but by banks, hedge funds and traders. They buy caches of aluminum in financing deals. Once those deals end and their metal makes it through the queue, the owners can choose to renew them, a process known as rewarranting.”

If Goldman is indeed paying aluminum owners, fellow speculators, to rewarrant their metal and leave it in the warehouses piling up rent owed to Goldman, that might indicate some creative profits or at least useful losses are being made.

Aluminum is economically important enough that Chancellor Angela Merkel’s government has been giving aluminum refineries, notoriously high-volume electricity consumers, various electricity rebates that must be paid for by individual consumers or “ratepayers” in their home electricity bills because, Germany’s government said, the preservation of the aluminium supply was that significant for their economy as a whole.

(SHPOTT mocked.)

Außerbörslicher Schattenhandel

“Off-market shadow trading,” which der Spiegel says is also known as over-the-counter trading, done directly between speculators such as bank traders. May exceed trading in the (regulated) markets.

E.U. and U.S.A. regulators agree that they want to regulate O.T.C. trading. An F.A.Z. op-ed discussing recent U.S. Federal Energy Regulatory Commission (F.E.R.C.) fines mentioned that other U.S. financial authorities that could impose fines on international financial companies such as banks include the S.E.C. (Securities and Exchange Commission) and C.F.T.C. (Commodity Futures Trading Commission). It cited a quite-large Financial Times estimate of the size of global O.T.C. trading amounting to well over half a quadrillion dollars.

Regarding shadow-sector speculation in electricity: on 24 Jul 2013 the F.E.R.C.’s fine was upheld to London-based Barclays bank of nearly half a billion dollars to the bank (and $15 million to one manager and $1 million each to three traders) for benchmark manipulation affecting U.S. electricity markets between 2006 and 2008, including taking on-market losses in order to increase the value of off-market O.T.C. bets. Barclays intended to keep fighting the fine, however, and if the bank doesn’t pay it within the 30-day deadline the case could go to a U.S. federal court which could reset the fine. In January 2013 Deutsche Bank negotiated a settlement with the F.E.R.C. for the same electricity market gaming and received a fine of ~$1.5 million. On 24 Jul 2013 JP Morgan Chase was still negotiating with the F.E.R.C. about their fine for manipulating electricity prices in California and the Midwest; originally the settlement was said to be at nearly a billion but Chase succeeded in negotiating it down to less than one billion dollars though so far still more than Barclays’s ~$480 million.

Update on 30 Jul 2013: JP Morgan Chase’s F.E.R.C. fine for allegedly manipulating U.S. electricity markets was negotiated down to $410 million.

Regarding shadow-sector speculation in food commodities: The day before announcing its largest capital collection in its history as a mutual savings bank, on ~28 May 2013 Germany’s fourth-largest bank at the time published an open letter to the consumer advocacy organization Foodwatch.org saying their bank was joining their country’s second-largest bank and several smaller banks in pledging that they will no longer trade in or sell financial products based on agricultural commodities (such as grains). They recommended other banks also cease doing so in order to keep from driving up world food prices, remarking that investors’ demand to participate in food-based funds is low anyway. D.Z. bank said they have been and will continue to work closely with university academics to study and monitor world agricultural economics and the effects of food speculation. They requested government reregulation of both markets and of off-market trading to re-introduce “position limits” on the amount one entity, such as a hedge fund in the shadow financial sector, could wager on food-based financial products. After deregulation in the early 2000’s, “the speculators’ share in international commodity markets increased from 30% to 80%.”

At the time this D.Z. Bank letter was published, E.U. leaders intended to meet in late June 2013 to agree on regulations imposing these food-trading position limits but, said the head of the bank in question, “the financial sector” had already managed to introduce many loopholes into the drafts— “practically neutralizing the limitations on speculators,” said Foodwatch head Thilo Bode.

(Ow! ss ah BƏZZ lichh ah   SHOTTEN hond ell.)

 

Schmöker, Schund

Delightful words for fun “trashy” novels, pulp fiction, brown-bag books in some neighborhoods.

(SHMÖÖÖ kah,   SHOONT.)

Beweisvernichtungsbussgeld

“Fine for the destruction of evidence.” On 19 Sep 2013, Halliburton will plead guilty to destroying evidence related to the Deepwater Horizon BP oil spill in April 2010 and will pay the maximum fine for it, $200,000.

(Beh VICE fer NICHH toongs BOOSS geld.)

“Macht Krach!”

“Make noise!” Get involved in events. A quite decent message from Pope Franciscus at the World Youth Day in Brazil on 26 Jul 2013.

(Mahchht   krahchh.)

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