This week’s news includes; Volkswagen settles with US authorities emission scandals,  Snapchat sets up international office in London, King & Wood Mallesons goes into administration, Peta buys stake in Louis Vuitton.


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Opinion articles of the week:

  • Business Insider argues that the pound is actually going to have a great 2017.

  • Bank of England Chair Mark Carney claims the immediate risks of Brexit have declined. (BBC News)

  • City A.M claims that it’s time Britain stopped dancing to the tech giants’ tune.

  • Business Insider claims that Britain could become a corporate tax haven.




Volkswagen has confirmed it has negotiated a $4.3bn (£3.5bn) draft settlement with US regulators to resolve its diesel emissions scandal. The German car giant said in addition to the fine it will plead guilty to criminal misconduct as part of the civil and criminal settlement.

It will face oversight from an independent monitor over the next three years and also enact measures to strengthen compliance.

Including the fine agreed with the US government, VW’s costs will top the nearly €18.2bn (£15.7bn) it has set aside to handle the affair. The company has said the deal still needs to be approved by elements of the company as well as US courts and authorities, though an outcome is expected “in the very short term”, possibly on Wednesday or soon after.

In 2015 it was discovered that Volkswagen-manufactured cars with certain diesel engines had been fitted with a so-called defeat device, which cheated emissions tests in laboratory settings. (City A.M)

Executives charged with fraud

Six former Volkswagen executives are being charged over their alleged roles in the 2015 emissions scandal, as the company admits liability and is ordered to pay a record $4.3bn (£3.5bn) penalty, US officials have said.

The men are accused of running a near decade-long conspiracy during their time at the firm and are being charged with conspiracy to defraud the United States, violations of the Clean Air Act, and wire fraud, the US attorney general Loretta Lynch said on Wednesday.

“These individuals all held positions of significant responsibility at VW, including overseeing the company’s engine development division and serving on the company’s management board,” she said, adding that they had “seriously abused those positions”.

Separately, Lynch said Volkswagen had pleaded guilty to conspiracy to defraud the US, to commit wire fraud and to violate the American pollution laws. It also admitted obstruction of justice and “importation of goods by false statements”. (The Guardian)


Evidence is emerging that the sharp drop in the pound is boosting UK exports, economists say. In November, the volume of goods exported rose at a three-month rate of 1.1%, up from the previous report which showed a 2.7% decline, according to the Office for National Statistics (ONS).

Economists say that could be a sign that the fall in value of the pound since June is boosting exports. It could also be behind a rebound in manufacturing output in November.

“Signs are appearing… that the weaker pound is benefitting the economy, especially in terms of rising goods exports,” said Chris Williamson chief business economist at IHS Markit.

“Stronger exports do at least seem to be helping drive manufacturing output higher,” he added in a research note.

Despite those upbeat figures on exports, overall the UK’s trade position deteriorated in November. The deficit on trade in goods and services was estimated at £4.2bn in November, up from £2.6bn in October. The widening gap reflects a £3.3bn surge in imports.

In particular the ONS noted a rise in imports of laptops and tablets from China. It also highlighted a rise in transport goods, which includes ships and railway equipment, from countries outside the European Union. (BBC News)


Snap, the company behind messaging app Snapchat, says it has established its non-US office in London. It will pay taxes on UK and some international sales through the hub.

The move is unusual for a US technology company, many of which set up international headquarters in Ireland or other European countries due to tax breaks. However, the European Commission has been cracking down on some of the tech companies’ tax deals. In addition, the OECD has has been pushing for G20 measures on corporate tax avoidance.

Claire Valoti, general manager of Snap Group in the UK, said: “We believe in the UK creative industries. The UK is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we’ve already begun to hire talent.”

The messaging app parent company already had a UK office in London, but as of Tuesday, the office will operate as its international hub.

Revenue from sales made to UK customers will be booked in the UK. Sales staff in the UK will also handle clients in countries outside the US which do not have a Snap sales force, and those revenues will also be recorded in the UK. (BBC News)


King & Wood Mallesons (KWM) are set to go into administration. Insolvency practitioners have claimed that KWM was more financially mismanaged than British Home Stores (BHS). The firm announced that the firm would not be able to pay any salaries to any of staff and even administrators are fearful whether they would be paid.

