Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #294 Update on Corporate Germany

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NB: This RealAudio stream contains FTRs 294 and 295 in sequence. Each is a 30-minute broadcast.

1. Bringing For the Record’s coverage of German corporate machinations up to date, this broadcast begins with information supplementing a major topic of discussion in the second half of FTR-292. As the global energy industry is deregulated, energy corporations are crossing national boundaries. One of the fastest growing electricity companies is the German giant Eon. The second largest electricity generating company in the world, it is currently expanding into the United States, where it plans to establish a significant presence. As Eon began divesting itself of assets in order to comply with U.S. regulatory statutes, the nature of some of its businesses proved to be more than a little interesting. One of its main corporate subsidiaries was the Degussa chemical firm. (“Eon to sell Off assets to Smooth Deal on PowerGen” by Andrew Taylor and Uta Harnischfeger; Financial Times; 4/10/2001; p. 18.)

2. The Degussa firm is part of the old I.G. Farben complex of chemical firms that comprised the backbone of Hitler’s political, industrial and military support during World War II. Degussa, in which I.G. had a significant capital participation, was a dominant player in the Degesch firm. Degesch (an I.G. subsidiary) manufactured the Zyklon B gas used in the gas chambers in the concentration camps. Degussa was involved with the funding of the SS, contributing to the Himmlerkreis or “Himmler’s Circle of Friends.”

3. In addition, Degussa subsidiary NUKEM was involved with the trafficking of nuclear material to Iraq, as well as other countries attempting to manufacture nuclear weapons. (For more on NUKEM, see Miscellaneous Archive Show M-8.) “Two transactions that spring heightened fears that Iraq intended to use the Osirak reactor to produce bomb-grade plutonium. An Italian company, in a semi-clandestine deal, sold Iraq six tons of depleted uranium purchased from the West German nuclear consortium NUKEM. Fearing that NUKEM might not deliver the uranium if they knew if was intended for Iraq, the Italians claimed it was for domestic use in Italy. But they needn’t have worried about NUKEM’s scruples. The consortium was a wholly owned subsidiary of the German chemicals giant Degussa, which had invented and manufactured Zyklon B, the powerful cyanide gas that streamed out of the showerheads in Hitler’s death camps, killing millions of European Jews. Degussa had also played a key role in the Nazi effort to build an atom bomb, stopped only when its Oranienburg works near Berlin were flattened by U.S. bombers in 1945. That same year, the Third Reich was going up in flames, Degussa’s chairman, Hermann Schlosser, donated 45,000 reichsmarks to Hitler’s SS. Thirty-five years later Schlosser was still on the Degussa board, and in 1987 he was awarded the German Federal Merit Cross for his services to industry. One of Schlosser’s services was shipping nuclear equipment and materials to almost every developing nation that was known to have a clandestine bomb program. Another was opening the vast Iraqi market to German firms. His readiness to supply nuclear materials to both India and Pakistan had impressed on Saddam Hussein that this was a man he could do business with.” (The Death Lobby: How the West Armed Iraq; Kenneth Timmerman; Copyright 1991 [HC]; Houghton Mifflin Company; p. 70.)

4. Mr. Emory has focused on a suit that has been filed against IBM over its role in expediting the operations of the Third Reich, the liquidation of the Jews, in particular. The speculative line of inquiry pursued in connection with the lawsuit concerns the possibility that the IBM suit and other Holocaust related lawsuits may constituted a bargaining chip in the maneuvering surrounding corporate globalization.

5. Recently, the IBM suit was dismissed. “The biggest remaining obstacle is a separate New York lawsuit against German banks over their role in stealing Jewish property under the Nazis. Michael Hausfeld, the lawyer who brought the IBM suit said ‘The main reason we accelerated our discussions was to remove any obstacle that can be used as an excuse by the Germans to avoid paying. We aren’t going to give them that opportunity.'” (“End of Suit Against IBM Removes Legal Hurdle to a Holocaust Deal” by John Authers, Yvonne Esterhazy and Richard Wolffe; Financial Times; 3/30/2001; p. 16.)

6. In past discussion of these Holocaust lawsuits, Mr. Emory has noted that the law firm of Wilmer, Cutler and Pickering has been lobbying on behalf of Deutsche Telekom’s purchase of VoiceStream. Wilmer, Cutler & Pickering has represented German firms and Swiss banks in Third Reich-related suits and it employs Matthias Wissman, the treasurer of the scandal-plagued CDU. Wilmer, Cutler and Pickering’s efforts have been successful, suggesting at least the possibility that a quid pro quo may have been effected. One wonders if the successful resolution of the lawsuits and the establishment of “legal peace‰ with the dropping of the suit against IBM may have involved an agreement by the U.S. government to accede to the wishes of Deutsche Telekom (effectively controlled by the German government.)

