Tax Row Puts Opel Bailout Further In Doubt
German newspaper Die Welt had reported on Saturday that GM and Opel seems to be preparing for insolvency at Opel, having hired three law firms with renowned insolvency experts. GM denies the report, writes Reuters. “This scenario is currently not on the agenda,” a GM Europe spokesman told Reuters on Sunday. Note the careful usage of “currently” and “agenda.”
Die Welt says GM Europe would be advised by Baker & McKenzie as well as Clifford Chance, while the management of Adam Opel GmbH had hired Heidelberg-based firm Wellensiek. GM doesn’t deny that they have hired counsel: A GM Europe spokesman said the company had hired the firms to assess the effect of potential restructuring measures. Meanwhile, there is growing outrage in Germany about the fact that Opel never paid tax in Germany because it transferred profits to its U.S. parent.
This according to unnamed members of the German cabinet. “It cannot be that the German taxpayer has to save a company that transfers its profits to the United States,” Michael Fuchs of the Christian Democrats (CDU) told Bild am Sonntag. According to a report by Die Welt, it’s even worse: Opel paid €19.5m in taxes, but received a tax refund in the amount of €48.5m
A GM Europe spokesman did not comment on the reports but said the company had invested several billion Euros since 2002 in the expansion of Opel’s four German sites, a great deal of which went into the Ruesselsheim plant, near Frankfurt, where Opel has its headquarters.
The tax imbroglio doesn’t help Opel’s chances to get government money. The German cabinet is clear on one aspect: The submitted business plan is not enough. Government spokesman Thomas Steg said: “It is totally clear that what Opel has put on our table is totally inadequate as a basis for a decision. A decision will take weeks, until end of March at least.” Pushing Opel further down the road to insolvency.
Here some tidbits from Berlin (courtesy Reuters:)
Finance Minister Peer Steinbrueck told students in Bonn on Monday he would be “very reserved” with regard to state aid for Opel, and that Opel management had not yet provided the government with an adequate concept for the carmaker’s future.
Chancellor Angela Merkel has left open the possibility of granting Opel state aid, but last week she told fellow Christian Democrats that the carmaker is not systemically crucial to the German economy, a party official told Reuters.
Interior Minister Wolfgang Schaeuble said in a newspaper interview on Friday that insolvency could be an option for Opel though it need not mean the carmaker going bust.
Foreign Minister Frank-Walter Steinmeier, who will lead the SPD’s challenge against Merkel in the election, has branded Schaeuble “irresponsible” for bringing up potential insolvency.
An Economy Ministry spokesman said the government was not preparing a change to German insolvency law to help Opel.
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