AFP

Germany on Wednesday blocked the sale of two chipmakers to Chinese investors because of a potential threat to security.

“We must look very closely at company takeovers when it relates to important infrastructure or when there is a danger that the technology would flow to buyers from non-EU countries,” said Economy Minister Robert Habeck.

Chinese company Sai MicroElectronics had been seeking to buy the Dortmund factory of Elmos through its Swedish subsidiary Silex. 

The German government had rejected the planned takeover because “the purchase could endanger the order and security of Germany,” said the economy ministry.

Other ways of reducing the risks, including allowing the acquisition under certain conditions, were “unable to eliminate the identified dangers”, it added.

A second acquisition had been turned down, Habeck said, without naming the companies involved because of “trade secrets”.

But Germany’s minister for research Bettina Stark-Watzinger named the company as Bavaria-based ERS Electronic, which supplies a cooling technology to wafer manufacturers.

Fears have been growing in Europe’s economic powerhouse about an over-reliance on Beijing, and letting critical infrastructure fall into the hands of Chinese state-linked companies.

Russia’s invasion of Ukraine and its subsequent dwindling of crucial gas supplies to Europe has further accentuated the concerns.

In particular, the microchip industry has come under scrutiny, as it produces key components used across industry from consumer electronics to battery-powered vehicles.

Earlier this year, the European Union unveiled a multibillion euro “Chips Act” aimed at doubling Europe’s market share in semiconductors and reducing dependence on supplies from Asia. 

– ‘Not naive’ –

Elmos, which primarily builds components for the automobile industry, said late last year it intended to sell the production facility at its headquarters.

Silex was seeking to buy the site for 85 million euros ($85.4 million).

But business weekly Wirtschaftswoche said Elmos had been the recipient of 5.9 million euros from the German state for two research projects. It had also received 8.1 million euros from an EU project on autonomous driving.

Habeck said that Germany remained open to investors, but that “we are also not naive”. 

Beijing has been trying to glean knowledge about production and development, underlined the minister, saying that the “statements from China are very clear”.

Habeck, of the ecologist Greens party, has recently locked horns with Chancellor Olaf Scholz over investments from China.

He deeply opposed a plan by Chinese shipping firm Cosco to buy a stake in a Hamburg port terminal, forcing Scholz to pull rank to force through the deal by allowing the purchase of a reduced stake.

Scholz has repeatedly underlined the importance of strong trade ties with Beijing, something that German industry leaders have also stressed.

China is a major market for German goods, particularly for auto giants Volkswagen, BMW and Mercedes-Benz, and many jobs in Europe’s top economy depend directly on the relationship.

On a controversial visit to Beijing last week, Scholz, accompanied by a delegation of German business bosses, told Chinese leaders that Berlin expected equal treatment on trade.

But Scholz’s trip has sparked controversy for coming so soon after Xi Jinping strengthened his hold on power in China last month.

With tensions between the West and Beijing running high on issues ranging from Taiwan to alleged human rights abuses, there had been concerns that the high-profile trip may have unsettled both the United States and the European Union.

European workers squeezed by the soaring cost of living went on strike in Belgium and Greece on Wednesday, with stoppages threatening to paralyse parts of Britain, France and Spain in coming days.

Spreading industrial unrest poses a problem for governments which are already spending billions trying to blunt the worst effects of rising prices, at least for the most vulnerable.

Europe is acutely affected by the fall-out of the war in Ukraine, which is exacerbating a global energy crisis, inflation and a scarcity of some food products.

The onset of winter, when energy bills spike, and repeated predictions of a looming, continent-wide recession are souring the labour mood even further.

Belgium and Greece saw general strikes on Wednesday, disrupting transport in their respective capitals, impacting businesses.

In Brussels, home to the European Commission and other EU institutions, workers were protesting inflation running higher than 12 percent — well above the 10.7 percent average across the eurozone.

The country’s biggest union, the FGTB, is demanding greater leeway to negotiate pay rises. 

