The 10 biggest business stories of 2012
Filed under: News
We take a look at the ten biggest business stories of the year.
1. Shareholder spring
The City was rocked by a series of shareholder revolts - mainly over executive pay and/or corporate strategy - which claimed the scalps of several FTSE 100 bosses including Aviva's Andy Moss and AstraZeneca's David Brennan.
Bizarrely, consultancy KPMG says the shareholder spring was "something of an illusion" and that 2012 saw less shareholder opposition than the previous year. Next year things could heat up again, it believes, with further and "more meaningful" rebellions over pay as a larger number of long-term incentive plans come up for renewal. I thought some of this year's revolts were quite meaningful...
2. EADS-BAE - The merger that never was
The planned €35 billion merger of the UK defence group BAE Systems and Franco-German Airbus owner EADS could have created a serious rival to America's Boeing. But the deal failed in spectacular fashion after running into political deadlock in October - caused by German chancellor Angela Merkel's "nein".
French president François Hollande is meant to have responded: "Oh shit. I have just got this entire agreement through the cabinet." Merkel apparently refused to take David Cameron's calls when he tried to save the deal. It was said that while EADS wanted the deal, BAE needed it. But if you dig deeper, there were fears that the US would block defence contracts to BAE as the Pentagon would not want French and German influence over its military programme.
3. Glencore-Xstrata - A long-running takeover battle
The $33 billion takeover of mining giant Xstrata by commodities trader Glencore has dragged on but was finally approved by both sets of shareholders at the end of November. The only hurdles left to clear are final approval from competition authorities in South Africa and China.
Glencore went public with its offer in February - at the time it was billed as a merger of equals - but was forced to sweeten its terms in September after months of negotiations.
Glencore boss Ivan Glasenberg initially backed his counterpart at Xstrata, Mick Davis, for the top job at the combined group but then changed his mind and decided he wanted it for himself. But Davis needn't feel too sorry for himself as he is leaving with a payout of $13 million.
4. Eurozone still muddling through
The eurozone crisis continued unabated, with further rounds of government austerity meeting with more street protests. However, a spate of suicides among people who were about to be evicted from their homes in Spain led to a change in eviction policy. Unemployment has soared to record levels in countries such as Spain and Greece, while a fifth of all Irish households are also jobless and the unemployment rate in the eurozone as a whole is also at a record high, of 11.7%.
The 17-nation currency bloc remains stuck in recession and even Germany, its economic powerhouse, is no longer immune from the slump. But politicians are desperate to keep the eurozone together. Despite growing expectations of a "Grexit" last spring, Greece is still hanging in there and being kept afloat by international bailout money.
Meanwhile the UK economy has been flatlining over the last couple of years and UK politicians like to blame the eurozone crisis. Its emergence from recession in the summer was celebrated with much fanfare but after the Olympics boost faded, chances are the economy went back into decline between October and December.
5. West Coast Main Line fiasco
The collapse of the £5 billion West Coast Main Line deal will cost the taxpayer dear. In a humiliating climbdown, the government was forced to scrap its decision to award the franchise to FirstGroup in October due to flaws in the bidding process. The mistakes were unearthed after rival bidder, Sir Richard Branson's Virgin Trains which has run the line since 1997, launched a legal challenge against the decision. Virgin had the last laugh and will continue running trains from London to Glasgow until November 2014 when a new long-term franchise is awarded.
6. Banks even more disgraced
In January 2011 Barclays boss Bob Diamond - who was once described by Lord Mandelson as the "unacceptable face of banking" - famously said the time of remorse and apology for banks was over. A year and a half later he was forced to eat his own words when the Libor scandal erupted, claiming his scalp and that of several other executives. Barclays was fined £290 million for rigging crucial interest rates that affect the cost of borrowing around the world, known as Libor, but other banks are also likely to face penalties.
It got worse for UK banks. PPI (payment protection insurance) has turned into the worst financial mis-selling scandal ever, overtaking the private pensions scandal of the 1980s and 90s. And even Standard Chartered, the emerging markets bank that prides itself on its squeaky clean image, got done in the US for breaching sanctions against Iran and anti-money-laundering rules.
7. Canadian to head Bank of England in surprise move
Everyone was expecting Paul Tucker to get the top job at the Bank of England. In the end he didn't - perhaps partly because he was tainted by the Libor scandal - and the job went to an outsider instead. The Canadian former ice hockey player Mark Carney had the best CV of all the candidates but had also persistently denied that he would be the next BOE governor. Clearly Britain's chancellor George Osborne had a lot of wooing to do.
8. Tax avoidance
Starbucks, Google and Amazon have been castigated for paying little or no UK corporation tax on profits made in the UK while British businesses pay full whack. The row over multinationals dodging tax in the UK is still going but at least Starbucks has agreed to pay more tax - after a flurry of media interest, protests from UK Uncut and the government's pledge to clamp down on corporate tax dodgers.
9. Gas price fixing and other whistleblower revelations
A number of unusual trades triggered investigations by the Financial Services Authority and energy watchdog Ofgem into gas price fixing. A whistleblower, Seth Freedman who worked for a price-setting firm, went public in the Guardian with concerns about what he feared were attempts to manipulate Britain's £300 billion wholesale gas market. It then emerged that Citigroup, which is already being investigated over the Libor scandal, was also behind some of the unusual gas trades.
A whistleblower is also at the centre of allegations of bribery and corruption at Rolls-Royce. Dick Taylor worked at the jet engine maker for over three decades but said he was was left feeling "depressed" and "cheated" and forced to take early retirement after raising the alarm over alleged bribery in Indonesia.
Drugmaker GlaxoSmithKline was fined a record $3 billion for mis-selling drugs in the US over the summer - once again the problems came to light thanks to whistleblowers inside the company.
10. BP banned from US government contracts
The 2010 Gulf of Mexico oil disaster continues to haunt the British energy giant. It has now been banned from new contracts with the US government. The Environmental Protection Agency cited its "lack of business integrity" in the offshore oil spill - the worst in US history. This could be a real blow to BP - its US operations accounted for about a third of pretax profits in the third quarter and the company is the top fuel supplier to the US military.
BP and its affiliates are barred from new federal contracts until they demonstrate they can meet federal business standards, while existing contracts are not affected. The move puts even more pressure on BP to settle federal and state lawsuits that could top $20 billion, but the company is hopeful that the temporary suspension will be lifted soon.