7. “US telecommunications regulators will approve Deutsche Telekom’s $23.5bn acquisition of VoiceStream, perhaps as early as this weekend but are struggling with the detail of their consent order which may delay finalization for a week. The deal has been one of the most politically contentious in recent years because of the German government’s 58 per cent stake in Telekom. Critics, led by Senator Ernest Hollings, have argued U.S. law forbids foreign government ownership of U.S. telecom licenses . . . . The two Republican FCC commissioners, including Michael Powell, chairman, are believed to have given their assent to the merger. The Democrats are awaiting the new legal analysis before giving their approval . . . . At the center of the machinations within the FCC is Mr. Hollings‚ contention that the Communications Act of 1934, which governs all license transfers, bars foreign government ownership.” (“Watchdog to Clear Telekom Takeover of VoiceStream” by Peter Spiegel; Financial Times; 4/5/2001; p. 1.)

8. Another key corporate acquisition of an American corporation by a foreign firm concerns ASM Lithography Holdings purchase of Silicon Valley Group. ASM Lithography has strong connections to the German firms Zeiss and Leica, both of which have sold strategic technology to countries hostile to the United States. (See Miscellaneous Archive Show M-11, FTR-87.)

9. Tinsley Laboratories, which makes vital optical equipment for American spy satellites, is a division of SVG. “The US Department of Defense has indicated it will agree to the sale of Silicon Valley Group (SVG) to a Dutch company, removing a key hurdle from a $1.6bn deal delayed for more than three months because of national security concerns. Senior Pentagon officials, who met SVG executives last week, are understood to have agreed that export controls negotiated with the companies will meet the concerns raised by critics that the deal would put vital technologies in foreign hands. Defense officials have given warning, however, that there may be minor adjustments in the final terms still being negotiated with other government agencies. The sale of the relatively small SVG to Netherlands-based ASM Lithography has generated intense political controversy on Capitol Hill . . . . A U.S. government official said the current agreement required ASM to invest in Tinsley’s operations in the U.S. for a set period, perhaps seven years. It also placed limits on the transfer of Tinsley’s assets and personified aboard for the same period.” (“Pentagon Backs Sale of Silicon Valley Group” by Peter Spiegel; Financial Times; 4/10/2001; p. 1.)

10. The broadcast revisits a point of speculation raised in FTR-272. ASM Lithography’s full name is “ASM Lithography Co. Limited.” The firm is based in the Netherlands, the base of a major branch of the Thyssen industrial family. The Thyssen interests, in turn, are a major element of the Bormann organization.

11. The discussion highlights the Thyssen-Bornemisza branch of the family and their operations in the Netherlands. “Heinrich Thyssen-Bornemisza runs his private Dutch-based investment group from Lugano, Switzerland, and his cousin, count Federico Zichy-Thyssen, grandson of old Fritz Thyssen, exercises control over Thyssen A.G. from his base in Buenos Aires.‰ (Martin Bormann: Nazi in Exile; Paul Manning; Copyright 1981 [HC]; Lyle Stuart Inc.; ISBN 0-8184-0309-8; p. 237.)

12. “Thus, the two principal figures of the Thyssen fortune throughout the years preceding and during the Third Reich were Fritz and Heinrich. Neither liked the other, so they agreed to divide their inheritance into two separate spheres of interest, cooperating only when it was necessary. Fritz’s circle of interest became the German holdings, Thyssen Gewerkschaft A.G., Faminta A.G. Heinrich devoted himself largely to holdings outside of Germany, Bank voor Handel en Scheepvaart, Rotterdamsche Trustees‚ Kantoor, N.V. Handels-en-Transport Maatschappij ‘Vulcan‚ Rotterdam, Press and Walzwerk A.G., August Thyssen Bank. Heinrich Thyssen became Baron Heinrich Thyssen-Bornemisza when he married into Hungarian nobility. In this way he had acquired Hungarian nationality, which gave him dual nationality. He also changed his residence to Switzerland when German pressures became too alarming, and in time acquired Swiss nationality.” (Ibid.; pp. 246-7.)