The firm has also announced that all training contracts were to be cancelled by the 13th of January. Fortunately, a number of firms have lined up to rescue KWM’s trainees including Ashurst, Linklaters, Allen & Overy and DLA Piper.

For information on KWM’s administration as it happens, check out The Lawyer’s news page on the firm.



Sainsbury’s has reported record Christmas sales of more than £1bn across the group. The supermarket giant said like-for-like sales rose 0.1% in the 15 weeks to 7 January. This beat analyst expectations of a 0.8% fall in sales. Shares in the chain jumped more than 6% in morning trading.

But chief executive Mike Coupe said the “market remains very competitive and the impact of the devaluation of sterling remains uncertain”. The pound has been falling against the dollar and the euro since the EU referendum and there have been warnings that this will lead to higher prices this year as import costs rise.

Meanwhile discount rival Lidl reported a 10% increase in sales over the Christmas period. As with Aldi it does not give like-for-like sales, which strip out the effect of new store openings and are therefore a better comparison. The company said it was “incredibly encouraging” that it achieved “its most successful festive trading period ever” in such a competitive market. (BBC News)


Lobsters have helped budget supermarket group Lidl score record sales over the crucial Christmas period.  The strong result might come as a surprise to some, as December tends to be the month when discounters lose out to their higher end rivals as shoppers treat themselves and their families.

The German discounter revealed that sales grew by 10 per cent in December, its best festive sales performance ever, boosted by strong sales of vegetables typically eaten at Christmas, turkey and cheap lobster.

Helped by a Twitter campaign promoting a cut-price lobster at £2.99, the supermarket was able to record 40,000 sales in one day. Turkey sales rose by 40 per cent following an advertising campaign

However, the retailer which now has 650 shops in the UK, did not disclose like-for-like sales for the period, a more widely used industry measure of performance. (The Independent)


The number of new cars sold in the UK hit an all-time high in 2016. The Society of Motor Manufacturers and Traders (SMMT), said 2.69 million cars were registered last year, 2% higher than in 2015. The industry body said 2016’s growth was due to “very strong” consumer confidence, low-interest finance deals and the launch of several new models.

However, the SMMT says this year is unlikely to set another record, with sales expected to fall by 5-6%. SMMT chief executive Mike Hawes said such a fall would not represent “a collapse in the market” and sales would still be at “historically an incredibly high level”.

He said that five consecutive years of increased sales had been fuelled by pent-up demand that developed during the recession of the late 2000s.

The record level of registrations in 2016 doesn’t tell the whole story. Overall it was fleet buyers that propelled the market to new highs. Sales to consumers suggest a very different story.

After a strong start, private car sales fell throughout most of the year. December’s 5.5% fall year on year was the ninth monthly decline in a row. With claims that the new car market is saturated, higher prices coming on forecourts and economic uncertainty ahead, the industry’s forecast of a 5% fall in the market this year could prove optimistic. (BBC News)


The government is no longer the largest investor in Lloyds Bank, after it reduced its stake to below six per cent for the first time since it was bailed out in the financial crisis.

The stake now comprises 5.95 per cent of the FTSE 100 bank. The sale means that over £18bn of taxpayer money has now been returned – after the £20.3bn part-nationalisation.

US investment manager BlackRock is now the largest investor. It owns a stake in the bank bigger than five per cent, according to an earlier regulatory filing. The proceeds of the sale will go towards paying off the national debt, which ballooned as government stepped in during the financial crisis. Lloyds was bailed out in October 2008 as the government pumped money into the British banking sector to avoid its collapse.

The government has since steadily reduced its holdings from October, when the Treasury owned 6.5bn shares, or 9.1 per cent of the bank – down from a 43 per cent peak – according to UK Financial Investments, the government body tasked with managing government stakes in Lloyds and RBS.

Lloyds shares were quoted at 65.9p before the London open on Monday, before falling to 65.3p in early trading. This is below the 73.6p level which was previously considered to be the break-even point for the government. However, a mixture of fees and dividends have made the disposal more attractive for the government.

