Archive for category EU Insider

Corporate welfare gone mad

Posted by Stephen Gardner in EU Insider on July 7, 2011

Visitors passing through London’s Heathrow airport on the way to next year’s Olympics can no doubt have confidence in the airport’s security systems. But they might be surprised to learn that, courtesy of a European Commission grant, they will be subsidising their own surveillance, and that they will be watched by an Israeli firm that provides monitoring systems for the West Bank separation barrier.

The Olympics will provide a live test for a “Total Airport Security System” (TASS), backed with an £8 million EU grant from research spending. The project promoters give little detail, but say that different scenarios will be tested at Heathrow, involving “integrating and fusing different types of selected real-time sensors and sub-systems for data collection in a variety of modes”.

The TASS consortium includes Britain’s airport operator BAA, which is obviously in need of an EU hand out, having made a £200 million loss last year. But the lead roles are being taken by firms from Israel, not an EU country at last checking. VERINT Systems (Israel) will coordinate, while surveillance know-how will be provided by Elbit Security Systems. Elbit’s supply of Big Brother cameras to the West Bank wall have led to it being dropped as an investment by some pension funds, and the Commission itself considers the separation barrier illegal where it is built on Palestinian land. It is worth noting that intellectual property created in the course of EU research projects (eg new surveillance systems) remains the property of the firms involved, so in theory EU money could pay for development of systems that will ultimately be planted atop an illegal wall and used to keep an eye on the Palestinians!

Considering that the TASS project will result in a high-tech system that can profitably marketed to airports around the world, it is unclear why the Commission needs to dole out this corporate welfare. Defence giant BAE Systems is also taking part, being clearly unable to fund research and development from its £1 billion 2010 profit. BAE is separately involved in 12 similar EU research projects, funded with another £71 million in taxpayers’ cash.

The TASS project website is here: http://www.tass-project.eu/

A version of this article was published in Private Eye magazine.

,

12 Comments

Back to Bilderberg

Posted by Stephen Gardner in EU, EU Insider on June 14, 2011

This year’s Bilderberg conference took place in St. Moritz, Switzerland, from 9-12 June. I’m not going to rehearse the usual conspiracy theories, but from a Brussels point of view it is worth noting that Herman van Rompuy was there, along with former Commissioners Peter Mandelson and Mario Monti, and the omnipotent and omnipresent Etienne Davignon, who was once a Commission vice-president.

Current commissioners Joaquín Almunia and Neelie Kroes also attended, just as they did in 2010. Kroes was at Bilderberg in 2009 as well. It is interesting to note that one of the topics for discussion this year was ‘social networks: connectivity and security issues’. This will have been of particular interest to Kroes, in her role of Digital Agenda Commissioner. It would also have sparked the interest of attendees Chris Hughes (Facebook co-founder), and Eric Schmidt and Reid Hoffman, respectively the executive chairmen of Google and LinkedIn. But any discussion that might have taken place between the CEOs and Kroes no doubt did not touch on her regulatory role.

Meanwhile, Almunia was able to rub shoulders with the top executives from a number of major companies, including Airbus, Shell, Siemens and so on. Unquestionably, Almunia’s impartiality as competition commissioner was in no way dented by any discussions he may or may not have had with these industry leviathans.

One CEO in attendance was Klaus Kleinfeld of Alcoa. In March, the Commission took the Italian government to the EU Court of Justice because it had not done enough to recover illegal state aid given to Alcoa. Alcoa is currently appealing the Commission’s original decision to charge the Italians with reclaiming the aid.

I’m sure that Almunia and Kleinfeld, should they have met at the conference — possibly in the company of Italian economy and finance minister Giulio Tremonti, who was also there — politely steered away from any discussion of this matter.

What is it though with competition commissioners and Bilderberg? The current and previous two holders of that post — Almunia, Kroes and Monti — were all at St. Moritz.

