The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Google shareholders are getting some modest future-proofing. A novel deal protects owners of the company’s non-voting stock against a discount – and from the day when founders Larry Page and Sergey Brin no longer wield full control. The convoluted legal settlement, however, only goes to show it’s better to avoid a shareholder caste system in the first place.

Shareholders opposed the $300 billion web search giant’s plan to issue non-voting stock. They argued that Page and Brin, who already hold super-voting Class B stock, would become even more entrenched if Google started issuing non-voting C shares rather than standard voting A shares.

Facebook, Zynga and Groupon are among the other technology companies boasting classes of shares with different voting rights. There’s a case for protecting the autonomy of founders up to a point, but a misalignment of economic and voting interests can cause trouble. Big valuation gaps sometimes open up. Non-voting stock in both Rupert Murdoch’s News Corp and Sumner Redstone’s Viacom has on occasion traded at least 20 percent below the price of voting shares.

The Google solution, agreed just before the case went to trial, involves a five-step sliding scale. Starting at a 1 percent discount, Class C holders will be compensated in cash or stock for part or all of the gap, up to a 5 percent discount. That turns out to be coincidentally on a par with the long-term discount at Telus, a Canadian telecoms group where an ultimately successful plan to merge voting and non-voting shares met resistance last year from hedge fund Mason Capital Management.

Moreover, if Brin and Page, who control well over half Google’s voting power, sell down to below 15 percent of the votes, there’s a provision in the deal encouraging the board to convert C shares into voting A shares. That makes sense looking ahead to a time when the founders hold less sway and the votes of ordinary shareholders really count.

With a behemoth like Google involved, other companies with different voting classes might follow a similar template, assuming the settlement is approved by the Delaware court. But the fact is, it’s a messy solution for a problem that needn’t exist in the first place. As they establish their capital structures, companies should just stick to one share, one vote.

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The long-awaited parliamentary report on UK banks is underwhelming. In part, that’s a reflection of the Parliamentary Commission on Banking Standards’ fuzzy remit and limited powers. Set up last July in the wake of Barclays’ Libor shame by Chancellor George Osborne to address perceived ethical failings in the industry, the commission’s biggest hits come when it addresses that original purpose.

The diagnosis of pre-crisis banker conduct is spot on. The commission pithily characterises managers as adopting a “Murder on the Orient Express” defence – insinuating that no one could be held guilty because all were party to the crime. The commission’s recommendation is for managers who willfully endanger their institutions to receive criminal sanctions, including jail. That is welcome: justice by jury is preferable to the trial-by-tabloid meted out to former Royal Bank of Scotland Chief Executive Fred Goodwin.

Proposals to reform pay seem sound, too, such as a recommendation that regulators be able to claw back HBOS-style mega-pension pots as well as deferred pay if a bank founders. The commission also argues that bonuses should be deferred by up to 10 years. HSBC is currently the only big bank operating in the UK that encourages such a long-term view.

It’s when the commission strays from its initial mandate that its conclusions are less convincing. The report urges the abolition of UKFI, set up to manage the government’s holdings in RBS and Lloyds. Instead, it argues, the government should review RBS’s strategy by September so the bank’s management can be freed from interference. Tellingly, the commission ducks any firm proposals itself on RBS’s future.

Other ideas pushed by the commission look likely to add costs and red tape for no obvious reward, like its push for a register for approved persons and a shiny set of ethical rules. Its members argue regulators would be unable to hold bankers to account without them. But it’s hard to see why.

Likewise, it’s not clear what will be gained from yet another inquiry into banking competition. Previous tours d’horizon fell on deaf ears, like the Cruickshank review in 2000.

The banking standards commission has avoided that fate, not least because of its excoriating earlier missive on the collapse of HBOS. But its final report – despite being 576 pages – pulls more punches than it lands.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Small shareholders in Chinese companies have a new reason to be whey-faced. Big investors in Hong Kong-listed Yashili have agreed to sell out to Chinese dairy giant Mengniu for HK$3.50 a share – a fifth below the price at which the milk powder maker floated just three years ago.

Yashili’s short history as a listed company has been stomach-churning. The shares fell 12 percent on their first day of trading in November 2010. A year later, they were 70 percent below their debut price. For the founding Zhang family, going private and receiving over $660 million in cash in return for selling its 51 percent stake must seem attractive. The clan will also retain ten percent of Yashili’s equity via an unlisted vehicle, and is likely to retain key management positions.

Yashili’s financial backers have also done better than they might have expected a year ago. Buyout firm Carlyle has roughly doubled the value of its investment by selling its 24 percent stake for cash, according to people familiar with the situation. Even UBS, the bank that underwrote Yashili’s IPO, gets a second sip as lead advisor to Mengniu.

