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Volkswagen to replace CEO as it tries to make a clean break

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Volkswagen CEO Matthias Mueller addresses a news conference at Volkswagen's headquarters in Wolfsburg, Germany, on September 25, 2015.

Fabian Bimmer | Reuters

Volkswagen CEO Matthias Mueller addresses a news conference at Volkswagen’s headquarters in Wolfsburg, Germany, on September 25, 2015.

Volkswagen plans to replace CEO Matthias Mueller as the German automaker takes another step to move past the lingering effects of its 2015 diesel emissions scandal, according to sources familiar with the automaker’s plans.

Mueller will be replaced by Herbert Diess, who currently runs the Volkswagen brand, CNBC has learned. Diess, 59, joined Volkswagen in July 2015, after previously working at BMW.

Volkswagen issued a statement saying, “…the Chairman of the Supervisory Board of Volkswagen is currently in discussions with certain members of the Supervisory Board and of the Board of Management. Mr. Matthias Müller showed his general willingness to contribute to the changes.”

Mueller’s departure represents an attempt to make a clean break from the diesel emissions scandal and shows the automaker’s struggles as it has tried to move beyond it, sources said. While Mueller was never charged or formally linked to the scheme to rig the emissions of certain diesel engines, there has been plenty of speculation in Germany that Mueller and other executives were slow to act as the public started to learn about the scandal. Those questions, along with Mueller’s inability to lay out a clear vision for Volkswagen’s future, have been two issues hurting his tenure as CEO.

Meanwhile, Diess has been praised for his public stance that Volkswagen needs to change and evolve. Since taking over the VW brand in late 2015, Diess has not been afraid to take on powerful labor unions in Germany as he has pushed the automaker to cut costs.

“He’s been able to articulate how Volkswagen moves forward,” said one VW executive who talked with CNBC on the condition he not be named.

Diess has overseen a steady rise in Volkswagen brand sales. In the first quarter, VW brand global sales hit a record high of 1.52 million vehicles, including growth of 8.3 percent in China, the brand’s biggest market.

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Ireland wants remote working to now revive its rural towns

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Terrace of historic shops and buildings, Skibbereen, County Cork, Ireland, Irish Republic. (Photo by: Geography Photos/Universal Images Group via Getty Images)

Geography Photos | Universal Images Group | Getty Images

DUBLIN — In March, the Irish government unveiled a plan to revive the country’s rural economy by enticing more people to work remotely.

A long-standing challenge for rural Ireland has been the migration to urban areas. With the shadow of the Covid-19 pandemic and what can be achieved through remote working, the Our Rural Future plan aims to incentivize more people to stay in or move to non-urban areas.

The plan commits to providing financial support for local authorities to turn vacant properties in towns into remote working hubs. This includes a plan for “over 400 remote working facilities” across the country.

Grainne O’Keeffe has first-hand experience of attracting people to a rural town. She heads up the Ludgate Hub, a co-working space and start-up support organization in the small town of Skibbereen, about 80 km west of the city of Cork in the south of Ireland.

Ludgate Hub — which is named after scientist Percy Ludgate — was set up in 2016 and was an early mover in rural start-up efforts.

O’Keeffe told CNBC that Ludgate provides a practical example of attracting founders and employees to a small town.

It operates out of an old bakery and is opening a second facility in an empty school building later this year. It has mostly attracted individuals whose start-ups allow for working remotely, including Eric Yuan-backed start-up Workvivo.

O’Keeffe said significant investments in physical infrastructure like high-speed broadband and sourcing suitable buildings are key to making any town viable for remote working.

Skibbereen is connected to high-speed broadband through a Vodafone-led venture called Siro.

“That is without doubt a game changer for every region. That is fundamental and so is having a building that is conducive to a work environment,” she said.

Rural broadband connectivity has been a regular bugbear in Ireland. The government’s National Broadband Plan is rolling out services in previously underserved areas but it has had its fair share of delays. Other operators like Eir are in the midst of their own rural rollouts while Elon Musk’s Starlink is testing in one location in Ireland.

Work environment

Garret Flower made the move from Dublin to his native county of Longford, in the midlands. He is the chief executive of software start-up ParkOffice, whose team of 15 has now gone fully remote.

“The countryside has so much to offer,” he said. “I think remote working is something that can really drive people back to the rural areas.”

But he also warned against an over reliance on home working. As lockdowns eventually ease, the availability of office space or desks in towns and villages will be a key component of any strategy, he said.

“Not everyone has an enjoyable living area to work from. You can’t put that pressure on everybody to be able to work from their home. I grew up in the family home and it was chaos. I could never have worked with everyone there in the house,” he said.

