Spending within their means?
Every day, or so it seems, we hear about the new and larger container ships being ordered by the leading carriers to be built not in shipyards within their own countries but by shipyards in foreign countries. How strange. One would think that those ships, if built by shipyards in the carrier’s own country, would benefit that nation’s economy by creating employment opportunities and the consequent and eagerly sought “multiplier effect.” That isn’t the way the game is being played though, is it? In our Vol. XXXVII, Art. 34 commentary we asked why the CEOs of those major carriers insist upon throwing good money after bad. And that’s just what they’re doing. Here’s an article from last week’s Shipping News that reveals the extent of the losses suffered by Maersk Line’s parent AP Moller- Maersk. Note how clever it has been presented by Maersk spokesmen.
“Maersk Line parent AP Moller-Maersk has changed its ownership structure so it can use dividends to expand shipping rather than having them donated to benefit the Nordic public. By moving the 41.51 percent shareholding and its 51.09 percent of all AP Moller-Maersk voting rights into AP Moller Holding, it will be able to keep funds for shipping, said the report.
“The foundation that controls the shipping giant is to transfer its stake in the business to a new holding company to boost the group’s financial flexibility, said the report. AP Moller Foundation is controlled by the Maersk family, but is obliged to use all dividends – US $ 972 million in 2012 – it receives from the shipping group for donations.
“‘With the establishment of the holding company the AP Moller Foundation wants to secure and strengthen its active ownership and provide financial flexibility and a financial buffer for the whole group,’ said foundation chairman Ane Maersk McKinney Uggla.” –
Shareholdings are shifted to a new holding company when “shifty” ones want to get their hands on available funds. But in this case, those funds are being taken from the “Nordic public” which the company later described as “science and good causes.” Not a very admirable stratagem. Maersk, like the other major carriers, is not showing the profits that were forecast a few years ago, but instead of acting responsibly and reducing expenditures, the company even increased their orders for costly leviathans from foreign yards. It’s clear that their recent transfer of funds away from Nordic causes in order “to expand shipping” only emphasizes the obvious.
Yes, they’re losing money, and yes, they’re continuing to spend outside their own country.
In our Vol. XXXVII, Art. 34 we stated, “If an unscrupulous individual could spend money where it could not be audited, isn’t it quite possible that such an individual would choose to spend that money somewhere overseas, where auditing (accountability) would be impossible? (Think Offshore Tax Havens – Kickbacks – Money laundering.) …
“Think Madoff, think Enron, think Wall Street banksters – think anything you like – but don’t for a minute think that moguls are stupid or crazy. They’re unaccountable – and irresponsible.”