There’s little cream for minority investors, however. The offer values Yashili stock at just five percent above where it traded at the end of May, after stripping out the dividend due to be paid at the end of June. The offer values Yashili at around 15 times this year’s forecast earnings, compared with 25 times for food companies like Want Want and Tingyi, and 22 times for Mengniu itself.

Small shareholders aren’t entirely powerless. They could refuse to sell, or opt to receive a fifth of the offer in the form of shares in the unlisted holding company. But either scenario would leave them holding illiquid equity. The unlisted stock isn’t tradeable, and most institutions would be unable to accept it anyway. In reality, they have little choice but to sell.

Companies like Yashili, whose founders hold majority stakes, are the norm in China. For those who ride their coat-tails, that usually means handing control to someone whose interests aren’t always aligned with other investors. That lesson seems to repeatedly go unlearned.

Jefferies’ second-quarter earnings probably aren’t a reliable bellwether for the rest of Wall Street this time round. The mid-sized investment bank blamed a tough March and April for most of the 35 percent drop in second-quarter profit compared to the same period last year. That, though, is at odds with both market data and hints from some of its larger rivals.

Jefferies’ Chief Executive Richard Handler said the reason for the slowdown was client concerns “about the tapering of the Federal Reserve’s quantitative easing programs.” Such fears have certainly rocked markets in recent weeks, sending the yield on the 10-year U.S. Treasury up half a point to 2.2 percent and sharply curtailing new bond sales by companies.

It seems to have affected Jefferies more immediately than rivals, with the firm reporting a 27 percent drop in fixed-income trading revenue compared with a year ago. Yet Bill Gross, Pimco’s co-chief investment officer, for one, did not make his call about the end of the bull market for bonds until April 29.

April, while not the best month, was still pretty benign in many markets – high-grade and high-yield debt, leveraged loans and real estate all had a decent showing, according to Credit Suisse. Other banks certainly benefited. In mid-May, for example, Mike Cavanagh, co-head of JPMorgan’s corporate and investment bank, happily told investors at a conference that his FICC traders had, so far this quarter, added 15 percent more to the top line than a year earlier.

Of course, Jefferies’ results also included March, which fell into its larger rivals’ first quarter. Handler ruled out trading hits as a reason for his firm’s performance, which leaves either business mix or client activity – or more likely both.

It could be that Jefferies of late has been more dependent on trading government and agency bonds, which both had a tough April. Or perhaps the drop in futures and commodities volume hit the firm.

Unfortunately, it’s even tougher to discern than before. As of March, Jefferies has been a subsidiary of investment firm Leucadia National, so does not have to produce the same detailed earnings reports it used to. Executives probably like the reduced burden. But the opacity makes comparisons even trickier than usual.

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The G8 is likely to take some action on corporate tax avoidance. But action by the leading rich nations isn’t enough. They need to preach.

The British hosts want the summit, which ends on Tuesday, to reach an agreement on two parts of the elaborate net of company-friendly cross-border tax legislation. First, it could establish an automatic exchange of information. The existing request-based system is slow, cumbersome and often ineffective. Second, the eight nations and the European Union might establish a common framework for proper registries of beneficial ownership. Secrecy helps profit disappear into low-tax jurisdictions.

The two measures would be a big step forward, making it harder for corporations to break the link between economic activity and taxation. But it would only be a first step.

The G8 can no longer speak for the world. Developing economies and most of the largest producers of resources are not included. Neither are most of the tax havens, which have traditionally been more than willing to take small amounts of revenue in exchange for allowing companies to avoid paying large amounts of taxes elsewhere. Unless these countries are willing to participate, the G8 agreement will do little.

The UK and the EU have already started. British anti-evasion rhetoric has long sounded slightly hypocritical, as it put little pressure on dependencies such as Jersey and the British Virgin Islands, to share information. But an agreement last week is promising. And the EU is now putting pressure on recalcitrant members Austria and Luxembourg to lift bank secrecy.

More needs to be done. The G8 should appeal to the broader G20, whose finance ministers meet in July. An agreement at that summit will have much more effect.

The fair-tax agenda is undoubtedly popular. Starbucks, Google and Apple are not defusing public anger by pointing out that their cross-border tax arrangements follow the letter of the law. But without much more evangelical fervour, nations and companies will not follow the spirit of the law. Even if the G8 falls short of a concrete agreement, the preaching should continue.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Indonesia’s overhaul of energy subsidies is the right plan, but its timing is highly suspect. Hiking state-controlled diesel and gasoline prices by 22 and 44 percent, respectively, will lift prices when investors are already jumpy: $4.7 billion in financial capital left the country in the last quarter. To prevent higher inflation from spooking investors further, the central bank will have to raise interest rates. That means sacrificing GDP growth.

For the past five years, the government has refrained from raising energy prices, choosing instead to absorb the subsidies – $20 billion last year – in the budget. But with the fiscal deficit ballooning, lawmakers agreed to a price increase, while also handing out $910 million to poor families.

