German former tax inspector jailed for 8 years over cum-ex fraud
Court also orders Hanno Berger to repay €13.7mn to the Bonn government
A former senior German tax inspector was convicted and sentenced to eight years in jail on Tuesday over his role in a long-running dividend tax fraud following a landmark trial in Bonn.
Hanno Berger was accused by prosecutors of being one of the masterminds behind a fraud that led the German government to refunding billions of euros of dividend taxes that had never been paid.
Berger, who was extradited from Switzerland earlier this year after spending almost a decade on the run, was also ordered to repay €13.7mn to the German government, a spokesperson for the Bonn court told the Financial Times.
Germany is among the European countries hardest hit by the so-called “cum-ex” scandal. These “cum-ex” transactions cost German taxpayers some €10bn, according to an estimate by Finanzwende, a consumer protection lobby group.
Having reached a senior position in the German tax authority, Berger later became a tax lawyer. Prosecutors accused him of having advertised the fraudulent scheme to clients and being directly involved in transactions that cost German taxpayers €279mn
The 72-year-old has been in police custody since his extradition from Switzerland, where he has a holiday home and where he fled to in 2012 on the day his office in Frankfurt was raided.
While several bankers received jail terms in previous trials relating to the cum-ex scandal, Berger’s sentence is the longest. Investigations by public prosecutors in Cologne and Frankfurt into the scandal are focusing on 1,500 suspects and 100 banks on four continents, including more than 70 Deutsche Bank employees.
Next year, two former partners of magic circle law firm Freshfields, including Ulf Johannemann, once the firm’s head of global tax, will face trial in a Frankfurt court over their alleged role in the fraud. Prosecutors accuse them of abetting the fraud by issuing flawed opinions over the legality of the practice.
Prosecutors had sought a sentence of nine years for Berger, who faces a second trial over different cum-ex transactions at a court in Wiesbaden.
Gerhard Schick, a former Green member of parliament who now heads Finanzwende, said the verdict of the Bonn court was “a reason for great joy” as it showed that justice was stronger than “criminal money”.
A lawyer for Berger did not immediately respond to a request for comment.
Jeff Zucker joins private equity group RedBird to launch $1bn fund
Move marks comeback after forced exit as CNN president
Jeff Zucker, the former president of CNN, has joined US private equity group RedBird to launch a $1bn sports, media and entertainment fund with International Media Investments.
The move to RedBird marks a comeback for Zucker 11 months after being forced to quit his job at the US cable news network because of his failure to report a romantic relationship with a subordinate.
“I’ve spent 35 years running media businesses . . . That experience has given me unparalleled perspective for this unique time in media,” said Zucker.
RedBird, founded about eight years ago by former Goldman Sachs banker Gerry Cardinale, has a record of partnering with athletes, entertainers and well-known media executives to invest across sectors.
The New York-based buyout group, which manages about $7bn, recently acquired AC Milan from Elliott Management for $1.2bn.
Cardinale’s firm has also invested in a company controlled by NBA basketball star LeBron James, acquired an NFL rival league XFL with film star Dwayne “The Rock” Johnson, and holds stakes in the company that owns the Red Sox baseball team and Liverpool Football Club.
“With Jeff as our CEO, this platform will integrate substantial operating expertise with sophisticated financial and investing acumen to deploy transformational capital on a scaled basis,” said Cardinale.
Zucker became one of the pre-eminent figures in the US’s television world during his three-decade career that began as a producer and then chief executive of NBCUniversal.
He joined CNN in 2013 and made a lasting impression on the news network with a hands-on management style, which was credited with lifting the network’s ratings as it entered the Trump era.
During his time at WarnerMedia, Zucker was also responsible for Turner Sports, including overseeing negotiations for Major League Baseball and the National Basketball Association. Zucker began his career at NBC as a researcher for NBC Sports during its coverage of the Seoul Olympic Games in 1988.
