Under German Administration
GÜTERSLOH/EAST RIDING (Own Report) Europe's largest media company, the German firm Bertelsmann AG, is taking over official tasks normally performed by public authority in Great Britain. From July 2005 a Bertelsmann subsidiary will undertake the majority of public administration in a British local authority. The plan is regarded by the German firm as a ,,pilot project of strategic importance"for its expansion into a multi billion market. Across Europe, Bertelsmann aims to expand within the framework of the so-called ,,Public/Private Partnership"into areas which are presently under the control of nation states and to carry out activities which are normally reserved to publicly responsible local authorities. Great Britain is also a target of Bertelsmann's expansion in print media. By a joint venture enterprise with two other German media firms in the construction of new large-scale printing facilities abroad, Bertelsmann is aiming to gain market leadership in European newspaper printing.
From July the German firm Arvato AG, a totally owned subsidiary of Bertelsmann AG, will take over the majority of the administration of the British local authority, the East Riding of Yorkshire, which has around 350,000 inhabitants. About five hundred local authority employees will switch to Bertelsmann. So a German firm will be entrusted with carrying out duties which were previously under the authority of the British state. These include public and statutory duties ( such as are carried out by a state, local authority or public corporation) to fulfil requirements under public law. The exercise of these powers of government is normally the preserve of responsible local government officials who have a special duty to the local authority and bear allegiance to the state. In a few months Arvato will become responsible for paying wages and social benefits as well as collecting council tax, fees and charges. It will provide a citizens' bureau and the Council's total information technology requirement. 1)
A Strategic Pilot Project
The German conglomerate sees the takeover of administration in the East Riding as ,,a pilot project of strategic importance"for expansion into a multi-billion pound market. Arvato AG believes that, in Great Britain alone, the potential market is about 8.7 billion euros (£6 billion) 2)and has already announced the expansion of its activities in public administration in Great Britain. The Arvato board states that it is already in substantive discussions for the takeover of more local administrations. 3)The firm is also planning entry into the public administration market in other European states. The Bertelsmann Foundation, which holds 57.6% of the shares in Bertelsmann AG and is principally finances out of the profits, has been involved for years in advising local government authorities. 4)According to German law, the Foundation counts as ,,of public utility"and therefore receives favourable tax treatment. Its articles of association explicitly provide for activities abroad.
World-Wide Expansion
Arvato AG is one of the most important components of Bertelsmann AG's world-wide activities. After the RTL Group, it is the most important subsidiary in turnover and profitability of the conglomerate. In 2004 Arvato increased its turnover and profits before tax and dividends to 3.756 billion euros and 310 million euros respectively. 5)The firm controls enterprises from printing works to call centres and is increasingly targeting service provision in finance, logistics and out-sourcing. Through a joint venture with the large German printers Gruner & Jahr and Axel Springer, Arvato plans to become the market leader in European newspaper printing this year. This cooperative venture, to be vetted by the the EU Commission at the end of May, would control about 25% of the market. 6)Within the framework of a world-wide print media offensive ( ,,Growth and Innovation"), Bertelsmann is building a 110 million euro plant in Treviglio in Italy and a 170 million Euro printing works in Great Britain (Liverpool). 7)Here Arvato is attacking the British firm Polestar. A print order from News Corporation (Rupert Murdoch) with an estimated value of 1 billion euros over ten years will not go to Polestar but to its German competitor. 8)
,,Hitler's Best Supplier"
The economic rise of Arvato's owner, Bertelsmann, was based on close involvement with Nazism. From 1933 Bertelsmann produced Nazi propaganda. The firm grew quickly, becoming the largest producer of books for the Wehrmacht, printing over 19 million copies. Bertelsmann could be called ,,Hitler's best supplier". A TV report on the publisher stated that its literature ,,imparted strongly anti semitic, racist, militarist content and National Socialist propaganda". Bertelsmann was from 1933 ,,an outstanding representative of those who produced such literature". Through the production of popular Nazi literature Bertelsmann experienced a ,,profit explosion". The historian Norbert Frei attested to Bertelsmann's ,,affinity in World-View"(Weltanschauung) and ,,high readiness to adapt to the economic calculus". The former Managing Director, Heinrich Mohn, supported the SS financially from 1921 as a ,,subscribing patron member". He gave around 15,000 Reichsmarks. For some few years the firm strove to work up its acquaintance with the Nazi leadership and gain attention. This must be seen in connection with its attempts then to expand into the American market, where Bertelsmann attracted unfavourable reports in the US media. A press report of 2000 9)commented ,,Bertelsmann's expansion in the USA, which presently accounts for one third of its turnover, compels the firm to acknowledge unpleasant facts from times past".
Bertelsmann expects strong growth in all areas of activity during 2005. Group turnover rose by 17 billion Euros during 2004 and the year's surplus rose by more than 1 billion Euros. For the current year the firm has announced several takeovers for which some 1.5 billion Euros are allocated. It is also said that Bertelsmann plans to buy several TV stations in southern and eastern Europe. 10)
1) How Bill helped Bertelsmann; The Gurdian 18.03.2005. Wachstumsinitiative GAIN läuft bei Bertelsmann auf Hochtouren; FinanzNachrichten.de 17.03.2005. Arvato will's besser machen - Outsourcing der Verwaltung; n-tv online 23.02.2005
2) Bertelsmann: Telefon statt Television; die tageszeitung 18.03.2005
3) OWL-Firma treibt UK-Knöllchen ein; die tageszeitung 24.02.2005
4) see also Divide et impera
5) Bertelsmann AG: Konzernentwicklung & -strategie - Bilanzpressekonferenz, 17.03.2005
6) arvato weiter auf Wachstumskurs; Financial Times Deutschland 22.03.2005
7) Wachstumsinitiative GAIN läuft bei Bertelsmann auf Hochtouren; FinanzNachrichten.de 17.03.2005
8) arvato-AG: Umsatz, operatives Ergebnis und Mitarbeiterzahl erneut gesteigert; Pressemitteilung 22.03.2005. Bertelsmann ärgert Middelhoff; Frankfurter Allgemeine Zeitung 23.03.2005
9) Frankfurter Rundschau 08.10.2002; TV-Bericht, Monitor 20.05.1999. Neues von der Front - Bertelsmann lässt seine Rolle in der Nazizeit klären; Die Zeit 4/2000. Unabhängige Historische Kommission zur Erforschung der Geschichte des Hauses Bertelsmann im Dritten Reich: Die Vergangenheit des Verlags C. Bertelsmann in Gütersloh 7. Oktober 2002
10) Bertelsmann prüft Einstieg ins Mobilfunkgeschäft; Süddeutsche Zeitung 18.03.2005. Bertelsmann: Telefon statt Television; die tageszeitung 18.03.2005. arvato-AG: Umsatz, operatives Ergebnis und Mitarbeiterzahl erneut gesteigert; Pressemitteilung 22.03.2005
