The Financial Times reports that US DOJ criminal prosecutors have traveled to London as part of its forex probe to interview people potentially involved in the alleged manipulation of the forex market. The article points out an interesting distinction between US and UK law, where the US has the right against self incrimination whereas the UK authorities can compel potential defendants to answer questions. While there has been a lot of smoke regarding the forex investigations, many of us are still waiting to see the fire. What exactly did the banks do and how did they do it and for how long? Leaks to media sources are not the best way for the public at large to understand the scope of this thing.
Promotion of Ethics, Simplicity and Transparency in Finance
Showing posts with label U.S. government. Show all posts
Showing posts with label U.S. government. Show all posts
Monday, April 28, 2014
Monday, March 17, 2014
Government Motors .... Just Wondering
General Motors (GM) is in the news these days for safety issues surrounding an ignition defect "now linked to 12 deaths and at least 31 accidents over the past decade." GM first reported publicly its own safety investigation and recall last month (February 2014), though there have been lawsuits over the years for several of the accidents.
While we have no opinion on GM culpability and believe it prudent to wait for results of Congressional inquiries and other external and internal investigations, we wonder what it means that the U.S. government owned General Motors for a substantial and critical time period in this tragic story.
The government injected $49.5 billion into GM in 2009 as part of the automaker's bankruptcy. As a result, the U.S. owned 61% of GM. Simply put, the government bought and owned General Motors. The government reduced its position to 26% in late 2010, reduced again to 19% in late 2012, and sold down to ZERO in DECEMBER 2013.
Now let's look at GM's chronology of its internal investigation thus far. In the years 2005, 2006, 2007, 2011, 2012, and 2013 there were important developments and milestones in GM's findings and research into the ignition defect. The U.S. government was the largest owner of GM in three of these critical years. Of course, the government was also 61% majority owner for a period in which tragic car accidents continued.
CORPORATE GOVERNANCE
SHAREHOLDER RESPONSIBILITY
SECURITIES LAWS
We pose a few obvious, but interesting, questions:
* What is the role of the Board of Directors? Did the GM Board discuss the ignition defect safety investigation over the years? In particular, did the Board members - including those installed by the U.S. government - perform their fiduciary and ethical responsibilities?
* What is the responsibility of the U.S. government in its role as majority owner (2009-2010) and then dominant owner (2010-2013)?
* As majority owner and dominant owner, did the government disclose all it knew about the evolving internal investigation as it sold large chunks of equity to the public?
* Is the timing of GM's public announcement (February 2014) of this high-profile safety defect soon after the U.S. government's sale of its last holding in the company (December 2013) purely coincidental?
While we have no opinion on GM culpability and believe it prudent to wait for results of Congressional inquiries and other external and internal investigations, we wonder what it means that the U.S. government owned General Motors for a substantial and critical time period in this tragic story.
The government injected $49.5 billion into GM in 2009 as part of the automaker's bankruptcy. As a result, the U.S. owned 61% of GM. Simply put, the government bought and owned General Motors. The government reduced its position to 26% in late 2010, reduced again to 19% in late 2012, and sold down to ZERO in DECEMBER 2013.
Now let's look at GM's chronology of its internal investigation thus far. In the years 2005, 2006, 2007, 2011, 2012, and 2013 there were important developments and milestones in GM's findings and research into the ignition defect. The U.S. government was the largest owner of GM in three of these critical years. Of course, the government was also 61% majority owner for a period in which tragic car accidents continued.
CORPORATE GOVERNANCE
SHAREHOLDER RESPONSIBILITY
SECURITIES LAWS
We pose a few obvious, but interesting, questions:
* What is the role of the Board of Directors? Did the GM Board discuss the ignition defect safety investigation over the years? In particular, did the Board members - including those installed by the U.S. government - perform their fiduciary and ethical responsibilities?
* What is the responsibility of the U.S. government in its role as majority owner (2009-2010) and then dominant owner (2010-2013)?
* As majority owner and dominant owner, did the government disclose all it knew about the evolving internal investigation as it sold large chunks of equity to the public?
* Is the timing of GM's public announcement (February 2014) of this high-profile safety defect soon after the U.S. government's sale of its last holding in the company (December 2013) purely coincidental?
Subscribe to:
Posts (Atom)