He resigned this year after he failed to disclose a romantic relationship with Allison Gollust, CNN’s executive vice-president and chief marketing officer.
How US scientists moved one step closer to dream of fusion power
Energy gain breakthrough raises hopes of eventual abundant zero-carbon source of fuel
US scientists have achieved energy gain in a fusion reaction for the first time, the country’s energy secretary Jennifer Granholm has confirmed, heralding the breakthrough as evidence that the technology could eventually provide an abundant, zero carbon alternative to fossil fuels.
“This is a landmark achievement,” Granholm said at a press conference in Washington on Tuesday, confirming the breakthrough first reported by the Financial Times.
“We have taken the first tentative steps towards a clean energy source that could revolutionise the world,” said Jill Hruby, administrator of the National Nuclear Security Administration.
But how much closer does this breakthrough take the energy sector to the dream of fusion power?
What is fusion?
Fusion is the reaction that powers the sun. It involves heating two hydrogen isotopes — normally deuterium and tritium — to such extreme temperatures that the atomic nuclei fuse, releasing helium and vast amounts of energy in the form of neutrons.
Unlike nuclear fission, the process produces no long-lived radioactive waste. It also emits no carbon, and scientists estimate a small cup of the fuel could power a house for more than 800 years.
Fusion’s supporters describe it as the “holy grail” of clean energy: a technology that could theoretically provide near limitless, zero carbon power.
But although Soviet scientists developed the first fusion machine in the 1950s using a process called magnetic confinement, until now no group had been able to produce more energy from a fusion reaction than it consumed — a scientific milestone known in the field as scientific energy gain or target gain.
What have the US scientists achieved?
Scientists at the US government’s National Ignition Facility at the Lawrence Livermore National Laboratory in California have achieved that goal of energy gain in the reaction for the first time.
The $3.5bn NIF, which opened in 2009, was primarily designed to test nuclear weapons by simulating explosions but has also been used to advance fusion energy research.
Magnetic confinement, which remains the most widely studied approach to fusion, uses huge magnets to hold the deuterium-tritium fuel in place while it is heated to temperatures hotter than the sun.
The NIF uses a different process, called inertial confinement, in which it fires 192 lasers at a tiny capsule of the fuel. The lasers heat the fuel to more than 3mn degrees Celsius, which blows off the surface of the target capsule, causing what the NIF describes as a “rocket-like” implosion. That compresses and further heats the fuel until the hydrogen atoms in the deuterium and tritium fuse, releasing helium and energy.
In the experiment on December 5, the reaction produced about 3.15 megajoules of energy, which was about 150 per cent of the 2.05MJ of energy in the lasers, the laboratory said on Tuesday. The gain was even greater than the preliminary results reported by the FT.
Does this mean they have cracked fusion power?
No. Achieving energy gain has been seen for decades as a crucial step in proving that commercial fusion power stations are possible. However, there are still several hurdles to overcome.
First, energy gain in this context only compares the energy out to the energy in the lasers, not to the total amount of energy pulled off the grid to power the system. In fact, each shot requires 330MJ of electrical energy, delivered in a 400-microsecond burst.
The system that powers the lasers at the NIF is old and not designed for maximum energy efficiency. However, scientists still estimate that commercial fusion will require fusion reactions that generate between 30 and 100 times the energy going in.
The NIF also makes a maximum of one shot a day, whereas an internal confinement power plant would probably need to complete several shots a second.
“The experiment demonstrates unambiguously that the physics of laser fusion works,” said Robbie Scott, a plasma physicist who has contributed research to the NIF. “Next steps include the demonstration of even higher fusion energy gain and the further development of more efficient methods to drive the implosion.”
How does it compare with other recent breakthroughs?
The achievement at the NIF follows big announcements in the past 18 months by other publicly funded fusion laboratories with slightly different research objectives.