The decision will automatically boost prices. Morgan Stanley economist Deyi Tan reckons inflation will rise by 3 percentage points to around mid-8 percent. It will also prompt domestic investors to demand additional yield as compensation for keeping their wealth at home. In 2005, when Indonesia made two hefty upward adjustments to gasoline and diesel prices, locals took almost $10 billion out of the country, precipitating a mini-currency crisis. That precedent will make Indonesia’s central bank extra careful this time around, especially as markets anticipate the possibility of the Federal Reserve scaling back its asset purchase programme. The central bank last week raised its benchmark interest rate by a quarter of a percentage point.

For Indonesia’s authorities, higher interest rates and lower growth will be an acceptable price. The alternative is a sharp fall in the rupiah, so that foreigners find local assets to be attractively priced in their home currencies. But that avenue is littered with potholes. For one, it will add to inflation by increasing the cost of imported goods. At the same time, private borrowers’ cost of servicing overseas debt will increase.

A somewhat slower pace of expansion won’t be a calamity in an economy that has chalked up real GDP growth of more than 6 percent for 10 straight quarters. But the combination of a sharp slowdown and higher interest rates could cause bank loans to start turning sour, delaying any recovery. By resisting much-needed reforms for so long, the government has made the pain of eventual adjustment a lot worse than it should have been.

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AT&T is all dressed up with nowhere to go. The telecom company had a $93 billion bid for Telefonica blocked by Madrid, according to a Spanish newspaper. The target has denied that it received any expression of interest. But the report is a sign of the problem AT&T faces: it has a lofty stock multiple, which makes M&A tempting, but it seems shut out of both domestic and foreign deals.

The U.S. mobile market looks pretty mature. The number of active wireless devices already exceeds the population, according to industry group CTIA. Sure, as consumers adopt additional devices, such as tablets, this figure will drift higher. But that’s a slow crawl compared to past growth in what was then a burgeoning new market.

Increasing revenue by pushing higher-priced data plans will be difficult. About three-quarters of its billed subscribers already have smartphones, and American bills are higher than in most developed countries. AT&T’s wireless growth slipped below 4 percent in its most recent quarter.

Acquiring smaller U.S. rivals to boost the top line is a no-go. U.S. wireless regulators are keen to promote competition. That’s why they nixed AT&T’s $39 billion bid for T-Mobile USA in 2011. That bid may have been the catalyst for a wave of consolidation among smaller U.S. carriers like Sprint Nextel, LEAP Wireless and Clearwire. AT&T, though, is unlikely to play a part.

Overseas is a different story. Company executives think mobile data usage in Europe is about to take off, based on recent comments to investors and analysts alike. Infrastructure and software rolled out domestically can increasingly be used overseas. And there’s a striking valuation mismatch. AT&T stock currently trades at more than a 50 percent premium to Telefonica’s, based on estimated 2013 earnings.

The snag is European regulators don’t appear any friendlier. If AT&T wants growth, then Telefonica, Portugal Telecom and France Telecom would fit the bill. All boast an attractive collection of wireless assets in developing countries. Yet each of these companies is regarded as a national champion, and probably off limits. The revelation that the U.S. government is widely spying on foreign data traffic won’t help, either. AT&T may be interested in Europe, but that right now looks like a one-way conversation.

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Iranians have voted for an end to the conservative status quo. The surprise victory of Hassan Rohani, the sole moderate candidate, in the presidential race has shown the level of public discontent with the Islamic Republic’s hardliners, whose voices silenced others in the last few years. The high turnout also returns legitimacy to the electoral process after the rigged vote of 2009. Iran’s complex power structure means that radical shifts at home or abroad are unlikely. But the mood in Tehran has shifted.

Rohani is, in the Iranian context, a moderate. A former nuclear negotiator with the West, he says he wants to save the economy, implement a “civil charter” and create a less security-heavy environment. He also advocates a less confrontational relationship with the West, which tightened sanctions against Iran during Mahmoud Ahmadinejad’s fiery eight-year presidency.

Easing sanctions, which halved the country’s oil exports, is key to any economic turnaround. The currency has lost more than two-thirds of its dollar value over the past two years. Inflation has risen to 32 percent and the unemployment rate stands at 12 percent, according to official figures that may hide a harsher reality. Gross domestic product will shrink for a second consecutive year in 2013, according to International Monetary Fund forecasts.

The rial strengthened around 6 percent on news of Rohani’s win, but how much more he can achieve will depend on the will of “Supreme Leader” Ayatollah Ali Khamenei who has the final say on nuclear and foreign policy matters. That includes the situation in Syria, where Iran is also pitted against the West. Past initiatives by one of Rohani’s predecessors, reformist Mohammad Khatami, have been sunk or undone by resistance from conservative factions. The public mood could however persuade Khamenei he must soften his position on some issues.

