Samsung faces deceptive advertising charges in France after activists target corporate pledge

Activist groups accuse Samsung factories of using underage labor. (Reuters)
Updated 03 July 2019
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Samsung faces deceptive advertising charges in France after activists target corporate pledge

  • Samsung Electronics is the world’s largest maker of smartphones

PARIS: The French subsidiary of Samsung Electronics is facing charges of deceptive marketing over its corporate ethics pledges after local activists complained that the smartphone giant’s practices in its factories, including the use of underage labor, violated human rights, two NGOs said Wednesday.

The preliminary charges were lodged in April against the South Korean firm by a Paris investigating magistrate following a complaint by two French activist groups: Sherpa and ActionAid France — Peuples Solidaires.

The complaint directly to the investigating magistrate circumvents prosecutors, who declined to pursue similar complaints by activists.

“This is the first time in France that it was recognized that corporate ethics pledges may be considered marketing practices that are binding on a firm,” the activist groups said.

In their complaint filed in June 2018, a copy of which was viewed by AFP, the groups accused Samsung of not respecting the ethics pledges it makes on its website.

Samsung declares on its website that in addition to complying with local laws and regulations it is also committed to applying a strict global code of conduct and practicing ethical management.

“We respect the basic human rights of all people. Forced labor, wage exploitation and child slavery are not allowed under any circumstances,” Samsung said on its website.

The activists argued that as the corporate ethics pledge was available to French consumers, the nation’s justice system was competent to handle the criminal complaint.

Based on reports by non-governmental organizations that visited Samsung factories in China, South Korea and Vietnam, the activist groups alleged that the firm was employing children under the age of 16.

They also alleged that the firm practiced abusive working hours, that housing and labor conditions failed to meet basic conditions of human dignity, and put workers in danger.

Samsung was not immediately available to comment.


Spanish costs and weak UK push Santander profit 18% lower

Updated 23 July 2019
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Spanish costs and weak UK push Santander profit 18% lower

  • Profits in Britain tumble amid pressure on mortgage margins

MADRID: Spanish lender Santander reported an 18% fall in quarterly net profit hurt by one-off restructuring costs from its acquisition of Banco Popular and a weak performance in Britain despite a solid performance in Latin America.
It reported a net profit of 1.39 billion euros ($1.56 billion) for the three months to the end of June, topping the 1.29 billion euros expected by analysts in a Reuters poll.
The euro zone's largest bank by market capitalisation, which took over Banco Popular two years ago, recently agreed with unions on the closure of around 1,150 branches and layoffs in Spain -- around a tenth of its Spanish workforce.
It said it would take charges of 706 million euros, 600 million euros alone in Spain, where it booked a loss of 262 million euros. Excluding one-off costs, underlying net profit in the quarter was up 5%.
In Britain, its third-largest regional market after Spain and Brazil, profit fell 41%, due to a continued pressure on mortgage margins and to restructuring costs of 26 million euros and provisions of 80 million euros.
It had a solid performance in Brazil and Mexico in the second quarter and Chairman Ana Botin told an extraordinary general meeting that Mexico was an important part of its plan to invest and grow in Latin America.
Santander's diversification overseas, especially in Latin America, has helped the bank to cope with tough conditions for banks in Europe in the years since the financial crisis.
Santander confirmed at the meeting that it would fight a 100 million euro ($112 million) lawsuit being brought by Italian banker Andrea Orcel after it withdrew an offer to make him its chief executive earlier this year.
MEXICO DEAL
Shares in Santander were up 3%, against a 1% rise on the Spanish blue chip market, the Ibex.
On Tuesday, investors signed off at an extraordinary shareholder meeting on a capital increase of 2.6 billion euros to finance the acquisition of a 25% stake they don't own of its Mexican subsidiary.
The move in Mexico is part of efforts to increase focus on emerging economies while cutting costs to counter squeezed margins in mature European markets.
While record-low interest rates have prevailed in the euro zone for the past 10 years, rates in Mexico stand at 8.25%, the highest since the 2008 global financial crisis.
In Mexico, where it aims to make around a tenth of its profits after the deal, profit rose 20% in the quarter.
"We believe in Mexico, it economy and its financial sector, and we think this is an appropriate time to continue to invest in Mexico and our Mexican subsidiary," Botin said, adding that this country offered higher profitability than other markets.
Analysts highlighted a good set of underlying trends mostly driven by Brazil and stronger than anticipated net interest income and lower provisions.
Net interest income, a measure of earnings on loans minus deposit costs, was 8.95 billion euros, up 5.6% from the second quarter of last year and 3.1% higher against the previous quarter due to a solid lending growth in Latin America.
Analysts had forecast a NII of 8.76 billion euros.
In Brazil, where the bank makes more than a quarter of its profits, profit rose 18% from a year ago, boosted by solid growth in business volumes, while profits in the United States rose 36%.
Santander ended the quarter with a core Tier-1 capital ratio, a closely watched measure of a bank's strength, of 11.3%, compared with 11.23% in the previous quarter, in line with its medium-term target of 11-12%.
Santander's chief financial officer Jose Garcia Cantera told analysts the bank expected another 20 to 30 basis points of regulatory headwinds in the second half of 2019.
"But at the same time we would expect our capital to grow from here until the end of the year (...) our target is to get to 11.5 percent as soon as possible," Cantera said.