4 Comments

Outrageous FIFA

Posted by Stephen Gardner in EU Insider on December 2, 2010

It seems like a marriage made in heaven: Russia and FIFA for the World Cup 2018. The “mafia state”, as described in the Wikileaks dispatches, and the Swiss-registered, er, non-profit association that had revenues of $1.06 billion and a “surplus” of $196 million last year.

One can speculate that FIFA’s choice of Russia for 2018 was influenced by the lesser likelihood of scrutiny of FIFA’s operations there. In South Africa in 2010, FIFA required a waiver of taxes and changes to the law, creating new crimes to protect its commercial interests. Had an EU location been chosen for 2018, great media pressure would surely have built up over issues such as these. Russia, followed by Qatar in 2022, would seem to be ideal choices for avoidance of the spotlight.

Belgium and Holland put in a joint bid for 2018, but it is hardly surprising that they failed to secure it after Belgian politician Bert Anciaux kicked up a fuss earlier this year about the concessions demanded by FIFA. Anciaux published a series of guarantees that FIFA wanted from the Dutch. These included (and I quote):

“FIFA and/or FIFA Subsidiaries… will be fully exempt from any Taxes in the Netherlands… The full Tax exemption is not limited to the events and is not limited time-wise… The exemption stated in this section shall encompass all revenues, profits, income, expenses, costs, investments and any and all kind of payments, in cash or otherwise” (author’s note: hmmmm, in cash eh?).

However…
“The Government of the Netherlands and all governmental authorities of the local level will procure, at their own costs, the implementation of all necessary safety and security measures required to ensure the safety and security of FIFA / FIFA Subsidiaries and their staff… The Government of the Netherlands will, at its own costs, develop and implement a detailed and comprehensive security concept”.

“Unrestricted import and export of all foreign currencies to and from the Netherlands, as well as the unrestricted exchange and conversion of these currencies into US dollars, Euros or Swiss francs…” (author’s note: isn’t this carte blanche for money laundering?).

“Ambush marketing… that may induce third parties into erroneously believing that those product or services are approved, authorised or endorsed by FIFA… will be prohibited by law.” (note: this is just one of a number of activities related to commercial activity to be “prohibited by law”. These prohibitions “shall be sanctioned by a suitably severe penalty to deter any deliberate breach, subject to a written demand for penalty by FIFA”. Hang on, laws and penalties are determined by Parliaments, no?).

“The Netherlands guarantees to FIFA the availability throughout the Netherlands of a telecommunication infrastructure and all relevant services… [this] shall be given to FIFA at no specific costs and expenses for FIFA.”

There were many more such demands. Some, though not all, were knocked back by the Netherlands. I wonder if the Russians (or the Qataris) reacted in the same way?

Considering the outrageousness of FIFA’s demands, media scrutiny, the economic downturn and pressure on government finances, not to mention EU competition law which is violated by FIFA’s monopoly and commercial practices, it seems unlikely that the EU will ever host a World Cup again. FIFA is a venal organisation and the sooner it is replaced by something else, the better.

,

13 Comments

Convicted MEPs

Posted by Stephen Gardner in EU Insider on July 22, 2010

Andrea D’ambra, a campaigner from Italy, is trying to get MEPs with criminal convictions booted out of the European Parliament. He has even set up a Facebook group. He lists three Italians, Vito Bonsignore, Aldo Patriciello and Mario Borghezio as having various convictions for “serious criminal offences relating to corruption charges, discrimination and illegal financial practices.” To this we can add Jean-Marie le Pen (various hate crime convictions), Bruno Gollnisch (Holocaust denial), Nick Griffin (incitement to racial hatred) and Andrew Brons (breach of the peace, OK not exactly crime of the century).

How many MEPs with criminal convictions are there? Which country has the most? We should be told! Give me names (current MEPs only; Ashley Mote and Tom Wise are history).

