Venezuela to remove five zeroes from ailing currency

In this file photo taken on June 20, 2018 a man counts 1000-Bolivar-bills to buy groceries at the municipal market of Coche, a neighbourhood of Caracas. (AFP)
Updated 26 July 2018

Venezuela to remove five zeroes from ailing currency

CARACAS: Venezuela will remove five zeroes from the bolivar currency rather than the three zeroes originally planned, President Nicolas Maduro said on Wednesday, in an effort to keep up with inflation projected to reach 1 million percent this year.
The OPEC nation’s economy has been steadily collapsing since the 2014 crash of oil prices left it unable to maintain its socialist economic system that for years provided lavish subsidies while enforcing strict price controls.
Annual inflation in June topped 46,000 percent, according to the opposition-run Congress. The IMF said this week it could hit seven digits this year, putting it on par with the crises of Zimbabwe in the 2000s and Germany in the 1920s.
“The monetary reconversion will start on Aug. 20,” Maduro said in a televised broadcast, showing new bills that are to be released next month.
He said the overhaul would tie the bolivar to the recently launched state-backed cryptocurrency called the petro, without offering details.
Cryptocurrency experts have said the petro suffers from a lack of credibility because of a lack of confidence in Maduro’s government and the mismanagement of the country’s existing national currency.
The government has said it is the victim of an “economic war” led by opposition leaders with the help of Washington, which last year levied several rounds of sanctions against Maduro’s administration and a group of top officials.
The country’s high inflation rate has made it nearly impossible to obtain cash.
Venezuela’s minimum wage is now about the equivalent of $1 a month, which has left citizens across the country unable to eat properly or obtain basic medical care — fueling an exodus of Venezuelans seeking to escape the economic crisis.
The government had been prepared to cut three zeroes off the currency in June but postponed the measure at the request of banking industry leaders who said the financial system was not ready for the measure.
Maduro on Wednesday proposed an overhaul to the currency crimes law in order to improve the flow of foreign investments.
Economists routinely identify the exchange controls as a major hindrance to economic growth. The issue will be taken up by the country’s all-powerful Constituent Assembly, Maduro said.
He also said he was transferring a concession bloc of the vast Orinoco heavy oil belt to the central bank, which he said would help shore up the bank’s international reserves.


New emissions blow for VW as German court backs damages claims

Updated 26 May 2020

New emissions blow for VW as German court backs damages claims

  • Scandal has already cost firm more than €30 billion; ruling serves as template for about 60,000 cases

KARLSRUHE, Germany: Volkswagen must pay compensation to owners of vehicles with rigged diesel engines in Germany, a court ruled on Monday, dealing a fresh blow to the automaker almost 5 years after its emissions scandal erupted.

The ruling by Germany’s highest court for civil disputes, which will allow owners to return vehicles for a partial refund of the purchase price, serves as a template for about 60,000 lawsuits that are still pending with lower German courts.

Volkswagen admitted in September 2015 to cheating in emissions tests on diesel engines, a scandal which has already cost it more than €30 billion ($33 billion) in regulatory fines and vehicle refits, mostly in the US.

US authorities banned the affected cars after the cheat software was discovered, triggering claims for compensation.

But in Europe vehicles remained on the roads, leading Volkswagen to argue compensation claims there were without merit. European authorities instead forced the company to update its engine control software and fined it for fraud and administrative lapses.

Volkswagen said on Monday it would work urgently with motorists on an agreement that would see them hold on to the vehicles for a one-off compensation payment.

It did not give an estimate of how much the ruling by the German federal court, the Bundesgerichtshof (BGH), might cost it.

Volkswagen shares were 0.5 percent lower. The BGH’s presiding judge had signaled earlier this month he saw grounds for compensation.

Costs mount

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

A lower court in the city of Koblenz had previously ruled the owner of a VW Sharan minivan had suffered pre-meditated damage, entitling him to reimbursement minus a discount for the mileage the motorist had already
benefited from.

The court at the time said he should be awarded €25,600 for the used-car purchase he made for €31,500 in 2014.

“We have in principle confirmed the verdict from the Koblenz upper regional court,” said BGH presiding federal judge Stephan Seiters.

Volkswagen had petitioned for the ruling to be quashed altogether by the higher court, while the plaintiff had appealed to have the deduction removed.

A Volkswagen spokesman said that outside Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain.

The carmaker also said it had paid out a total of €750 million to more than 200,000 separate claimants in Germany who had opted against individual claims and instead joined a class action lawsuit brought by a German consumer group.

The carmaker said last month it would set aside a total of 830 million for that deal.

In a separate court, Volkswagen agreed last week to pay €9 million to end proceedings against its chairman and chief executive, who were accused of withholding market-moving information before the emissions scandal came to light.