EDP head office raided in corruption probe

edpOfficers of the Judicial Police raided the Lisbon offices of EDP, REN and the Boston Consulting Group this morning as part of an investigation into active and passive corruption.

The Attorney General's Office explained that the investigation is being run by the Central Department of Investigation and Criminal Action which the Public Prosecutor's Office uses in complex cases. Energy bosses António Mexia from EDP and Rodrigo Costa from REN confirm the searches.

“Redes Energéticas Nacionais (REN) confirms that, today, proceedings have been carried out by the judicial authorities at the company's headquarters in Lisbon. REN will continue, as always, to collaborate with the authorities in everything that’s within its reach."

EDP ​​confirms the police had been to collect information and said it would cooperate with the authorities.

"The Boston Consulting Group confirms that the Judicial Police was present at its Lisbon office and has made available all the necessary elements to the ongoing investigation and will continue to collaborate with the authorities while always ensuring the confidentiality of its customers."

The Judiciary Police did not make a statement but the Public Prosecutor’s office said, "The purpose is to investigate facts subsequent to the legislative process and administrative procedures relating to the introduction into the national electricity sector of Contractual Equilibrium Maintenance Costs (CMEC). The CMECs are compensation payments for the early termination of energy contracts."

The searches focused on the companies’ financial and administration departments, in the hunt for "facts that could be included in crimes of active corruption, passive corruption and economic participation in business."

This complex CMEC business dates back to the last decade when the State, with the full backing of Brussels, was empowered to compensate EDP for the cancellation of energy purchase contracts with its supplier, REN, so that everyone could enter the unregulated energy market from July 1, 2007, without old supply contracts getting in the way, which apparently is what the EC wanted but later wass attacked by the Troika over 'excessive revenues.'

To facilitate the scrapping of these contracts, the CMEC system was devised, which ensured compensation was paid to EDP by the taxpayer, not the electricity consumer through higher prices.

The idea of ​​paying State compensation came from the Pedro Santana Lopes government at the end of 2004, but was triggered by the José Sócrates administration in 2007, when Manuel Pinho was at the Ministry of the Economy and António Mexia was already heading EDP.

At the time of the Troika, the Passos Coelho government classified these CMECs as "excessive revenues," a definition rejected by EDP’s Mexia who said the payments "reduced the costs to taxpayers."

The European Commission later wanted to open an investigation into the way these payments were handled. Someone somewhere seems to have found a way of fiddling the system so Portugal’s forces of law and fiscal order have opened yet another corruption investigation into high profile companies.

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