,

15 Comments

Bilderbuggers

Posted by Stephen Gardner in EU Insider on June 9, 2010

Journalists love the Bilderberg group because it has an air of secrecy and conspiracy. In fact, rather than anything very substantial, it seems to be largely a vanity project – people who think themselves very important gathering in an air of secrecy and conspiracy. Last week in the Commission’s press room there were questions about the possible attendance of José Manuel Barroso.

Barroso was not there at the June 3-6 meeting in Sitges, Spain. Three of his colleagues were however: Joaquín Almunia, Karel de Gucht and Neelie Kroes. At least that is what the Bilderberg website says – the group is getting a little less secretive it seems.

For all the secrecy and conspiracy (and public expense of getting the Spanish police out to guard the venue, though apparently Bilderberg refunds any such costs incurred), judging from the list of participants, Bilderberg seems to be a gathering of rather second division VIPs. Almunia, de Gucht and Kroes got to rub shoulders with a number of company CEOs, some journalists, and luminaries such as premier of British Columbia Gordon Campbell, president of Austria Heinz Fischer and Greek finance minister George Papaconstantinou. Er, isn’t rubbing shoulders with these people what the Commissioners do every day anyway? Admittedly there were more important attendees, such as Bill Gates and famous war criminal (according to Christopher Hitchens) Henry Kissenger. Spanish PM Zapatero was there as well.

And of course Bilderberg is chaired by former EU Commissioner and the man who allegedly secretly runs Belgium, Etienne Davignon.

Bilderberg justifies its secrecy by stating that participants all attend in a personal capacity and it is therefore not a public event. So no doubt the Commissioners that attended all did so on unpaid days off, and travelled and accommodated themselves for the event at their own expense.

14 Comments

The problems with Lisbon

Posted by Stephen Gardner in EU Insider on October 29, 2009

I get the impression that the Lisbon Treaty is backfiring somewhat and no-one wants to talk about it too much at the moment. The Treaty was supposed to consolidate and simplify the EU’s powers and make the running of the machine more straightforward. But we can see in retrospect that the second Irish vote, in exchange for guarantees that will be legally formalised at a later date, has undermined this.

The Irish second vote created a precedent. Vaclav Klaus, in stalling on the treaty, is really only doing what the Irish as a whole did. They didn’t like Lisbon so they obstructed it temporarily until concessions were made. Klaus is doing the same, but in the Czech Republic there have been no referendums on the treaty, so he has taken what superficially looks like a different path of one-man obstructionism. But in the end it amounts to the same thing as the Irish — holding up the treaty to get particular guarantees in the national interest, in the Czech case on the Benes Decrees.

Of course if Klaus gets his way — and why shouldn’t he if the Irish got theirs? — others might start to push for their own concessions, as a recent EU Observer article explains.

But a far more serious booby-trap is waiting in Germany, where the Constitutional Court, in its judgement at the end of June, said the Lisbon Treaty did nothing to correct the EU’s “structural democratic deficit”. Because of this, the Court effectively reserved to itself the power to protect the German Basic Law and the rights of German citizens, should the EU overreach itself. In practical terms, this means the German court may overturn rulings of the European Court of Justice (ECJ), potentially putting a serious brake on further EU integration.

A test case relating to employment law is working its way through the system in Germany. The case — the Mangold case — concerns a finding against Germany by the ECJ over age discrimination. Should the German court decide the ECJ went too far and reverse the Mangold decision, it could change the balance of power between the EU and member states. I’m not sure the implications of this have so far sunk in in Brussels. The German judges are due to pronounce by the end of the year.

,

11 Comments

Question marks over EP new buildings deal

Posted by Stephen Gardner in EU Insider on October 9, 2009

In March, the European Parliament proudly inaugurated two new Brussels buildings, needed to house the ever-expanding travelling circus of members, assistants and bureaucrats. But the Parliament is less happy to talk about some of the financing arrangements behind the buildings’ construction.

