EU Tax Breaks Probe, Payday Loans, Corruption: Compliance

Tax breaks for Apple Inc., Starbucks Corp. and Fiat Finance & Trade SA in three European Union countries are under investigation by EU competition regulators in a clampdown on special treatment for companies.

The EU is checking whether the tax deals in Ireland, the Netherlands and Luxembourg are illegal state aid, according to an e-mailed statement yesterday. Governments can be ordered by the European Commission to claw back unfair aid.

The EU began gathering information about accords between Apple and Ireland, Starbucks and the Netherlands and Fiat Finance in Luxembourg last year.

“Apple pays every euro of every tax that we owe,” the company said in an e-mailed statement. “We have received no selective treatment from Irish officials.”

The Luxembourg Finance Ministry didn’t immediately respond to e-mails seeking comment. Fiat declined to comment. Ireland’s Finance Ministry said it’s “confident that there is no state-aid-rule breach” and will “defend all aspects vigorously.”

The EU probe targets “a very technical tax issue in a specific case” and covers 2004 to 2014, it said in an e-mailed statement.

The Dutch Finance Ministry said it will cooperate with the EU and is confident that the probe will show that no state aid was granted.

Starbucks complies with “all relevant tax rules” as well as laws and international guidelines set by the Organization for Economic Cooperation and Development, Simon Redfern, a spokesman for the company, said by e-mail.

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Compliance Policy

Payday Loans Cost Too Much Due to Lack of Competition, CMA Says

Payday loan customers in the U.K. may be paying too much because of a lack of competition, the U.K. Competition and Markets Authority said yesterday in a statement.

The CMA in April said it will look at ways to increase competition, including setting up an independent price comparison website and providing clearer upfront disclosure of borrowing costs if a loan isn’t paid back in full and on time.

The CMA report estimates suggest that total savings for U.K. customers from greater competition may top 45 million pounds ($76 million) a year.

Japan Money Managers Say Yes to Greater Activism With Firms

Japan’s biggest institutional investors signed up to a new code to prod companies to make better use of shareholders’ capital in a nation where return on equity is half the global average.

The Financial Services Agency said on its website June 10 that 127 asset managers agreed to adopt Japan’s new stewardship code. The regulator, which designed the principles, had expected at least 100 signatories. Among those agreeing to the voluntary code were the world’s largest pension fund, the nation’s three biggest trust banks, and the asset management arms of the country’s three so-called megabanks, the FSA said.

Participating institutions agree to comply with seven principles or explain why they didn’t. They’re expected to monitor companies and push them to improve their management, publish guidelines for how they do so, and disclose how they exercise their voting rights. Enlisting investors as corporate shepherds is one of several strategies by Prime Minister Shinzo Abe to enhance governance and returns.


OECD Says Russia, China Joining Anti-Corruption Efforts

Gabriela Ramos, chief of staff at the Organization for Economic Cooperation and Development, discussed efforts to stamp out corruption in nations including Russia, China and Mexico.

“We can make progress when we talk about corruption if we develop strong frameworks” for issues such as procurement systems, bribery and beneficial ownership, Ramos said.

She talked from Rome with Guy Johnson on Bloomberg Television’s “The Pulse.”

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Comings and Goings

Banks Hire From Markets Watchdog for Top U.K. Compliance Posts

Morgan Stanley and Banco Santander SA are hiring executives from the U.K. markets regulator for their London operations.

Matthew Nunan, the Financial Conduct Authority’s head of wholesale enforcement, will leave in August to take a senior compliance role in the New York-based bank’s London office, two people with knowledge of the move said, asking not to be identified because the decision wasn’t public. Sharon Campbell, who stepped down as FCA head of financial crime and intelligence in May, will join Santander’s British unit as director of financial crime next month, according to the bank.

Hiring Campbell “demonstrates our commitment to the proactive management of this very important issue,” Andy Smith, a spokesman for the Spanish lender, said. Tom Walton, a London spokesman for Morgan Stanley, and Nunan declined to comment on his move.

Lara Joseph, an FCA spokeswoman, declined to comment on the departures.

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