Last year in China, a magnetic confinement machine, known as a tokamak, called East — the Experimental Advanced Superconducting Tokamak — managed to sustain a fusion reaction at 120mnC for a record 101 seconds. Temperatures of more than 100mnC, generally required for magnetic confinement fusion, had been attained before but never sustained for such a long time.
In May, researchers at the world’s largest, most powerful tokamak in Oxford, the Joint European Torus (JET), produced a record 59MJ from a sustained reaction lasting five seconds. That was enough energy to boil about 60 kettles and more than doubled the previous energy output record of 22MJ, achieved by JET in 1997.
Neither reaction demonstrated an energy gain as the NIF did, but neither facility had prioritised achieving gain, experts said.
What happens next?
The sector hopes the breakthrough will galvanise interest and investment and so accelerate progress.
Historically, most fusion science has been done by publicly funded laboratories such as the NIF and JET, but in recent years investment has also flooded into private companies promising to deliver fusion power in the 2030s.
Melanie Windridge, a plasma physicist who runs the consultancy Fusion Energy Insights, pointed out that the NIF, which cost $3.5bn to build, was 13 years old and based on laser-technology developed in the 1980s.
“If you can do that with ageing technology it just shows what could be possible with the newest equipment,” she said. “If they get private backing and they are able to move at these aggressive timescales, then they can use cutting edge technology . . . and that is tremendously exciting.”
LVMH’s Sidney Toledano Talks Recruiting the Next Generation of Luxury Artisans
Government ministers and fashion executives addressed democratizing luxury hiring at Comité Colbert's educational fair.
PARIS — Luxury association Comité Colbert brought brands and big names together to promote careers in craftsmanship to students.
Sidney Toledano, LVMH Fashion Group chair and newly elected president of the Chambre Syndicale de la Haute Couture, joined French Minister of Culture Rima Abdul Malak on stage, along with Minister for Education and Vocational Training Carole Grandjean and Minister for Small and Medium Enterprises, Trade, Crafts and Tourism Olivia Gregoire.
The afternoon panel closed the three-day educational fair “Les de(ux)mains du luxe,” Comité Colbert’s clever play on words referencing the future of handicrafts.
Despite business booming for the luxury sector, companies across the board have expressed difficulty in recruiting young artisans to carry forward traditional methods.
Toledano reminded the crowd that Louis Vuitton, Coco Chanel, Christian Dior and Louis-François Cartier were all artisans before they were “designers.”
“They were artisans, they were entrepreneurs, they were storytellers,” he said. “Their business power rested on their savoir faire.”
Toledano was careful to note that the day’s event was to continue the ongoing quest for education and elevation of craft. He said that in his youth he grew up surrounded by artisans, but young people today are more separated from craft.
“It’s a problem that exists for our industry,” he said. “How we transmit to the next generation is a real question — is it stronger word of mouth, marketing, storytelling? — to transmit the opportunities of these careers.”
Toledano said it’s the responsibility of government programs and the private sector luxury companies to raise the status of craftsmanship careers.
“The métiers de la main need to be reinvented and young people need to discover the métiers d’art — they are in constant evolution, innovation and we need to transmit the idea of savoir faire,” said Minister Malak.
Malak said the French government is committed to five pillars of promotion for craftsmanship: spreading knowledge of the professions; education and internships alongside experienced craftspeople; investing in innovation and new technology to transmit age-old techniques before the disappear; ensuring crafts are not just centered in Paris but dispersed throughout France, and finally, that they grow internationally as well.
She cited cross-cultural programs to promote French craftsmanship in the U.S. and Japan and said the government is establishing residency programs in Africa and China to train artisans abroad.
“There’s a great potential of not just exporting our French savoir faire, but also learning from other countries and creating exchanges and cooperating with them, because it’s also this cooperation that will help reaching new markets, new citizens that are interested in it, and also pushing the boundaries of sustainability in this field and innovation in this field,” said Malak.
