Thursday, September 1, 2016

Brazil president impeached - Reuters

Rousseff on Wednesday, ending an impeachment process that polarized Latin America's biggest country amid a massive corruption scandal and brutal economic crisis.
Senators voted 61-20 to convict the country's first female president for illegally using money from state banks to bankroll public spending, marking the end of 13 years of leftist Workers Party rule.
Rousseff's opponents hailed her removal as paving the way for a change of fortunes for Brazil. Her conservative successor, Michel Temer, the former vice president who has run Brazil since her suspension in May, inherits a bitterly divided nation with voters in no mood for the austerity measures needed to heal public finances.
In his first televised address to the nation after being sworn in as president through 2018, Temer called on Brazilians to unite behind him in working to rescue the economy from a fiscal crisis and over 11 percent unemployment.
"This moment is one of hope and recovery of confidence in Brazil. Uncertainty has ended," Temer said in the speech broadcast after his departure for a G20 summit in China.
Until just a few years ago, Brazil was booming economically and its status was rising on the global stage.
The country then slid into its deepest recession in decades, and a graft scandal at state oil company Petrobras tarnished Rousseff's coalition. Millions took to the streets this year to demand her removal, less than two years after she was re-elected.
A string of corruption scandals, led by the Petrobras scheme, has engulfed vast swaths of Brazil’s political class and business elites over the past 2-1/2 years.
Temer will likely face tough opposition from the Workers Party both on the streets and in Congress to his agenda of privatizations, reforms to Brazil's generous pension and welfare laws and a public spending ceiling he hopes lawmakers will pass this year.
For the third straight day, pro-Rousseff demonstrators in Sao Paulo, Brazil's largest city, clashed with riot police, who used tear gas to clear the streets.
By Maria Carolina Marcello and Anthony Boadle | BRASILIA
Brazil's Senate ousted President Dilma Rousseff on Wednesday, ending an impeachment process that polarized Latin America's biggest country amid a massive corruption scandal and brutal economic crisis.
Senators voted 61-20 to convict the country's first female president for illegally using money from state banks to bankroll public spending, marking the end of 13 years of leftist Workers Party rule.
Rousseff's opponents hailed her removal as paving the way for a change of fortunes for Brazil. Her conservative successor, Michel Temer, the former vice president who has run Brazil since her suspension in May, inherits a bitterly divided nation with voters in no mood for the austerity measures needed to heal public finances.
In his first televised address to the nation after being sworn in as president through 2018, Temer called on Brazilians to unite behind him in working to rescue the economy from a fiscal crisis and over 11 percent unemployment.
"This moment is one of hope and recovery of confidence in Brazil. Uncertainty has ended," Temer said in the speech broadcast after his departure for a G20 summit in China.
Until just a few years ago, Brazil was booming economically and its status was rising on the global stage.
The country then slid into its deepest recession in decades, and a graft scandal at state oil company Petrobras tarnished Rousseff's coalition. Millions took to the streets this year to demand her removal, less than two years after she was re-elected.
A string of corruption scandals, led by the Petrobras scheme, has engulfed vast swaths of Brazil’s political class and business elites over the past 2-1/2 years.
Temer will likely face tough opposition from the Workers Party both on the streets and in Congress to his agenda of privatizations, reforms to Brazil's generous pension and welfare laws and a public spending ceiling he hopes lawmakers will pass this year.
For the third straight day, pro-Rousseff demonstrators in Sao Paulo, Brazil's largest city, clashed with riot police, who used tear gas to clear the streets.