The Parliament leases the buildings, known as the Willy Brandt and József Antall buildings. It signed in 2004 a whopping €284 million deal with a Belgian developer which, shortly before, exercised an option to buy the land on which the buildings now stand. Under the deal, the developer was to raise the finance to fund the construction.

Because of this, according to the Parliament, a public procurement process was not required for the financing bids. The developer oversaw it all, soliciting bids for the financing under which the buildings would be constructed, leased and eventually sold to the European Parliament. This is rather like buying a house and asking the seller to arrange the mortgage for you. Whose best interests will the seller look after?

The Parliament has so far refused to release documents related to the deal. Many documents are held by the developer, and, the Parliament says, cannot therefore be made public. However, the Parliament holds a report, done by KPMG, on the financing bids assembled by the developer. But the Parliament will not release this either, citing commercial confidentiality.

The EU Ombudsman has now weighed in, saying the Parliament should release the report and other documents, or “give convincing explanations for not doing so” — the implication being that explanations so far have not been convincing. Will the Parliament clear up these muddy waters? It has until October 31 to respond to the Ombudsman.

[A version of this article was published in Private Eye magazine].

,

8 Comments

EIB: funding development through tax havens

Posted by Stephen Gardner in EU Insider on August 25, 2009

The European Commission and big member states like France and Germany are planning a crack down on tax havens (while Britain is pretending to). So it might come as a surprise that the EU’s house bank, the European Investment Bank (EIB), is busily lending to companies established in tax havens.

Particularly notable is EIB lending for supposed development projects in poor countries. In reality, this ‘development assistance’ is a way to channel low-cost public capital to private equity firms that look for projects with juicy returns of 20 percent or more, before remitting the proceeds to low or no-tax and minimum transparency jurisdictions such as Mauritius.

For example, the EIB has recently (16 June) agreed a $15 million loan to Shorecap International Limited, a private equity outfit specialising in microfinance. The firm, which boasted in its 2007 report of an average 23 percent rate of return, is incorporated in the Cayman Islands.

Another beneficiary is Africap, a Mauritius-based investment company, which received €5 million from the EIB in 2007. Mauritius, a tiny Indian Ocean island with 1.3 million people, is a favourite haunt of so-called development funds, including Adlevo Capital, Africinvest Limited, GroFin and Leapfrog Investments. These firms alone have shared €65 million of EIB money in the last 12 months. Mauritius is the source of an extraordinary 44 percent of foreign investment in India – underlining the extent to which development assistance has become a tax avoidance scam.

The EIB also during 2008 agreed loans totalling €53 million for funds run by Aureos Capital Limited, also Mauritius-registered. Until it was sold to its managers at a knock-down price (an issue covered extensively in Private Eye magazine), Aureos was a joint venture between CDC (the UK’s development finance institution) and Norway’s development fund Norfund, which has imitated CDC’s strategy of channelling public money to funds registered in tax havens.

The difference between CDC and Norfund, however, is that the Norwegian government has now told Norfund to stop investing in tax havens. Counter Balance, a campaign group that has analysed EIB lending to tax dodgers, noted that Norway finally came round to following “the logic that development funds should not support tax evasion.” When will Britain, and the EIB, take the same approach?

Note: a version of this article was originally published in Private Eye. The Counter Balance group is campaigning for more openness on the part of the EIB, which remains a relatively non-transparent EU institution.

, ,

No Comments

Structural funds cashback

Posted by Stephen Gardner in EU Insider on July 16, 2009

The European Commission yesterday (15 July) rather quietly slipped out its 2008 report on protection of the European Communities’ financial interests – in other words an assessment of whether or not the money is going to the places it should be going to. Last year there was a press release and announcements in the midday press conference. This year it was all a bit hush-hush, with a small mid-afternoon briefing attended by just a handful of hacks.

Is there something in there this year they want to hide, I wonder? Well, if so, I haven’t found it yet. The report itself is a digestible 30-page affair, but it is accompanied by two hefty annexes that will take a while to chew through.