Other guests included LVMH director of craftsmanship development Alexandre Boquel, Van Cleef & Arpels president Nicolas Bos, Christofle president Emilie Metge and Hermès director of human resources Vincent Vaillant.
“Luxury is one of the things France is most known for — along with maybe football and cooking,” joked Christofle’s Metge. “We know how to celebrate luxury and savoir faire, but the most important thing we have to keep in mind is that luxury, without the next generation, can die out.”
Panelists agreed that government investment in manufacturing is important, but that educating and recruiting the next generation is key to keeping luxury alive. While business has been booming and luxury companies have been recording record profits, recruitment remains a weak link.
All of the panelists agreed that while craftsmanship is at the core, communication is the key.
“We have to be able to transmit to the next gen to be sure that we can stay at the top level of manufacturing and the way to design products and luxury goods,” said Metge, adding that luxury cannot continue to gate keep.
“We need to transmit to the new generation, but be sure that you don’t ‘own’ the savoir faire and that you are here to pass it on to the next generation. Be more democratic — able to talk to any generation and not only in one luxury, very high and elitist category, but we need to talk to teenagers. This is the most important message that we want to have today,” she added.
Students tend to focus on the ideas of being a designer or stylist, but students interested in the art of fashion often don’t know about the work that goes on behind the scenes.
“These types of professions, in the past, have been hidden,” said LVMH’s Boquel. “There’s been an opposition between the abstract professions versus the manual professions. The best way to change this is to communicate about the image we have. We want to showcase the beauty of the professions and to explain that there is expansion of development for talent. It’s a huge opportunity for you to create your professional path within luxury.”
Following the panel, Toledano toured the room at Paris’ innovation hub Station F, visiting various stations from some of the 23 luxury brands on show. LVMH presented the programs of its Institut des Métiers d’Excellence, Van Cleef & Arpels offered a workshop to promote its L’Ecole des Arts Joailliers, while Cartier presented its Haute École de Joaillerie.
Léonard demonstrated pattern making, Chanel showed the creation of a bag, and Christofle demonstrated gilding techniques.
Toledano even stopped by the Dior display to speak with a seamstress who was working on a tulle couture gown.
The event wrapped up a three-day educational fair that brought more than 4,000 students to learn about métiers d’art at the hands of the luxury fashion houses.
The White Lotus’s subversive game
Warning: extensive spoilers for series 2
The mystery of The White Lotus was there from its start. In the second series opener, Daphne, the slender, freckled trophy wife, tells new arrivals on the beach: “The hotel’s perfect . . . Italy’s just so romantic, oh, you’re going to die. They’re gonna have to drag you out of here.” Before she goes for one last swim right into a floating cadaver.
The weekly episode drop of this HBO series, created, directed and written by Mike White, has proved that event TV is here to stay in the age of streaming. The mystery of who died and whodunnit gave the show its momentum, along with the sumptuous Sicilian location and sharp dialogue. But what made it truly satisfying was its picking apart of the games people play in their relationships, in all their moral complexity.
The first series of The White Lotus was a cutting satire on the entitlement of the rich and the suffering of their attendants. There was the callousness of San Francisco-born billionaire heiress Tanya, played by a quivering Jennifer Coolidge, dashing the spa dreams of the resort’s beautician; and the demise of the resort manager Armond, who, under the pressure of whining customers, freefalls into a drink-drugs-and-sex meltdown.
This second series doesn’t let the rich off the hook for their bad behaviour entirely — Cameron, a financier who is seemingly involved in some kind of Madoff scheme, whines about a friend sacked for mistreating his assistant. But the focus is really on sex and relationships, and the issues the holidayers face are existential. The beach and the pool offer no escape. In fact, without the distractions of their jobs or kids, the tourists’ problems are amplified: they are forced to confront the ugly flaws of their marriages and parenting.