13. Next, the program highlights the Thyssen-Bornemisza holdings in the United States, as well as the relative secrecy surrounding its operations in the United States. “As Count Zichy represents the largest shareholder group in Thyssen A.G. from his home in Buenos Aires, the young baron directs his interest from his Villa Favorita in Lugano. One such holding in the United States is Indian Head, Inc., with American corporate headquarters at 1200 Avenue of the Americas, New York City. Thyssen Inc. has its U.S. offices farther down this avenue at number 1114, in the W.R. Grace & Co. building. Indian Head is a wide-ranging manufacturing conglomerate, with 42 plants in the United States and 10,400 employees. It enjoys annual net sales of close to $604 million. For an industrial corporation of such size it has a remarkably low profile. It distributes no annual report˜’We are a privately held corporation.‚ Like Thyssen Inc., in the United States, it has no background ownership file with the SEC because it has never had to go public. When Thyssen bought Budd Manufacturing for $275 million, it was in cash, and therefore there was no requirement for corporate disclosures to the Securities and Exchange Commission. Still, good will is cherished, and German industrialists and bankers continue to strive to project a friendly German image in the United States. One noteworthy announcement, made from Washington, D.C., in March 1979 was that 57 priceless Old Master paintings from the collection of Baron Thyssen-Bornemisza would be taken on a tour of the United States in 1979 and 1980. This collection of great masterworks is said to be˜except for the Royal Collection of the queen of England˜the greatest private art collection now in existence. This public traveling exhibit constituted a major achievement as a public relations ploy. Ever cautious, however, no German firm underwrote the tour; Indian head was kept out of the picture. Instead, a major U.S. corporation was chosen to underwrite the masterworks tour. United Technologies of Hartford, Connecticut (152,000 employees, 200 plants, and a worldwide marketing operation in power, flight systems, industrial products and services), agreed to underwrite the cost of the venture as a favor to its German friend in Lugano, Switzerland. The project was initiated from Lugano; the baron, after consulting with his corporate image advisors, agreed to United Technologies rather than Indian Head with its hidden shareholders. The foundation that made all arrangements was another privately endowed, nonprofit organization, International Exhibition foundation. It made the approach to United Technologies and also brought aboard the prestigious Andrew W. Mellon Foundation and the Federal Council on the Arts and Humanities. When the baron came to Washington for the official press preview of the tour, he arrived, trim and bouncy, and fifty-eight years of age, fit, fluent in French, Italian, English, and German. He expressed delight with American cooperation. A speaker at the Washington press ceremonies was Hubert Faure, president and chief executive of United Technologies Otis Group and a director of UT. He spoke warmly of his long-time friendship with Baron Hans Heinrich Thyssen-Bornemisza.” (Ibid.; pp. 262-263.)

14. The program highlights another interesting aspect of the Bormann organization’s influence in the United States, its select use of Jewish businessmen as front men. “It has drawn many of the brightest Jewish businessmen into a participatory role in the development of many of its corporations, and many of these Jews share their prosperity most generously with Israel. If their proposals are sound, they are even provided with a specially dispensed venture capital fund. I spoke with one Jewish businessman in Hartford, Connecticut. He had arrived there quite unknown several years before our conversation, but with Bormann money as his leverage. Today he is more than a millionaire, a quiet leader in the community with a certain share of his profits earmarked, as always, for his venture capital benefactors. This has taken place in many other instances across America and demonstrates how Bormann’s people operate in the contemporary commercial world, in contrast to the fanciful nonsense with which Nazis are described in so much ‘literature.'” (Ibid.; p. 227.)

15. The broadcast concludes with a look at a recent arrangement that would permit Allianz (an insurer), Dresdner Bank, Munich Reinsurance, and HypoVereinsbank to overlap and increase their assets. “The unraveling of the intricate web of cross-shareholdings that has shaped German business for decades looks one step closer as Allianz, the Munich insurer, prepares a $21.4bn bid for Dresdner, the country’s third largest bank. If successful, the deal would allow complex cross-shareholdings between Germany’s largest insurers and banks to be simplified, unwinding relationships created after the Second World War that have tied up capital to the detriment of shareholders. As such, it could be the first of a series of deals to unlock billions of euros that have been lying unused in portfolios for decades. It would also create two giant bancassurance groups in Europe’s largest market, an intimidating prospect for other financial services groups in Europe. Domestically it would provide distribution networks for Germany’s two largest insurers, enabling them to sell pensions and mutual funds to savers. At present, the Allianz family of banks has three members: the Munich insurance group owns 21.4 per cent of Dresdner, 17.4 per cent of HypoVereinsbank, the country’s second largest, and 5.6 per cent of Deutsche Bank, the largest. All three of them also own stakes in Allianz. The proposed deal would draw in another insurer that also has relationships with the three banks: Munich Re, the world’s biggest insurer and another powerhouse in Germany’s Industrial pantheon. It owns 5.9 per cent of Dresdner, 5 per cent of HypoVereinsbank and a smaller stake in Deutsche bank˜each of which has stakes in Munich Re. A four-way swap of the cross-shareholdings between Allianz, Munich Re, Dresdner and HypoVereinsbank would allow Allianz to bid for the remaining shares in Dresdner it does not own. It would also increase the stake held in HypoVereinsbank by Munich Re, cementing their partnership. This would create not one but two bancassurance groups˜each offering a range of financial services.” (“Germany Unwrapped” by Tony Major and John Willman; Financial Times; 3/30/2001; p. 14.) (Recorded on 4/22/2001.)

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