Only two of the eight contracts, where Portugal bought defence equipment in return for 'contra' investment in Portugal by the seller, have been executed.
In a third agreement, compensation for the acquisition of torpedoes, a Portuguese court ordered that bank guarantees were executed and the money transferred to the state, some €11.6 million, as the seller’s side of the bargain had not taken place.
The remaining five programmes, where the seller agreed to invest a set amount of money in Portugal in return for the business, remain unfulfilled.
This is the saddening conclusion in the Annual Report of Contra Agreements 2013 that was quietly posted on the Ministry of Economy’s website last Friday.
Since the Portuguese Contra Agreement Commission was abolished in 2011, and its duties transferred to the Ministry of the Economy, reports on these activities have not been published, and now the public can see why.
The placement of the report online is as a direct result of instructions given by the new Minister for the Economy Pires de Lima who said that "nothing justifies this lack of information. Transparency in the management of public affairs, while always safeguarding the confidentiality of contracts, is to continue," even when the news is as dire as currently, it seems - he is to be congratulated.
There are two glaring cases in the report. No surprises that one is the controversial submarines deal, the other is for their torpedoes. In the torpedoes case the government had agreed a contra agreement valued at €46.5 million but ended up receiving €11.6 million from cashing in the bank guarantee that had been lodged, thus losing 75% of the agreed investment stipulated in the agreement.
In the case of the two submarines from Germany, the contra agreement was for a sum of €1.21 billion spread over 39 investment projects, "the most significant being those relating to the Viana do Castelo shipyards valued at €632 million and in the automotive sector in the amount of €382.5 million," according to the report.
In June 2011, a full seven years after the agreement was signed, the implementation of compensatory payments had yet even to be started by the German consortium.
The then Minister for the Economy, Álvaro Santos Pereira, decides to accept a project from Koch Portugal valued at €220.6 million to replace several of the smaller contracted investments. Just over a year later a new project popped up, the re-construction of the Falesia Hotel near Albufeira with an inflated price tag of €600 million.
With the implementation of these two projects, minister Pereira hoped that the press attention would wander or that the contractual obligations for the submarine purchases would be fulfilled. By the end of the year the Koch Portugal project was still being pondered by the Germans and the Falesia hotel project had been ditched as it did not make economic sense to the investors who blamed the hotel owners for having unrealistic expectations of their hotel's market value.
The list of unfulfilled contracts goes on - the F16 aircraft purchase has only has received 78% of the agreed contra payments, the purchase of AW101 helicopters is only up to 61%, the armoured cars deal is only up to 17% of the agreed compensation total.
The lack of financial controls from the Ministry of the Economy have been astounding, as has been the concealment of the truth from the public, until the new minister took over from Pereira who now has been shown to have been totally out of his depth.
As Portugal's economy creeps along in deep recession, every euro is important. The scandalous lack of attention to pulling in the agreed investment money from wealthy arms and equipment suppliers is as suspicious as it is incompetent.