Separately, a government-funded start-up accelerator called NDRC, which is now run by a consortium of business groups around the country, is focusing on developing start-up ecosystems in more diverse areas of the country.

One of its members is the RDI Hub, a facility in the town of Killorglin in County Kerry, in the southwest of the country.

“In Kerry we traditionally have a very ingrained migration. People leave Kerry. It’s rare that you would stay, most people go away for college, most people go away to start a job. Some come back but the majority go and keep going,” said Reidin O’Connor, the manager of RDI Hub.

O’Connor is from the area originally and relocated from Dublin with her partner and children a few months before the pandemic arrived.

She said that government efforts on remote working hubs need to focus not only on workers but how they can be integrated into local communities as well.

“Hubs should be the space where you have your start-ups and your creatives working together. But you also have classes and it becomes the hive of the community and it’s where people gather,” she said.

P A Thompson | The Image Bank | Getty Images

Housing and transport

A lingering issue for the development of any region in Ireland is housing. Prior to the pandemic, the housing shortage was long a hot-button issue. But since the onset of the pandemic, the issue has become more acute with construction activity halting.

Of late, institutional investor activity in the housing market has attracted a great deal of public scorn.

Ludgate’s O’Keeffe said that rural regeneration efforts will have to contend with housing and that authorities like county councils will need to “recognize that there will be increases in populations and that there is a need for housing to be accommodated.”

O’Keeffe acknowledges that transport links between rural towns like Skibbereen and nearby cities like Cork or further afield in Dublin presents challenges too.

“It is certainly an issue that we have for us, that remoteness, but I do think digital enablement reduces physical divide,” she said, adding that reducing digital divides can help address shortcomings in physical infrastructure like transport links.

Flower said there’s a significant opportunity afoot to revitalize large swathes of the country that could be otherwise forgotten about.

“A boatload of my friends in the last recession up and left for Australia and Canada and haven’t come back. We need to put images in people’s heads that they can come back and that they can work these world class jobs in remote parts of the country.”

 

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Brazil fears third Covid wave as Bolsonaro faces parliamentary inquiry

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Brazilian president Jair Bolsonaro is undergoing a probe carried by the Congress on mismanagement of the pandemic.

Andressa Anholete | Getty Images News | Getty Images

Health experts fear Brazil’s Covid-19 catastrophe could get even worse in the coming months, while a parliamentary inquiry into the government’s response to the pandemic is expected to ratchet up political pressure on President Jair Bolsonaro.

South America’s largest country, previously renowned for demonstrating leadership during health crises, has become an international pariah amid the coronavirus pandemic. Brazil has recorded the highest coronavirus-related death toll in the world outside the U.S., is lagging in terms of vaccinations and is still without an effective and coordinated public health response to the outbreak.

An official inquiry, approved by Brazil’s Supreme Court, was opened late last month to investigate the government’s handling of the pandemic that has killed more than 430,000 people. The inquiry could pave the way to Bolsonaro’s impeachment, though analysts say political opponents of the right-wing leader may prefer to contest the president at elections in October 2022.

Bolsonaro has reportedly said he is “not worried” about the inquiry. A spokesperson for Brazil’s government did not respond to a request for comment when contacted by CNBC.

Bolsonaro has repeatedly spoken out against public health measures, which have become a political battlefield in Brazil, and continues to oppose any lockdown measures to curb the spread of the virus.

“The current unmitigated epidemic won’t be overcome without a dramatic change of direction,” said Dr. Antonio Flores, an infectious disease specialist and Covid medical advisor for aid group Medecins Sans Frontieres in Brazil.

He said that if life continues as normal “at such high daily incidence, one can only expect a new wave of cases, additional thousands of deaths and more pressure on the already stretched health system.”

A gravedigger walks among graves of COVID-19 victims at the Nossa Senhora Aparecida cemetery in Manaus, Amazonas state, Brazil, on April 29, 2021.

MICHAEL DANTAS | AFP | Getty Images

His comments echo warnings from other health experts that say Brazil could soon see a third wave of Covid infections in the coming weeks. It is feared that the country’s lackluster vaccination effort won’t be enough to prevent a new surge during the winter months of June through to September, with indoor gatherings and activities especially risky.

Flores told CNBC that all available public health measures should be stepped up “as soon as possible” and the country’s vaccination campaign needs to be accelerated. He added that an effective testing and tracing system along with coherent guidance on public health restrictions must also be implemented.

‘A decisive element of next year’s election’

As of May 12, around 15% of Brazil’s population of roughly 211 million have received at least one dose of a Covid vaccine, according to statistics compiled by Our World in Data. Chile, meanwhile, has vaccinated close to 46% of its population with at least one dose of a Covid vaccine, reflecting one of the highest vaccination rates worldwide.

