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Portimão Urbis may be wound up

portimaoarenaMayor Isilda Gomes has ordered a working group to provide solutions for the council’s trading company Portimão Urbis which has accumulated unsustainable losses.

"The current situation is not sustainable, so there must be change," said Gomes in a statement about the failed municipal company.

To define the company's future the mayor has decided to form a working group which will look at winding up the company among other solutions. The study will be completed by March 31st.

The company's former management is under investigation for fraudulent activities and money laundering and is currently the subject of an external audit and a separate audit by the General Inspection of Finance. According to the latest annual report, the company’s debts totalled €18 million for 2012, an increase of €3.3 million over the previous year. Its personnel costs alone are running at €3.7 million annually and it is not expected to have made a profit last year.

Portimão Urbis has about 150 employees who, even if the company survives, will have to be trimmed. But Isilda Gomes refusal to predict the conclusions of the study, stressing that the goal is to "prepare the way forward that is the least burdensome for the staff and for the council."

The study will determine the impact of reintegrating the activities and the staff into the council structure, which currently has nearly a thousand employees.

The mayor rightly points out that the council is required to close the company to enable it to apply for government bail out funds as national legislation requires the closure of municipal companies which have traded at a loss for the past three years.

Portimão council is among the most indebted councils in Portugal and urgently needs successfully to apply for government funds to enable even basic services to remain in place. Urbis could be wound up with key staff retianed or, privatised with staff running any parts of the company  that are, or could be made, profitable such as the Arade Exhibition Centre..