Of Countries and Banks – It’s A Gangster World Out There
“Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” ~ John Dalberg-Acton
The first thing Mugabe did when he returned to power was to seize control of foreign-owned mines without paying for them as part of a program to accumulate $7 billion of assets following his July 31 election victory, a minister said.
““When it comes to natural resources, Zimbabwe will not pay for her resources,” Kasukuwere said. “If they don’t want to follow the law that’s their problem.” Non-compliant mine owners risk losing their licenses, he said.
It is easy.
So was it for Argentina last year.
“President Cristina Fernandez is struggling to attract energy investments after nationalizing a 51% stake in YPF from Spain’s Repsol SA so far without compensation in April 2012.”
And guess what ?
The investors are back.
“YPF, the country’s largest energy producer, is expected to sign a definitive joint venture with US Chevron Corp this week with an initial investment of 1.5 billion dollars to develop oil and gas shale deposits in Vaca Muerta…… YPF has also signed preliminary accords with Dow Chemical Co., Bridas Corp., and Corp. America to tap what the US Energy Information Administration says is among the world’s second-largest shale gas reserve and fourth-largest shale oil deposit”
So who cares if Repsol has lost out on their USD 10 bio investment. Chevron wins.
Who has the most to lose ?
“China’s foreign direct investment skyrockets in the coming years. It is projected to reach as much as $1 trillion to $2 trillion by 2020, according to the Rhodium Group.”
“In Europe and North America, China’s arrival on the scene has been more recent but the figures clearly show a growing trend: annual investment from China to the European Union grew from less than $1 billion annually before 2008 to more than $10 billion in the past two years. And in the United States, investment surged from less than $1 billion in 2008 to a record high of $6.7 billion in 2012, according to the Rhodium Group, an economic research firm. Last year, Europe was the destination for 33 percent of China’s foreign direct investment”
“China has also invested heavily in building infrastructure, undertaking huge hydroelectric projects like the Merowe Dam on the Nile in Sudan — the biggest Chinese engineering project in Africa — and Ecuador’s $2.3 billion Coca Codo Sinclair Dam.” Source : NY Times
I do not know if many of us remember CLOB over a decade ago. That would be closest to home for us. Yet the world remembers Malaysia for the good that turned out years later.
Even fewer would remember Singapore’s Land Acquisition Act in the 1960’s and the mass acquisition of scarce land.
But I do not think Chinese companies will take any aggression lying down, particularly when they have ported many a low cost staff to work in the jurisdictions they have invested in.
It will be interesting if the slowdown persists and as it is, we already have Vietnam bailing out the banks.
As countries struggle with internal strife, the mad grab for national assets may become necessary diversions in the name of populism or, as in Zimbawee’s case, just autocracy at work.
On the topic of the China, my burning curiosity question Is, if with Bo Xilai’s incarceration, we are seeing the beginning of China pulling a Putin ?
“During Putin presidency, many oligarchs came under fire for various illegal activities, particularly tax evasion in the businesses they acquired. However, it is widely speculated and believed that the charges were also politically motivated, as these tycoons have fallen out of favour with the Kremlin.” Source : Wikipedia
JP Morgan getting heat for commodity price rigging in aluminium prices. I lost count of the number of hundreds of millions they have paid out in fines and yet still turn in profits that beat expectations.
Now that they are putting the Libor thing behind us after the billions of profit for the regulators ! They are going for more fines in IRS rigging.
“Aug. 7 (Bloomberg) — The $2.5 billion of settlements
reached in the London interbank offered rate rigging scandal are
compelling banks to hand over information in the probe of a
separate financial benchmark tied to interest-rate derivatives.
Barclays Plc, UBS AG and Royal Bank of Scotland Group Plc,
the lenders fined in the Libor case, risk criminal prosecution
in the U.S. under the settlement agreements if they’re seen as
withholding evidence related to potential manipulation of the
benchmark known as ISDAfix, according to a person with knowledge
of the matter, who asked not to be identified because details of
the investigation aren’t public.”
Somehow I feel that the victims are not going to benefit much from all of this and everyone will end up losers.