Brazil’s lower rate of vaccination means millions of people nationwide, and beyond its borders, are at risk from more than 90 variants of the coronavirus currently circulating in the country — in addition to any new mutations that may emerge.

Brazil’s Covid vaccination campaign is in stark contrast to its response to the H1N1 swine flu pandemic in 2009, when it vaccinated 92 million people against the virus in just three months. The key difference this time around, analysts say, is Bolsonaro’s refusal to embrace a science-led approach to the health crisis.

This is a very dangerous government but because it was democratically elected there is very little that can be done at the moment to push back.

Ilona Szabo

President of the Igarape Institute

The Pan American Health Organization said on Wednesday that almost 40% of all global Covid-related deaths reported last week occurred in the Americas, with nearly 80% of the region’s intensive care units currently filled with patients. PAHO Director Carissa Etienne warned it was clear that transmission is “far from being controlled,” even as the U.S. and Brazil report reductions in cases, Reuters reported.

Brazil recorded more than 74,000 cases of the coronavirus on Thursday, down from a peak of over 100,000 daily infections in April. In terms of infection numbers, it remains the third-worst Covid-hit country in the world, behind the U.S. and India respectively.

“I think that, whereas the situation in India has worsened considerably recently, in Brazil, numbers have plateaued at a very, very high level. The country has been in a state of collapse for months actually,” Oliver Stuenkel, associate professor of international relations at the Getulio Vargas Foundation in Sao Paulo, told CNBC via telephone.

A man is vaccinated against Covid-19 by a health worker in a remote area of Moju, Para state, Brazil on April 16, 2021.

JOAO PAULO GUIMARAES | AFP | Getty Images

“What is really so fascinating is whereas (former U.S. President Donald) Trump and to some extent (Indian Prime Minister Narendra) Modi are paying a political price, Bolsonaro through a combination of factors has been able to retain fairly high political support and has not yet had to pay for it because his strategy of avoiding responsibility has been remarkably successful so far,” he added.

Analysts said the length of the inquiry into the government’s handling of the pandemic would typically be expected to take around three months, but there is scope for the process to drag on for much longer.

Stuenkel said he expected the inquiry to take around six months to complete given that “the actual goal is to hammer home the message on the evening news that Bolsonaro is to blame.”

“In essence, I think the investigation will be crucial because if the investigation cannot alter public opinion at this stage, after 400,000 people have died and after basically the permanent collapse of the health system, then basically nothing can … To me that is a decisive element of next year’s election,” he added.

What happens next?

Earlier this week, Brazil’s former health minister Luiz Henrique Mandetta — who was fired over a year ago after opposing Bolsonaro’s push to use the malaria drug chloroquine as a Covid treatment — testified before a parliamentary inquiry.

Mandetta said Bolsonaro was fully aware that the treatment had no scientific basis. Former U.S. President Donald Trump had also pushed for the use of the related drug hydroxychloroquine amid the pandemic despite a lack of scientific evidence.

“Unfortunately, this is a very dangerous government but because it was democratically elected there is very little that can be done at the moment to push back,” said Ilona Szabo, president of the Igarape Institute, a think tank based in Rio de Janeiro.

Szabo said that while she did not believe the inquiry would have “immediate” ramifications for Bolsonaro in political terms, “it is important that what is happening today has consequences in the future.”

“It will be proved that they are responsible and that most of the deaths were preventable,” Szabo said.

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Hong Kong travel bubble likely delayed, new restrictions

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A woman jogs past a cordoned off Merlion Park on June 12, 2020 in Singapore.

Suhaimi Abdullah | Getty Images

SINGAPORE — Singapore’s government said Friday it’s “very likely” that the air travel bubble with Hong Kong will not begin on May 26, as the Southeast Asian city-state further tightens measures to curb a rise in local Covid cases.

The air travel bubble would have allowed travelers to skip quarantine. It has faced multiple delays from its initial launch date on November 2020 as Hong Kong reported resurgence in Covid-19 cases.

Both Singapore and Hong Kong are major Asian business hubs without domestic air travel markets. Their tourism and aviation industries, heavily reliant on international travel, have been badly hit by the pandemic.

Singapore’s Transport Minister Ong Ye Kung said Hong Kong is “a very safe region” now, with few new Covid cases detected daily. However, infections in Singapore have been climbing, he added.

Ong said he’s spoken with Edward Yau, Hong Kong’s secretary for commerce and economic development, about the Covid situation in Singapore. Both sides will make a decision early next week on whether to go ahead with the air travel bubble launch, said Ong.

Singapore tightens restrictions

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