So the newly minted Ethan, fresh from the craziness of his tech company going public, jerks off to porn alone, making excuses to not have sex with his wife Harper (the brilliant Aubrey Plaza, her face morphing from eye-rolling acerbity to spiralling paranoia). Dominic, a big-shot Hollywood producer, is dealing with the marital fallout of his womanising, while his Gen-Z son Albie demands he confront his faults. Meanwhile Tanya, the spoilt heiress, finds her hopes for a romantic holiday with her husband Greg are dashed by his premature departure.
Even Portia, Tanya’s assistant, whose job seems only to involve some light boss-babysitting, experiences a crisis: “I just thought I’d come here and feel something. Is everything boring? I just feel like there must have been a time when the world had more.”
The show could simply skewer super-rich people’s problems, but it moves beyond that. White shows that everyone is playing a game. It may be an explicit hustle, as with the escorts Lucia and Mia, pretending to be attracted or even in love with their clients, or Quentin, a charismatic Tom Hollander, the “high-end gay” who may be plotting to kill Tanya for her money.
Or the game might be psychological, like the one played by Daphne and Cameron, whose mutual unfaithfulness keeps their relationship alive. Daphne shows that the game can also be one of self-deception — she chooses to see what she wants to see. At first, Harper’s problem is that she’s too straightforward — she seems incapable of playing the game and feels uncomfortable with her and her husband’s new wealth, saying they are “larping [live action role playing] as rich people”.
White, however, never plays anything too straight. Morality is not black-and-white. Game-playing is not necessarily bad — in fact, it can be invigorating. As Daphne explains to Ethan: “We never really know what goes on in people’s minds . . . You spend every second with somebody and there’s still this part that’s a mystery . . . You do what you have to do not to feel like a victim of life.”
It doesn’t matter how attentive you are to the game, it may be pure chance who wins. Quentin, master of the con, winds up dead just like the clueless Tanya. The bloodbath on the superyacht is a rare case of the rich and powerful losing a game which, as Quentin’s “nephew”/accomplice Jack warns Portia, is usually rigged in their favour. It is a heartening contrast to the last series. And as we watch Mia and Lucia’s valedictory walk at the finale’s close, White offers a glimmer of subversive hope — sometimes the unlikeliest people come out on top.
Research Calls
- Upgrades:
- Coherent (COHR) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $45
- Equinix (EQIX) upgraded to Outperform from Market Perform at Cowen; tgt $811
- Phreesia (PHR) upgraded to Buy from Neutral at Citigroup; tgt $40
- Humana (HUM) upgraded to Buy from Neutral at Goldman; tgt raised to $652
- HUYA (HUYA) upgraded to Buy from Hold at China Renaissance; tgt lowered to $4.20
- Inspire Medical Systems (INSP) upgraded to Buy from Neutral at Goldman; tgt raised to $308
- U.S. Bancorp (USB) upgraded to Outperform from Mkt Perform at Keefe Bruyette; tgt raised to $58
- Downgrades:
- Affirm (AFRM) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $13
- Am Natl Bankshares (AMNB) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $42
- Amerant Bancorp (AMTB) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $32
- Bar Harbor Bankshares (BHB) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $33
- BHP Group (BHP) downgraded to Sell from Neutral at UBS
- Block (SQ) assumed with an Overweight at Piper Sandler; tgt $93
- Capital Bancorp (CBNK) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $26
- Carrier Global (CARR) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
- Comerica (CMA) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $80