But the Belgian government counters that Belgian salaries are already indexed to inflation — an arrangement not seen in most other countries.

The strike cut train services by 75 percent and closed the airport in the southern city of Charleroi, the main hub in the country for Europe’s leading airline Ryanair.

– Strikes in Britain and France –

In Greece, ferries serving its many islands were among the transport lines halted by a general strike, the second to hit the country since September.

Greek unions are insisting on salary rises to cope with inflation which nationally has risen to 12 percent.

“The cost of living is untenable,” read a large poster for the country’s biggest union, the GSEE, calling for “social protection for all”.

Stoppages were to be felt on Thursday in Britain and France, with the underground urban rail networks and busses in London and Paris to be severely affected.

A French union leader, Celine Verzeletti of the CGT confederation, predicted up to 200 “demonstration points”, roughly the same as the last national strike in France, on October 18, when more than 100,000 people protested.

France is not as badly affected by inflation as its European peers, as the state holds stakes in the main energy companies and has minimised how far energy bills can rise.

Inflation in France is just over six percent — better than elsewhere — but with economic activity across the eurozone nosediving, hatches are being battened for what looks like a period of stagflation.

In Britain, where inflation is above 10 percent, worker protests over not being able to make ends meet are coming to a crescendo.

The Bank of England predicts the country is headed for a two-year recession, even though it was forced to hike interest rates, making it even tougher for UK households.

– EU energy moves –

On top of Thursday’s stoppage in London’s Underground, British nurses are to hold the first strike in the 106-year history of their RCN union at a date yet to be announced.

Late next week, hundreds of workers at Heathrow airport are to down tools for three days, between November 18 and 21, to demand better pay.

Their action could force the cancellation of flights to Qatar, which is to host the World Cup football tournament that kicks off on November 20.

British dockers, university staff, postal employees and the legal profession have all held, or threaten to continue strikes over pay eaten away by inflation.

In Spain, truck drivers have called an indefinite strike from next Monday. Their last stoppage, in March, led to empty supermarket shelves.

With labour protests mounting, the EU is looking at ways to take some of the sting out of energy prices.

The European Commission and member states are working on proposals to promote the joint purchase of gas and possibly impose a mechanism to cap the price of wholesale gas within the EU.

Details are not expected to be finalised until late this month, but the steps — and unseasonably warm weather last month — contributed to a fall in gas prices, though they are expected to rise again as winter bites.

The head of the European Central Bank, Christine Lagarde, said last week a “mild” eurozone recession looked likely — but warned it would not be enough to bring down record-high inflation.

Wirecard’s former CEO Markus Braun will go on trial from December 8 to answer fraud charges in Germany’s biggest-ever accounting scandal, a Munich court said Wednesday.

Austrian-born Braun, 53, stands accused of “commercial gang fraud”, embezzlement and market manipulation for his role in Wirecard’s spectacular collapse two years ago.

The higher regional court in Munich said it had scheduled 100 court dates for the mammoth trial.

Once the standard-bearer for the German tech industry, payments firm Wirecard was plunged into chaos in 2020 after admitting that 1.9 billion euros ($1.9 billion) missing from its balance sheets likely didn’t exist.

The scandal was “unparallelled” in Germany’s post-war history, according to then finance minister Olaf Scholz, who is now chancellor.

Braun, who has been in custody for over two years, denies the allegations.

Two other Wirecard managers, accounting boss Stephan von Erffa and Oliver Bellenhaus, the former head of Wirecard’s Dubai subsidiary, were also charged with fraud last March.

The trio had worked “in an industrial fashion” to commit the fraud, German prosecutors said at the time. The accused face “several years” in prison if found guilty, they added.

Wirecard’s chief operating officer Jan Marsalek, who has been on the run since the firm’s collapse, is still wanted by German prosecutors.

He was reported earlier this year to be hiding out in Moscow.