The government previously reduced its stake with two offerings to institutional investors in 2013 and 2014, bringing the stake to 24.9 per cent. The government has recently upped the pace of its sales, with Philip Hammond one of the driving forces after he assumed office as chancellor in July. Last month the government announced its stake had fallen below seven per cent. (City A.M)


Montreal-based apparel maker Gildan Activewear Inc. has won an auction to buy the assets of American Apparel, which went into a court-supervised liquidation process earlier this year. The transaction is subject to approval by a U.S. bankruptcy court on Thursday. If that goes through as expected, the deal will be finalized next month.

For $88 million US, Gildan is buying all intellectual property rights related to the American Apparel brand name, along with some manufacturing equipment at the clothes maker’s factories. No retail stores are included in the deal, and all current American Apparel stores are expected to close.

Gildan will, however, purchase inventory from American Apparel in a separate transaction “to ensure a seamless supply of goods to the printwear channel while the company integrates the brand within its printwear business,” the company said in a release.

While once a ubiquitous brand name for young people due to its risqué advertisements and commitment to use non-sweatshop labour, American Apparel collapsed under its own massive debts earlier this year and has tried to restructure more than once.

American Apparel — now based in Los Angeles but originally founded in Montreal in 1989 — has filed for bankruptcy twice, in 2015 and again last year. (CBC)


Animal rights pressure group Peta has bought shares in Louis Vuitton Moet Hennessey (LVMH) in order to pressure it to stop selling bags and other products made from exotic animal skins.

The stake in the French luxury group will give Peta the right to attend shareholder meetings and question the board in front of other shareholders. Peta has not said how many shares it has bought.

Such a move is common among pressure groups. The move by Peta – People for the Ethical Treatment of Animals – follows its investigation into the way that crocodile skin, which is often used for luxury goods, is harvested.

Peta said: “In the wake of an exposé revealing that reptiles on crocodile farms in Vietnam – including two that have supplied skins to a tannery owned by Louis Vuitton’s parent company, LVMH – are confined to tiny pits and sometimes hacked into while they’re still alive and thrashing, Peta has become a shareholder of LVMH on the Euronext Paris to put pressure on the company to stop selling exotic skins merchandise.”

Commenting when Peta’s video was released last month, LVMH’s director of environment, Sylvie Bernard, said that its tannery, Heng Long, had not bought crocodile skins from any Vietnamese farms since 2014.

LVMH is the world’s biggest luxury group. Its brands include Louis Vuitton handbags, several Champagne brands, Hennessy cognac and fashion labels Fendi and Marc Jacobs. The company also sells perfumes, cosmetics, watches and jewellery. (BBC News)


In the ride-sharing battle of David vs Goliath, smaller, nimbler David may be gaining ground. Number two U.S. ride-hailing company, Lyft, is growing faster and cutting losses faster than its giant competitor, Uber. And this year, the startup will give details on how it plans to take the battle overseas.

Lyft is planning to expand internationally and will reveal more in the year ahead. Lyft declined comment on its international plans. Currently, Lyft competes with Uber’s global ambitions through partnerships with local ride-hailing services in other countries. In December 2015, the American startup joined forces with Didi Chuxing in China, Ola in India and Grab in Southeast Asia. They’ve since been called the “anti-Uber alliance.”

Lyft announced that it is changing the nature of those partnerships.  Currently, Didi users in the United States are able to book a Lyft car directly through their Didi app without having to download the Lyft app.

But Lyft told CNBC, “Along with our international partners, we are updating how we serve our users traveling abroad. We will now direct them to download the partner’s app in the country they are visiting.”

That means Didi or Ola users who open their apps in the United States will receive a message prompting them to download Lyft, and vice versa for Lyft users that open their apps in China or Southeast Asia. The update will take place next week.

It’s unclear how users will respond to the change, which essentially asks them to give up valuable screen real estate and storage on their smartphones. The official line from a Lyft spokesperson is that “this will provide travelers with improved functionality and service in local markets.”

But it may also foreshadow Lyft’s own global ambitions. After the update, Chinese users who have visited the U.S. may bring a Lyft app back home with them to China. Or India. Or Southeast Asia. Kind of like a reverse takeover orchestrated by the U.S. leader of the “anti-Uber alliance.” (CNBC)