Schröder’s Not Proud of This Record

With Deutsche Telekom posting a record €24.5 billion loss for the first three-quarters of the year, just about the only thing going smoothly in Germany’s economy right now is music sales. A savage single satirizing Chancellor Gerhard Schröder, The Tax Song, soared toward No. 1, selling over 300,000 copies since its release.

The song is part of a wave of sharp criticism that the government has faced since announcing a series of tax increases and benefit cuts only weeks after the general election. Last week members of the Green Party, who are in coalition with Schröder’s Social Democrats, revolted as parliament passed a controversial bill raising pension-insurance costs. Under the measure, which takes effect Jan. 1, workers and their employers will be required to pay 19.5% of wages as pension contributions, up from 19.1% currently.

Opposition parties and some Greens think the hike will hamper competitiveness. The bill also raises the upper limit on wages subject to the tax to €5,100 from the current €4,600. Ultimately, the Greens went along but 18 of them protested that the raise sends the “wrong message.” Maybe their next move will be to release their own protest song.

REPARATIONS
Apartheid’s Courtroom Drama
Companies that thought they had seen the end of lawsuits stemming from the horrors of the 20th century had better think again. Last week lawyers representing over 33,000 South Africans sued 22 multinational companies, including Barclays, DaimlerChrysler and IBM, for dealing with South Africa’s apartheid regime after the United Nations declared the system a crime against humanity. The suit, filed in New York by the Khulumani Support Group which advocates for people scarred by apartheid, comes four months after a similar claim on behalf of four South African families. Thandi Shezi, a Khulumani project officer, says compensation should run into billions of dollars.

The companies call the suits “baseless” and will fight to dismiss them. “You can’t hold international investors responsible for the actions of governments,” says Monika Dunant, a spokeswoman for Zurich-based bank UBS Group, named in both suits. But South African activists point to successful cases against Swiss banks that held onto money deposited by Holocaust victims, and companies in Nazi Germany that benefitted from forced labor. “If they want to play the international game,” says Neville Gabriel of Jubilee South Africa, which backs the latest claim, “then they must play by international rules.”

COPYRIGHT
The Walls Have Ears
A recent U.S. law extended Mickey Mouse’s copyright for 20 years, but residents of Malta, Austria, now say they’ve housed him in their church for centuries. Restoration work uncovered a 700-year-old fresco that tourism officials hope will make the town a Mickey Mecca — and perhaps threaten Disney’s copyright. Stanford professor Lawrence Lessig notes that a long-standing legal hypothetical asks: “What if two people independently wrote the same play?” The answer, he says: “Both get a copyright. Seems fact is stranger than cartoon.”

THE BOURSE
Give ‘Em Credit
HSBC has for years snapped up assets across Asia and the Americas, but some analysts still balked at last week’s purchase of U.S-based Household International for a vault-draining $14 billion in stock. Household, which gives credit and loans to “sub-prime” customers, has a history only a pawnbroker could love, setting aside $484 million last year to settle claims of predatory lending. With consumer debt at record highs, HSBC’s buy seems risky. But Household will supply 30% of HSBC’s income in 2003 and give it a dominant U.S. presence. And nothing is sub-prime about that kind of reach.

INDICATORS
Cutting The Wires
Britain’s venerable Cable and Wireless says it is scaling down its loss-making global divisions. But when the company announced that the cuts would cost 3,500 jobs and up to $1.3 billion, shares plummeted to lows not seen in nearly 20 years and shareholders demanded that CEO Graham Wallace make the first cut in his own office. For now, he’s staying.

Big In India
Bill Gates unveiled Microsoft’s largest investment outside the U.S., vowing to pour $400 million into Indian IT development a day after pledging $100 million to fight aids in the country. As a token of appreciation for Gates’ generosity, residents of the technology hub of Hyderabad greeted him by erecting an eight-foot, inflatable condom.

BOTTOM LINES
“It’s like swapping Pokémon cards on the playground and earning a bonus when you have printed your own.”
Rupert Walker, former fund manager at Govett Investments, on the “split-capital investment trusts” now being investigated by Britain’s Financial Services Authority

“We think he is Lord of our transportation choices as well as all our other choices.”
Jim Ball, director of the Evangelical Environmental Network, on their WWJD (“What Would Jesus Drive?”) campaign against sport-utility vehicles