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Brazil's new President Michel Temer attends the presidential inauguration ceremony after Brazil's Senate removed President Dilma Rousseff in Brasilia, Brazil, August 31, 2016.  REUTERS/Ueslei Marcelino
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Defiant to the end, Rousseff, a former leftist guerrilla who was tortured and jailed under military dictatorship in 1970, vowed to fight on in defense of Brazil's workers.
Standing outside the presidential residence flanked by supporters, she insisted on her innocence and said her removal was a "parliamentary coup" backed by the economic elite that would roll back social programs that lifted millions of Brazilians out of poverty over the last decade.
"They think they have beaten us but they are mistaken," Rousseff said, adding that she would appeal the decision using every legal means. "At this time, I will not say goodbye to you. I am certain I can say 'See you soon'."
The end of the Workers Party's long grip on power sparked angry reactions from leftist governments across the region.
Venezuela, Bolivia and Ecuador withdrew their ambassadors, and Brazil responded by recalling its envoys for consultations. Cuba's Communist government branded Rousseff's ouster part of an "imperialist" offensive against progressive governments in Latin America.
The U.S. State Department voiced confidence that strong bilateral relations with Brazil would continue, adding the country's democratic institutions had acted within the constitutional framework.
In an unexpected move, Brazil's Senate voted 42-36 to allow Rousseff to retain the right to hold public office - a break with Brazilian law that specifies a dismissed president should be barred from holding any government job for eight years.
The move appeared to demonstrate unease among some senators, notably within Temer's own fractious Brazilian Democratic Movement Party (PMDB), over whether a budgetary sleight of hand that is common in Brazil was truly an impeachable offense.
Visibly annoyed in televised remarks at his first cabinet meeting, Temer said he would not tolerate divisions in his coalition as he quickly tried to quash the first sign of splits that could grow as allies press him to deliver on austerity.
Aecio Neves, leader of the center-right PSDB party that backs Temer, said the divisions had caused acute concern among his allies, but he denied there was any prospect of a split.
"Brazil has given itself a new chance, to look to the future and construct an agenda for reform in line with the economic crisis," said Neves, who narrowly lost the 2014 election to Rousseff.
HONKING HORNS, FIREWORKS
Motorists honked car horns in the Brazilian capital to mark the removal of a president whose popularity had dwindled to single figures since winning re-election in 2014. In Brazil's largest city, Sao Paulo, fireworks exploded in celebration after the vote.
Temer has vowed to boost an economy that has shrunk for six consecutive quarters and implement austerity measures to plug a record budget deficit, which cost Brazil its investment-grade credit rating last year.
An upturn in corporate investment in the second quarter provided a glimmer of economic hope for Temer and economists expect a return to growth before the end of the year. 
Brazil's stocks and real currency slightly accelerated gains following the Senate's decision but the reaction was muted as most traders were already counting on the result. Market analysts said investors would now be looking to Temer to quickly deliver on his promises of reform, notably a constitutional change to limit spending increases in coming years.
"What changes now, with Temer definitively confirmed, is that the pressure will increase on him to deliver," said Newton Rose, chief economist at Sulamerica Investimentos. "The honeymoon is over, and the market wants to know now how capable he is to govern and put the government accounts in order."
Temer's government risks entanglement in the ongoing investigation into kickbacks at Petrobras, which ensnared dozens of politicians in Rousseff's coalition. Three of Temer’s ministers have already had to step down due to links to the scandal, which could hobble efforts to restore confidence.
Rousseff became the first Brazilian leader dismissed from office since 1992, when Fernando Collor de Mello resigned before a final vote in his impeachment trial for corruption.

(Additional reporting by Lisandra Paraguassu and Alonso Soto in Brasilia, Bruno Federowski and Guillermo Parra-Bernal in São Paulo; Writing by Daniel Flynn and Brad Haynes; Editing by Tom Brown and Andrew Hay)

Wednesday, August 31, 2016

Read Apple CEO Tim Cook’s Response to Europe’s Tax Ruling - TIME Business

Posted: 30 Aug 2016 06:15 AM PDT

European officials on Tuesday ordered Apple to pay up to $14.5 billion in back taxes, plus interest, to Ireland.
The European Commission is essentially accusing Apple of harboring profits in Ireland in exchange for providing jobs there. The arrangement, say European officials, meant Apple has enjoyed tax benefits not extended to its competition.
In a statement posted online, Apple CEO Tim Cook says his company plans to appeal the “unprecedented” ruling. The Irish government also said it would fight the ruling. “I disagree profoundly with the commission’s decision,” Irish Finance Minister Michael Noonan said.
Read Cook’s full letter regarding the ruling below:

Thirty-six years ago, long before introducing iPhone, iPod or even the Mac, Steve Jobs established Apple’s first operations in Europe. At the time, the company knew that in order to serve customers in Europe, it would need a base there. So, in October 1980, Apple opened a factory in Cork, Ireland with 60 employees.
At the time, Cork was suffering from high unemployment and extremely low economic investment. But Apple’s leaders saw a community rich with talent, and one they believed could accommodate growth if the company was fortunate enough to succeed.
We have operated continuously in Cork ever since, even through periods of uncertainty about our own business, and today we employ nearly 6,000 people across Ireland. The vast majority are still in Cork — including some of the very first employees — now performing a wide variety of functions as part of Apple’s global footprint. Countless multinational companies followed Apple by investing in Cork, and today the local economy is stronger than ever.
The success which has propelled Apple’s growth in Cork comes from innovative products that delight our customers. It has helped create and sustain more than 1.5 million jobs across Europe — jobs at Apple, jobs for hundreds of thousands of creative app developers who thrive on the App Store, and jobs with manufacturers and other suppliers. Countless small and medium-size companies depend on Apple, and we are proud to support them.
As responsible corporate citizens, we are also proud of our contributions to local economies across Europe, and to communities everywhere. As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world.
Over the years, we received guidance from Irish tax authorities on how to comply correctly with Irish tax law — the same kind of guidance available to any company doing business there. In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe.
The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process. The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.
The Commission’s move is unprecedented and it has serious, wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed.
At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money.
Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle.
In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States. European companies doing business in the U.S. are taxed according to the same principle. But the Commission is now calling to retroactively change those rules.
Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.
Apple has long supported international tax reform with the objectives of simplicity and clarity. We believe these changes should come about through the proper legislative process, in which proposals are discussed among the leaders and citizens of the affected countries. And as with any new laws, they should be applied going forward — not retroactively.
We are committed to Ireland and we plan to continue investing there, growing and serving our customers with the same level of passion and commitment. We firmly believe that the facts and the established legal principles upon which the EU was founded will ultimately prevail.

The Google-Uber Rivalry Is Seriously Heating Up - Fortune


Posted: 30 Aug 2016 05:53 AM PDT

Ride-hailing company Uber’s board of directors isn’t a happy family, it turns out.
According to a report from tech news site The Information that cites anonymous sources, Uber has barred board member David Drummond from attending board meetings. Drummond, who joined Uber’s board in 2013, is senior vice president of corporate development and chief legal officer for Google’s parent company, Alphabet.
On Monday, Uber confirmed to the Wall Street Journal and later to Fortune that he stepped down from the board several weeks ago because of increasing conflicts of interest.

“I recently stepped down from Uber’s board given the overlap between the two companies. Uber is a phenomenal company and it’s been a privilege working with the team over the last two plus years,” said Drummond in a statement. “GV remains an enthusiastic investor and Google will continue to partner with Uber.”
Uber is reportedly also limiting the information it shares with board “observer” David Krane, who runs GV, Alphabet’s venture capital arm. Krane recently took over as leader of GV from founder Bill Maris, but Uber was Krane’s investment from the start. He joined the board in August of 2013 as well.
The move isn’t surprising at all—if anything, it’s surprising it didn’t happen sooner. Though Uber and Alphabet seem like a match made it heaven (Uber employs a large number of former Googlers and uses the tech giant’s mapping service), a collision between the two company’s ambitious plans seem increasing inevitable, as Fortune‘s Dan Primack predicted two years ago. Google has been rumored to be interested in developing its own ride-hailing service, and began experimenting last year with a carpooling feature through Waze, the navigation service it acquired in 2013.
The two are also fiercely competing in the self-driving car race. Google has been working on autonomous cars for much longer—since 2009—but Uber has been aggressively working to catch up. What’s more, Uber now employs one of the original co-founders of Google’s self-driving car project, Anthony Levandowski. Levandowski, along with other former Googlers, founded a self-driving truck company, Otto, which Uber recently acquired to boost its efforts in that area. Levandowski left Google at the beginning of the year, largely because he was itching to get a self-driving car on the market fast—presumably, faster than Google plans to.
Awkward scenarios like Uber’s are rare, but it’s not the first time it’s happened in Silicon Valley. In 2009, then Google CEO Eric Schmidt resigned from Apple’s board, where he had served since 2006. His decision came shortly after Google announced it was working on its own computer operating system, Chrome OS, which would compete with Apple’s. He had already been recusing himself from certain discussions that conflicted with his role at Google’s chief, such as those about the iPhone, which competes with his company’s mobile operating system, Android.
Uber is also facing a similarly touchy situation related to its recent merger of its Chinese business with local rival Didi Chuxing. As part of the deal, Uber CEO Travis Kalanick joined Didi Chuxing’s board, while Didi CEO Cheng Wei is joining Uber’s. This could make things tense considering a Didi partnership with ride-hailing company Lyft, along with Ola in India, and Grab in Southeast Asia, which still compete with Uber in their respective local markets.
It’s unclear whether Drummond or Krane will eventually depart from the board, though it wouldn’t be surprising. According to The Information, the limiting of their participation has been going on for “the better part of a year.”
Fortune has contacted Uber and GV and will update this story if we hear back.
The story has been updated to show that Drummond has officially resigned from Uber’s board.
This article originally appeared on Fortune.com

