“Nicht mit Ruhm bekleckert”

“Didn’t dribble glory on themselves,” in predicting the 2008 global financial troubles—from Thomas Thiel’s review of social scientist and publicist Werner Rügemer‘s 2012 book about the world’s three major financial ratings agencies.

In his book, Rügemer discussed the “curious financing model” in which clients pay for the grades they receive. Managerially, Rügemer said, many of the same people are members of the boards of the big three ratings agencies, the companies that own the ratings agencies, and the ratings agencies’ clients. Thiel:

“The deeper Rügemer goes into the ownership relationships, the more there unfolds a conglomerate of hedge funds, banks and companies that is worrying in how functionally interwoven it is. Market leader Standard & Poor’s for example belongs to the media house McGraw Hill, which mainly belongs to large investment funds such as BlackRock and Vanguard. These funds own many companies that are regularly/standardly/by default evaluated by the ratings agencies. In addition, many of the same funds are the shareholders behind Moody’s and S&P, such as the investment giant Capital Group. Seated on the supervisory boards (Aufsichtsrat) of the agencies there are companies like Coca-Cola or the pharma company Eli Lilly, plus banks and insurance companies such as Allianz, Morgan Stanley and Goldman Sachs.”

McGraw Hill owns another agency that is very important for setting world oil prices: Platts. Der Spiegel said Platts is the world’s largest energy information service. On Tuesday, 14 May 2013, the EU raided Platts’ London offices and offices of three big European oil companies, Shell (Holland), Statoil (Norway) and BP (UK), seeking information about price fixing allegedly achieved by slight distortions of data going into Platts. If said international oil price distortion occurred, it may have started in 2002.

Background info from the Wall Street Journal: the international “physical-oil market” is worth $2.5 trillion. “Index-publishing firms like Platts derive their prices from self-reported transaction data from participants in deals.”

(Nicked   mitt   ROOM   bah KLECK aht.)

Geschäftsführung und Aufsicht in einer Hand

“Management and management oversight in one hand.” Combining monitoring and management roles into one job held by one manager supposed to check themselves.

There can be overlap in groups as well. Apparently the board of directors running a German company and the supervisory board (Aufsichtsrat) that monitors the board of directors may not contain the same people, but this exclusion does not apply in the USA where, writes the F.A.Z., e.g. when the supervisory board approves the compensation of the management board, people who happen to be in both groups will at best merely abstain from voting.

(Geh SHEFTS foor oong   oond   OW! f sichht   in   eye ner   Hond.)

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