Governance in Brief
June 6, 2019 | Editor: Martin Wennerström
Fiat calls off Renault merger
On June 6, Fiat withdrew its proposal for a merger with Renault, on the heels of the latter’s second postponement of a decision on the matter. Fiat attributed its abrupt abandonment of the deal to “the political conditions in France,” a potential allusion to the fact that the postponements had both been at the behest of the French State. The French government, Renault’s largest shareholder with a 15% stake and double voting rights, had reportedly sought deferral in order to seek approval from its longstanding co-owner, Nissan.
While holding a 15% non-voting stake in the French carmaker, Nissan had been largely viewed as pivotal in the combined company’s ability to leverage its competitive position, owing to its advanced electronic vehicle technologies. The tie-up would have created the third largest automaker globally and would have reportedly saved the combined company more than USD 5 billion a year, a significant advantage as carmakers globally are heavily investing in innovation to adapt to the shifting automotive industry. While speculations have emerged regarding Fiat’s intention to now merge with Peugeot, Renault continues to grapple with the fallout from Carlos Ghosn’s arrest.
Teva settles Oklahoma opioids lawsuit
On May 26, Israel-based opioid maker Teva Pharmaceutical Industries Ltd announced that it had agreed to pay USD 85 million to the State of Oklahoma to settle allegations that it had engaged in allegedly illegal marketing of opioids that contributed to the state’s ongoing opioid crisis. Leading healthcare product maker Johnson & Johnson (“J&J”) now remains the sole remaining defendant in the 2017 lawsuit—the country’s first civil trial against a drug maker over the opioid crisis—after pharmaceutical company Purdue Pharma reached a USD 270 million settlement in March 2019. Oklahoma labeled J&J as the “kingpin” behind the state’s public health calamity, alleging that the defendants conducted deceptive and misleading marketing campaigns which cost the state millions, funded and controlled “seemingly unaffiliated” organizations which spread “misrepresentation”, and paid doctors to advocate for opioids.
Legal woes mount at Porsche
On May 28, 2019, German prosecutors searched the offices of Porsche AG, ostensibly over allegations that a government official had been bribed to reveal confidential information to a tax advisor retained by one of the luxury carmaker’s subsidiaries. In addition, prosecutors have reported that six people, some in leadership positions at Porsche AG, could be charged with breach of trust over “disproportionally high and thus unjustified” payments made to a former member of the company’s works council.
Porsche had previously agreed to pay EUR 525 million over “negligent breach of duty…and a levy of economic benefits” linked to the diesel emissions cheating scandal (dubbed “Dieselgate”), which has so far cost the wider Volkswagen Group EUR 30 billion.
Following leak, Nomura hit with penalty from watchdog
Japan’s financial regulator issued a “business improvement order” against the country’s largest broker Nomura Holdings, after one of Nomura’s employees leaked confidential information related to listing and delisting criteria currently being examined by the Tokyo Stock Exchange. The employee in question served on a panel established by the exchange in October 2018 with the purpose of reviewing a planned overhaul of its market structures and listing rules. The penalty requires the company to submit “a detailed improvement plan to prevent recurrence” of the misconduct. Nomura, which recently announced a major restructuring plan after having reported its first full-year loss in a decade in April 2019, revealed that its CEO will take a three-month pay cut to take responsibility for the wrongdoing.