Inversion Deals, Barclays Charge, Unilever Threat: CEO Daily for February 12, 2018
CEO Daily is delighted to see our journalistic brethren and sistren taking note of what we think is the most important trend in business: a growing desire to address problems normally considered the realm of governments. The Amazon-J.P. Morgan-Berkshire effort to address a broken health system is one data point; efforts by a raft of companies—such as Google, IBM and Cisco—to address the education and training challenges posed by accelerating technological change are others.
Axios’ Kim Hart posted Saturday on this topic, quoting Grameen Foundation’s Steven Hollingsworth saying this is “a moment of truth for corporations.” The New York Times’ Frank Bruni took a more jaundiced view, concluding his column by casting shade on Elon Musk’s space program, and all such efforts by business to take over government functions: “There may be something for all of us in Musk’s rocket launch. But there’s definitely a whole lot more in it for Musk.”
Fortune planted a flag on this trend more than two years ago, when we launched our annual Change the World list, then held the Fortune Global Forum at the Vatican, and, more recently, created The CEO Initiative. Unlike Bruni, we celebrate a return to the fundamental truths elucidated by Adam Smith more than 200 years ago. The profit motive is a powerful tool for addressing society’s most intractable problems. And at a time when many governments are demonstrating their impotency, a focused effort by business to do better should be welcomed.
Are companies acting it in their own interest? Of course. Their actions are earning them loyalty from employees and customers, helping them discover overlooked efficiencies, and unlocking new markets. Does that mean those efforts aren’t a boon to society? Not at all. The new business activism can’t solve all the problems being sidestepped by government. But it can go a long way.
More news below.
The new U.S. tax code will restrict some of the deductions claimed by U.S. companies that used mergers with overseas companies to reduce their tax bill back home, according to experts quoted by the Wall Street Journal. “Many foreign-domiciled companies that use intercompany debt as part of their tax structure are likely to be impacted negatively,” said Paul Herendeen, chief financial officer of Valeant Pharmaceuticals International, which is affected. WSJ
New Barclays Charge
The U.K.’s Serious Fraud Office has hit Barclays Bank with an “unlawful assistance” charge over a $3 billion loan it granted to the State of Qatar a decade ago. In 2008, the bank avoided the part-nationalization that hit rivals Lloyds and RBS by securing an enormous rescue package from Qatar and other investors. The SFO is interested in secret payments that allegedly smoothed the way for this package. Telegraph
Unilever Ad Threat
Consumer goods giant Unilever says it will pull ads from Facebook and Google if they fail to protect children and increase transparency. “As one of the largest advertisers in the world, we cannot have an environment where our consumers don’t trust what they see online,” chief marketing officer Keith Weed will reportedly say Monday. “And we cannot continue to prop up a digital supply chain—one that delivers over a quarter of our advertising to our consumers—which at times is little better than a swamp in terms of its transparency.” Guardian
Weinstein Deal Collapses
The $500 million sale of the Weinstein Co. collapsed at the last minute on Sunday night after New York state attorney general Eric Schneiderman sued the disgraced movie mogul Harvey Weinstein, his brother Robert, and the company. The civil suit accuses the Weinsteins and the firm of the “vicious and exploitative mistreatment of company employees.” Schneiderman had reportedly been worried about the company being sold without proper compensation for Harvey Weinstein’s victims. New York Daily News
Around the Water Cooler
Flying cars will be a reality within the next five years, according to the CEO of a company backed by Alphabet boss Larry Page. Kitty Hawk chief Sebastian Thrun said his firm would have an announcement ready next month. “You are now at a point where we can make air-based transportation, like daily transpiration, safer, faster and also [cheaper and more] environmentally friendly, than on the ground,” he said. CNBC
Some Banks Like Cryptocurrencies
Some smaller European banks are, unlike their larger counterparts, embracing the cryptocurrency sector. Vontobel, Falcon Bank, Fidor Bank, and Bank Frick are willing to handle clients’ cryptocurrency-based investments. “We know what to do from a security perspective so this is a big opportunity for banks like us,” Bank Frick CEO Edi Wögerer told the Financial Times. FT
London City Airport
If you were planning to fly in or out of London City Airport on Monday, that won’t be happening. The airport has been temporarily shut down after an unexploded World War II bomb was found by construction workers near the end of the runway. This is inconvenient, but not that rare an occurrence in cities where a lot of bombs—some of them duds—fell in the war. Fortune
Black History Month Tweet
The Boston Police have caught some flak for a tweet celebrating Black History Month—by honoring a white man. The tribute went to former Boston Celtics coach Red Auerbach, who was the first NBA coach to “draft a black player in 1950, field an All African-American starting five in 1964 and hire the league’s 1st African-American head coach (Bill Russell) in 1966.” Yes, people noted, but how about honoring Russell instead? The cops deleted the tweet and apologized. Washington Post