The standard is high for the title of World’s Worst Leader. North Korean Dear Leader Kim Jong-un may be impossible to beat, but this morning I could make a case for Venezuelan President Nicolas Maduro, who is starving his people.
Many reports, including a harrowing one in the New York Times, describe a nation of food riots, soldiers guarding bakeries, many people eating once a day, and conditions growing worse. In a recent survey, 87% of respondents said they don’t have money to buy enough food.
The situation is above all a leadership disaster, as we’ve noted before. Venezuela has the world’s largest oil reserves. No one needs to starve. Even without the oil, no one needs to starve. But years of strict socialism have so hobbled the economy that the nation is collapsing. Maduro, a tragically classic leader in crisis, is doubling down on the failed system, blaming “criminals,” business owners, and America, seizing more power for himself. He’s also cracking down on opponents who want a referendum on recalling him.
Until then, as cancer patient Lucila Fonseca told the Times, “We are now living on Maduro’s diet: no food, no nothing.”
Former Volkswagen CEO Martin Winterkorn is no Maduro, but since last September he has just kept looking worse. The latest news is that German prosecutors are investigating him for allegedly failing to inform investors of potential losses from the emissions scandal. The company responded to the news by saying that VW lawyers had found no evidence that company executives failed to inform investors as required. I’m definitely no expert in German securities law, but that seems hard to believe.
The scandal broke last September, when the U.S. Environmental Protection Agency charged VW with violating the Clean Air Act. Winterkorn professed shock, but documents have since revealed that he was told 15 months earlier that VW faced a U.S. investigation into whether it had installed an illegal defeat device in its cars, and several VW executives and lawyers were assigned to the matter. The WSJ reports that it has seen slides used at company meetings that include charts of fines VW could face in the U.S., including a potential maximum of $18 billion. In addition, on September 3, two weeks before the scandal became public, VW admitted officially to U.S. regulators that it had rigged diesel engines to cheat on emissions tests.
To repeat, I don’t know the precise requirements of German law. But if a CEO is supposed to notify investors of potential significant liabilities, a common-sense test seems to suggest that maybe September 3 would have been an appropriate time to do that.
The larger point is that this case continues to degenerate as a crisis management nightmare. After nine months, the company under CEO Matthias Müller has failed to contain the crisis and is nowhere near doing so. Tomorrow management meets with investors who want an independent investigation of top management’s role in the mess. This could get worse for a long time.
You can share Power Sheet with friends and followers here.
What We're Reading Today
Facebook investors approve Zuckerberg’s share strategy
Mark Zuckerberg sought to create a third class of non-voting shares to ensure he remains in control of the company as he sells his stake for charitable purposes. Promising to donate 99% of his wealth in his lifetime, Zuckerberg wanted a way to remain in control of Facebook while doing so. While this could create future problems for Facebook, the measure passed easily.
Senate rejects gun measures
To end a nearly 15-hour filibuster last week led by Connecticut Sen. Chris Murphy, Senate leaders agreed to vote on four gun measures. The proposals, which included funding research into the causes of mass shootings, expanding the background check system to include sales over the Internet, and to delay gun sales to suspected terrorists, all failed yesterday.
Former VW CEO under investigation
German authorities are investigating former Volkswagen CEO Martin Winterkorn for waiting to disclose the emissions cheating inquiry to investors. Winterkorn led VW during the years in which the cheating took place and it’s the first time the scandal investigation has reached the top tier of the company. Also reportedly under investigation is head of the VW brand Herbert Diess.
Tencent to buy “Clash of Clans” maker for $8.6 billion
The Chinese internet giant is about to become a massive player in mobile gaming, by purchasing nearly 85% of Finnish company Supercell Oy. Pony Ma‘s company paid a high price for the company. Supercell was valued at about $5.25 billion last year, but Tencent will buy the company at a valuation nearly double that.
Building a Better Leader
The percentage of employers offering stock repurchase plans…
…employee discounts, mortgage assistance, onsite health screening, and many other perks has dropped precipitously since 1996.
When stepping into a team that doesn’t like you…
…first find out who the talented workers are and make them your new team. You can then let the others go.
New developmental tool for managers: Empathy
More companies, such as Cisco Systems and Ford, are putting managers through empathy training before rising them up the ranks.
Donald Trump fires his campaign manager
Corey Lewandowski was let go, as Trump‘s campaign struggles to gain a foothold with general election voters. The move was reportedly pushed by Trump’s children, including his daughter Ivanka.
Clinton’s massive fundraising lead
Presumptive Democratic nominee Hillary Clinton raised $27 million in May, bringing her total cash on hand to $42 million. That squashes Trump‘s totals. He raised just $3.1 million in May and ended with $1.3 million in the bank. While some of the disparity was built as Clinton fought off the last remnants of Bernie Sanders‘s run, it highlights the GOP’s concerns over Trump’s ability to manage a serious campaign.
Apple shuns Trump, but embraces Paul Ryan
While Apple will choose not to support the GOP convention due to Trump‘s recent comments regarding women, immigrants, and Muslims, Tim Cook will help House Speaker Ryan raise funds. Cook will host a fundraiser for Ryan in Menlo Park, Calif. at the end of June.
Up or Out
Fortune Reads and Videos
Under Armour’s athletes had a bad weekend
But Under Armour investors aren’t worried about Stephen Curry and Jordan Spieth‘s losses.
Walmart changes tactics in China
It will take about a $1.5 billion stake in e-commerce site JD.com.
The FAA will announce new rules for small drones
Drones under 55 pounds will no longer require special permission to fly.
Feds drop charges against FedEx
The Department of Justice claimed in 2014 that FedEx knowingly shipped prescription drugs from illegal online pharmacies.
Prince William turns 34 today.
eBay founder Pierre Omidyar celebrates his 49th birthday.
Michel Platini, former head of the Union of European Football Associations (UEFA), turns 61.
Share Today’s Power Sheet:
|Produced by Ryan Derousseau|