Figures on Structural Fund irregularities make interesting reading though. These are sums of money committed to projects by authorities in member states, that later realise they shouldn’t have committed them. This can be for many reasons: incorrect paperwork, projects that later turn out not to be eligible, simple mistakes. “Irregularity” can also cover fraud, though this is only demonstrated in a very small number of cases.

Once member states spot an irregularity they are first required to tell the Commission, then they must get the money back. This is where problems start. Getting the cash back can take time, but if member states fail to recover it within two years, they must pay the money back to the Commission anyway, and the taxpayers of the country in question end up footing the bill.

So one could argue that member states have an interest in declaring a relatively low “irregular” payments amount, so that they are less exposed to losses later on. This certainly seems to be the case with France, which consistently declares unrealistically tiny numbers: for the Structural Funds, €4.6 million in 2007, and €5 million in 2008.

Compare this with 2008 figures for Germany (€20.9 million), the Netherlands (€28.7 million) and Italy (€74.9 million). Either the French are amazingly good at dotting the i’s and crossing the t’s on EU-funded projects or there is some under-reporting going on somewhere.

However, if a low number for irregular payments indicates competence on the part of the member state authorities that manage EU funds, then the champions of incompetence must be the British (though of course one can also argue they are most rigorous in declaring irregular payments). In 2007, for Structural Funds, the UK declared €161 million of irregular payments (more or less 10 percent of the UK’s Structural Funds pot for that year). In 2008, the figure was €123 million.

The UK has form for “significantly higher” than normal error rates in Structural Fund payments, especially when it comes to paying authorities in the north of England. Last year, for failings in the north-west of England, around €25 million had to be paid back to the Commission.

Surely there is a case here for some cross-border good practice exchange that will deepen EU integration: send the Mancunians and Liverpudlians to Paris for a bit so they can learn how it should be done!

, , ,

No Comments

Barroso gets nervous

Posted by Stephen Gardner in EU Insider on July 10, 2009

Panic stations in Camp Barroso. The former Portuguese prime minister, who has steered the European ship for the last five years, can see his second term slipping through his fingers. A letter circulated yesterday (9 July) to the political groups in the Parliament advertised Barroso’s willingness to come and make his pitch to them, and contained a note of desperation: “I believe I have the vision and the experience to lead the Commission… I would like to indicate my availability for meeting with the different political groups in the Parliament that so wish in order to discuss the policy orientations I intend to propose for the next five years.”

Barroso has now been formally nominated by the EU Council, but when it comes to the vote in the Parliament, it is really not easy to see how it might turn out. Crucially, if the vote takes place under Lisbon Treaty rules, for example if it takes place in October after the Irish re-vote, Barroso must secure an absolute majority of MEPs, not just a majority of those who are in the chamber at the time.

That means he has to get 369 votes. As things presently stand, he is backed by the centre right and the slightly more right of the centre right – equivalent to 320 votes. He is opposed, or at least not backed, by the ALDE group, the socialists, the greens and the far left – totalling 358 votes. In other words, no absolute majority either way.

So Barroso can try and convince, for example, ALDE to back him, which would give him an absolute majority (404 votes). There are also in theory 58 floating votes, if we take into account non-aligned members, the fascists, and assorted nutters who do not sit in the six largest groups.

For those not backing Barroso, it is hard to see any reason why they would want to take a vote on him before October. If the vote is postponed until then, if the Irish vote in favour of the Lisbon Treaty, and if the vote then becomes a vote on the whole Commission under Lisbon rules, the socialists, greens, etc., can push for a grand bargain covering all the top EU jobs. Under Lisbon, this would include of course a new EU Council permanent president, and a new EU ‘foreign minister’.

If that happens, there would be no foregone conclusion. Although strong alternatives to Barroso have yet to emerge, it is not hard to see why panic is starting to take hold.

, ,

2 Comments