– Germany’s Enron –

The time it took for German prosecutors to file formal charges against Braun underlined the complex web of fraudulent transactions implicating Wirecard subsidiaries and third-party companies that took investigators across the world to unravel.

Among victims of the fraud were banks that had provided credit of 1.7 billion euros to Wirecard. Bonds worth 1.4 billion euros had also been issued and are unlikely to be repaid.

“All the accused group members were acting in an industrial fashion… that is how they secured their own salaries, including partially profit-related portions,” prosecutors said.

Braun for instance, received at least 5.5 million euros in dividends, they said.

The Wirecard drama has drawn comparisons with the Enron accounting scandal in the US in the early 2000s.

Founded in 1999, the Bavarian start-up Wirecard rose from being a company piping cash to pornography and gambling sites to a respectable electronic payments provider that edged traditional lender Commerzbank out of the prestigious DAX index.

It boasted a market valuation of more than 23 billion euros at one point — outweighing even giant Deutsche Bank.

Wirecard’s troubles began in 2019 with a series of articles in the Financial Times alleging accounting irregularities in its Asian division, headed by Marsalek.

But the company was able, at that time, to fend off the claims and the FT’s journalists themselves came under investigation over the reports. 

The huge scam unravelled in June 2020 when auditors EY said they were unable to find 1.9 billion euros of cash in the company’s accounts.

The sum, which made up a quarter of the balance sheet, was supposedly held to cover risks in trading carried out by third parties on Wirecard’s behalf and was meant to be sitting in trustee accounts at two Filippino banks.

But the Philippines’ central bank has said the cash never entered its monetary system and both Asian banks, BDO and BPI, denied having a relationship with Wirecard.

Wirecard filed for insolvency soon after and was booted off Germany’s blue-chip DAX index after its share price plummeted by 98 percent. 

It became the first DAX company to fail, and the company’s collapse was a major embarrassment to Germany and its financial services industry.

The country’s finance watchdog Bafin was overhauled in the wake of the scandal, after coming under scrutiny for missing early warning signs of wrongdoing at Wirecard.

Facebook owner Meta will lay off more than 11,000 of its staff in “the most difficult changes we’ve made in Meta’s history”, boss Mark Zuckerberg said on Wednesday.

He said the cuts represented 13 percent of the social media titan’s workforce and would affect its research lab focusing on the metaverse as well as its apps, which include Facebook, Instagram and Whatsapp.

The tech industry is in a serious slump and several major firms have announced mass layoffs — Twitter’s new owner Elon Musk fired half its staff last week.

“I want to take accountability for these decisions and for how we got here,” Zuckerberg said in a note to staff.

“I know this is tough for everyone, and I’m especially sorry to those impacted.”

Ad-supported platforms such as Facebook and Google are suffering with advertisers looking to cut costs as they struggle with inflation and rising interest rates.

Zuckerberg told staff he had expected the boost in e-commerce and online activity during the Covid pandemic to continue, but added: “I got this wrong, and I take responsibility for that.”

– Metaverse woes –

The downturn has affected companies across the sector, with Apple and Amazon also recently announcing results that disappointed investors.

But Meta also faces some unique problems of its own.

Investors have been worried about Zuckerberg’s decision to devote billions of dollars to developing the metaverse, an immersive version of the web accessed via virtual reality headsets.

Zuckerberg renamed the company to Meta a year ago to reflect the commitment to the project, but the division working on metaverse technology has since made losses of more than $3.5 billion.

He has hinted several times this year that belt-tightening measures were just around the corner and said in his letter on Wednesday that staff layoffs were a “last resort”.

Meta would also keep a hiring freeze going into next year, he said, and other spending cuts were envisaged.

“Fundamentally, we’re making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently,” he wrote.

Last month, Meta announced profits of $4.4 billion in the third quarter, a 52 percent decrease year-on-year, causing its stock price to fall 25 percent.

The slump in profits comes despite its platforms dominating the world in terms of users — Facebook alone claims to have around two billion people who log on daily.