- Discover Financial Services (DFS) downgraded to Underperform from Buy at BofA Securities
- F.N.B. Corp (FNB) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt lowered to $15.50
- Heartland Financial (HTLF) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $54
- Home Bancshares (HOMB) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $28
- Independent Bank (INDB) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $100
- MidWestOne Financial Group (MOFG) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $37
- Robinhood Markets (HOOD) downgraded to Neutral from Buy at Citigroup; tgt lowered to $10
- Shore Bancshares (SHBI) downgraded to Mkt Perform from Outperform at Keefe Bruyette; tgt $22
- UserTesting (USER) downgraded to Mkt Perform from Strong Buy at Raymond James
- UserTesting (USER) downgraded to Neutral from Overweight at Piper Sandler; tgt $7.50
- Others:
- American Express (AXP) assumed with a Neutral at Piper Sandler; tgt $159
- Amphenol (APH) initiated with an Outperform at Credit Suisse; tgt $93
- Angi Inc. (ANGI) initiated with a Buy at Citigroup; tgt $2.60
- Beam Therapeutics (BEAM) initiated with a Buy at Citigroup; tgt $62
- Business First Bancshares (BFST) initiated with an Overweight at Piper Sandler; tgt $27
- Cano Health (CANO) resumed with an Underperform at BofA Securities; tgt $1.50
- Cognex (CGNX) initiated with an Underperform at Credit Suisse; tgt $41
- Cousins Prop (CUZ) initiated with an Outperform at BMO Capital Markets; tgt $29
- Criteo (CRTO) initiated with a Buy at Citigroup; tgt $36
- Custom Truck One Source (CTOS) initiated with a Neutral at JP Morgan; tgt $7.50
- Dover (DOV) initiated with an Outperform at Credit Suisse; tgt $171
- eBay (EBAY) initiated with a Neutral at Citigroup; tgt $47
- Etsy (ETSY) initiated with a Buy at Citigroup; tgt $161
- Generac (GNRC) initiated with a Hold at Stifel; tgt lowered to $98
- GoDaddy (GDDY) initiated with a Buy at Citigroup; tgt $95
- Hayward Holdings (HAYW) initiated with a Buy at Stifel; tgt $11
- Inspire Medical Systems (INSP) initiated with an Overweight at KeyBanc Capital Markets; tgt $287
- InterActiveCorp (IAC) initiated with a Buy at Citigroup; tgt $60
- KNOT Offshore Partners (KNOP) initiated with a Buy at Alliance Global Partners; tgt $16
- Latham Group (SWIM) initiated with a Hold at Stifel; tgt $3
- Mobileye Global (MBLY) initiated with an Overweight at JP Morgan; tgt $50
- Original BARK Co. (BARK) initiated with a Buy at Citigroup; tgt $2
- Outbrain Inc. (OB) initiated with a Neutral at Citigroup; tgt $4
- Philip Morris International (PM) resumed with a Neutral at Citigroup; tgt $109
- Redfin (RDFN) initiated with a Neutral at Citigroup; tgt $5
- TE Connectivity (TEL) initiated with a Neutral at Credit Suisse; tgt $123
- Teledyne Tech (TDY) initiated with an Outperform at Credit Suisse; tgt $503
- The Trade Desk (TTD) initiated with a Buy at Citigroup; tgt $60
- VeriSign (VRSN) initiated with a Buy at Citigroup; tgt $243
- Wayfair (W) initiated with a Buy at Citigroup; tgt $50
- Wish (WISH) initiated with a Sell at Citigroup; tgt $0.50
- Ziff Davis (ZD) initiated with a Neutral at Citigroup; tgt $100
Gapping down
In reaction to earnings/guidance:
- JOAN -4.8%, BLBD -3.6%, LLY -2% (guidance update), UAL -1.4% (guidance update)
Other news:
- LEV -17.6% (announces the pricing of its previously announced marketed public offering of units in the United States and Canada)
- TRMB -6.4% (to acquire Transporeon for €1.88 bln)
- BMO -3.8% (public offering totaling approx. C$3.15 bln)
- GFI -2.9% (CEO steps down; Martin Preece appointed interim CEO)
- IVZ -1.5% (reports November AUM)
- USER -1.5% (announces expiration of "go-shop" period )
- ALEX -1.2% (promotes COO to additional role as President)
- IHG -0.8% (new CFO)
Analyst comments:
- AFRM -1.1% (downgraded to Neutral from Buy at BofA Securities)