Apple Ordered to Pay $14.5 Billion in Back Taxes - TIME Business


Posted: 30 Aug 2016 03:30 AM PDT

BRUSSELS- E.U. antitrust regulators ordered Apple on Tuesday to pay up to 13 billion euros ($14.5 billion) in taxes plus interest to the Irish government after ruling that a special scheme to route profits through Ireland was illegal state aid.
The massive sum, 40 times bigger than the previous known demand by the European Commission to a company in such a case, could be reduced, the E.U. executive said in a statement, if other countries sought more tax themselves from the U.S. tech giant.
Apple, which with Ireland said it will appeal the decision, paid tax rates on European profits on sales of its iPhone and other devices and services of between just 0.005 percent in 2014 and 1 percent in 2003, the Commission said.
“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” said Competition Commission Margrethe Vestager, whose crackdown on mainly U.S. multinationals has angered Washington which accuses Brussels of protectionism.
Online retailer Amazon.com Inc and hamburger group McDonald’s Corp face probes over taxes in Luxembourg, while coffee chain Starbucks Corp has been ordered to pay up to 30 million euros ($33 million) to the Dutch state.
A bill of 300 million euros this year for Swedish engineer Atlas Copco AB to pay Belgian tax is the current known record. Other companies ordered to pay back taxes in Belgium, many of them European, have not disclosed figures.
For Apple, whose earnings of $18 billion last year were the biggest ever reported by a corporation, finding several billion dollars should not be an insurmountable problem. The 13 billion euros represents about 6 percent of the firm’s cash pile.
As of June, Apple reported it had cash, cash equivalents and marketable securities of $231.5 billion, of which 92.8 percent, or $214.9 billion, were held in foreign subsidiaries. It paid $2.67 billion in taxes during its latest quarter at an effective tax rate of 25.5 percent, leaving it with net income of $7.8 billion according to company filings.
The European Commission in 2014 accused Ireland of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation.
“I disagree profoundly with the Commission,” Irish Finance Minister Michael Noonan said in a statement. “The decision leaves me with no choice but to seek cabinet approval to appeal.
“This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of E.U. state aid rules into the sovereign member state competence of taxation.”
Ireland also said the disputed tax system used in the Apple case no longer applied and that the decision had no effect on Ireland’s 12.5 percent corporate tax rate or on any other company with operations in the country.
Apple said in a statement it was confident of winning an appeal.
“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process. The Commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.”
“REVERSE ENGINEERING”
When it opened the Apple investigation in 2014, the Commission told the Irish government that tax rulings it agreed in 1991 and 2007 with the company amounted to state aid and might have broken E.U. laws.
The Commission said the rulings were “reverse engineered” to ensure Apple had a minimal Irish bill and that minutes of meetings between Apple representatives and Irish tax officials showed the company’s tax treatment had been “motivated by employment considerations.”
Apple employs 5,500, or about a quarter of its Europe-based staff, in the Irish city of Cork, where it is the largest private sector employer. It has said it paid Ireland’s 12.5 percent rate on all the income that it generates in the country.
Ireland’s low corporate tax rate has been a cornerstone of economic policy for 20 years, drawing investors from multinational companies whose staff account for almost one in 10 workers in Ireland.
Some opposition Irish lawmakers have urged Dublin to collect whatever tax the Commission orders it to. But the main opposition party Fianna Fail, whose support the minority administration relies on to pass laws, said it would support an appeal based on reassurances it had been given by the government.
The U.S. Treasury Department published a white paper last week that said the E.U. executive’s tax investigations departed from international taxation norms and would have an outsized impact on U.S. companies. The Commission said it treated all companies equally.