For the West, it will take more than a change of tone by an Iranian president, whatever his reputation or intentions, to unwind the economic sanctions. But Rohani’s victory will embolden Iranian reformists and enable the country to better respond to the needs of a population, two-thirds of which were born after the 1979 revolution. At the very least, Khamenei’s apparent decision not to interfere with the vote shows that Iran maybe be moving again – this time, in the right direction.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Singapore has come up with a creative way of penalising rate-rigging banks. Regulators are forcing lenders implicated in manipulating the city-state’s borrowing and currency rates to set aside up to S$12 billion ($9.6 billion) in extra central bank reserves. With rates low, however, the costs will be much lower than recent mega-fines.

An investigation by the Monetary Authority of Singapore (MAS) concluded a staggering 133 traders tried to influence rates to their advantage. However, the regulator didn’t find conclusive evidence that they had succeeded. And as attempted manipulation is not explicitly forbidden by existing rules, it could not impose fines on the misbehaving banks.

Nevertheless, the MAS has found a way to extract a pound of flesh. It is demanding that 19 banks deposit extra reserves with the MAS for a year, without receiving interest. That will hit their bottom lines, much like a fine.

Low interest rates mean the financial damage looks manageable, however. Assume the banks borrow the extra funds at Singapore’s one-year interbank rate of 56 basis points: the combined cost for the 19 banks would be between S$47 million and S$67 million.

Alternatively, consider what the banks could have earned if they had lent out the money. At the same net interest margin of 164 basis points achieved by Singapore’s largest banks in the first quarter, the combined income lost would be between S$139 million and S$197 million. Contrast that with the $1.5 billion UBS alone paid for manipulating Libor.

The lower penalties reflect the fact that Singapore’s interest rate and currency markets are much smaller than Libor, which is a reference for trillions of dollars of loans and derivatives. And the damage may still be meaningful when compared with banks’ Singaporean trading businesses.

Even so, the approach is unlikely to catch on. Regulators in moribund Western economies will be reluctant to take an approach that would restrict the availability of new credit to the economy. Meanwhile, the MAS is proposing new rules that will give it the ability to whack future miscreants with criminal and civil charges. While creative, Singapore’s fines may be a one-off.

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

“The shadowy history of the secret bank that runs the world”, the subtitle of Adam LeBor’s new book, may sound sensationalist. But “Tower of Basel” is an absorbing and thorough examination of one of the world’s most important yet opaque institutions: the Bank for International Settlements (BIS).

The book’s publication is timely: revelations of Big Brother-style snooping by the U.S. government and the increasing influence of central bankers are troubling examples of what appears to be a power grab by the ruling elite. “Tower of Basel” shows how concentrated and opaque that control is in finance.

The BIS is often considered geek-central. It is the home of the immensely complicated Basel III rules for bank capital. Its reputation among financial types was enhanced by its regular warnings about excess leverage – starting well before the 2008 crisis. The BIS was chosen as the natural host for the Financial Stability Board, the group of global leaders that has coordinated the response to the crisis.

LeBor devotes little time to these issues, however. His concern is the bank’s lack of transparency and accountability. Despite being taxpayer-funded, the BIS is a club that operates with no democratic oversight. The bank is solidly profitable: it made $1.2 billion in tax-free profit in its last calendar year from the fees and commission it charges central banks for short-term liquidity and credit, gold swaps and other investments. That much, at least, is in the public domain.

But the BIS only makes ad hoc donations in the event of natural catastrophes: it has no set programme of philanthropy, according to LeBor. It also preciously guards the content of the discussions held at its offices.

The BIS’s history, described vividly by LeBor, suggests that opacity is troubling. The bank was founded in 1930 as a vehicle to funnel German reparations under the Young Plan after World War One. But it quickly adapted to become instrumental in keeping finance flowing during World War Two. Subsequently it oversaw the breakdown of the gold standard at Bretton Woods and the birth of the euro and the European Central Bank.

The BIS, then, has been a master of reinvention. But, as LeBor explains, it’s hard to dissolve an institution founded under international treaty with fixed statutes. Senior managers at the bank enjoy privileges akin to diplomats: their papers are inviolable and their actions at the bank are immune for life under Swiss law.

What’s more, this cosy club has a mixed moral record. Belgian and Czech gold stolen by the Nazis during World War Two found its way to vaults in the Reichsbank via the BIS. The bank was also alleged to have protected looted Nigerian money following the death of dictator Sani Abacha in 1998. In the 1930s, rumours abounded that BIS officials were using their informational advantages to speculate against the Swiss franc.

One of LeBor’s most telling anecdotes relates to the bank’s origins. Montagu Norman, then Bank of England governor, asked Walter Layton, editor of the Economist, to draw up the BIS’s constitution. Layton concluded that it couldn’t be done.