Tuesday, August 30, 2016

What America can learn from Brexit - Financial Times

Until recently, my politically obsessed friends in America did not express much interest in British elections. No wonder. Although the iconic figure of Margaret Thatcher had inspired fascination a few decades ago, as had, a little later, the white-toothed Tony Blair, the 2015 British election elicited barely a yawn. Westminster politicians — men such as David Cameron — seemed too dull to hold any lessons for the US.
No longer. Right now, Republican and Democratic strategists are gearing up for the 2016 US election campaign. And, sitting around dinner tables in recent days listening to the anguished, endless debates among pollsters, campaigners and pundits, I’ve often heard the question: what lessons does the Brexit vote hold for the US? Does the “shock” result of the UK referendum suggest that an outsider such as Donald Trump might win? Or is that comparison too simplistic?
To my mind, the answer is both “yes” and “no”. Brexit was a very different vote but there are about half a dozen lessons from the UK referendum that could matter in the US this November.
First — and most obvious — Brexit shows just how blind a political elite can be in a socially and economically polarised world. As my colleagues Gideon Rachman and Edward Luce have recently written, the Brexit vote was partly a protest vote — a howl of rage against economic pain, immigration and a loss of cultural identity. The only thing more surprising than this vote was that the UK elite was surprised by it; and the Democratic camp could easily repeat that mistake.
The second lesson is that the electorate is losing its fear of leaping into the unknown. Nobody can assume that Trump will lose “just” because he presents a risk. In a world where voters feel angry, taking a risk no longer seems so risky. And there is another important psychological issue at work: the electorate has just experienced a decade in which most of the rules of finance and economics have been turned upside down, as a result of the financial crisis. Turning the political rules on their head no longer seems so strange — at least, no stranger than seeing rates turn negative and big banks collapse.
That leads to a third lesson: revolution cannot be crushed by mere statistics or scare stories. Politicians such as Cameron tried to defeat the Brexit vote by citing economic data showing how dangerous Brexit might be; but voters dismissed it because they were too angry to listen — and too distrustful of the elite. The Brexit vote was decided on the basis of emotion — and the Remain camp failed to give voters a really positive vision of Europe. The Brexit camp, by contrast, invoked an image of an independent, proud sovereign nation that appealed to many voters.
This highlights a crucial fourth lesson: if the Democrats want to beat Trump, they cannot rely only on a US version of “Project Fear”; they need a positive and upbeat image too. Last week, the Democrats tried to create this at the Philadelphia convention. But they must recognise that Trump is campaigning on both negative and positive emotions; somehow the Democrats need to find a slogan as memorable and upbeat as Trump’s “Make America Great Again”.
A fifth lesson is that it is not just emotions that matter: the geeky details of the electoral process do too. One reason why the Remain camp lost in the UK was that turnout was low among potential young voters (who generally favoured Remain). Another issue was a little-noticed technical detail: parents used to be able automatically to register their teenage kids to vote, but this has recently changed. There are numerous “technical” details in the US electoral process that could turn out to be even more important; particularly since strategists — on both sides — are skilled at using all the loopholes they can find to get their supporters out, or suppress the other side. Pundits who want to predict the November results must look hard at the electoral weeds.
And that brings us to the sixth and most important lesson from Brexit: that democracy, by its nature, is unpredictable, particularly as social polarisation is increasing. Elites might hate this. So might investors or businesses, which need to plan for the long term. But if the whole point of democracy is to give people a voice, there will always be a risk that this voice will either howl in rage — or sit at home and not speak at all. Americans had better hope that the pundits learn this lesson ahead of time and — crucially — that politicians are ready to listen.

Controversial Trade Talks Between U.S. and E.U. Have Failed, German Economy Minister Says - TIME

Posted: 28 Aug 2016 08:57 PM PDT

(BERLIN) — Free trade talks between the European Union and the United States have failed, Germany’s economy minister said Sunday, citing a lack of progress on any of the major sections of the long-running negotiations.
Both Washington and Brussels have pushed for a deal by the end of the year, despite strong misgivings among some E.U. member states over the Trans-Atlantic Trade and Investment Partnership, or TTIP.
Sigmar Gabriel, who is also Germany’s vice chancellor, compared the TTIP negotiations unfavorably with a free trade deal forged between the 28-nation E.U. and Canada, which he said was fairer for both sides.

“In my opinion, the negotiations with the United States have de facto failed, even though nobody is really admitting it,” Gabriel said during a question-and-answer session with citizens in Berlin.
He noted that in 14 rounds of talks, the two sides haven’t agreed on a single common item out of 27 chapters being discussed.
Gabriel accused Washington of being “angry” about the deal that the E.U. struck with Canada, known as CETA, because it contains elements the U.S. doesn’t want to see in the TTIP.
“We mustn’t submit to the American proposals,” said Gabriel, who is also the head of Germany’s center-left Social Democratic Party.
In Washington, there was no immediate comment from the office of the U.S. trade representative.
Christian Wigand, a spokesman for the European Commission, the E.U.’s executive arm and which is leading the TTIP negotiations, said Sunday that the institution had no comment or reaction at this time.
Gabriel’s ministry isn’t directly involved in the negotiations with Washington because trade agreements are negotiated at the E.U. level. But such a damning verdict from a leading official in Europe’s biggest economy is likely to make further talks between the EU executive and the Obama administration harder.
Gabriel’s comments contrast with those of Chancellor Angela Merkel, who said last month that TTIP was “absolutely in Europe’s interest.”
Popular opposition to a free trade agreement with the United States is strong in Germany. Campaigners have called for nationwide protests against the talks on Sept. 17 — about year before Germany’s next general election.