Submarines - the Ferrostaal fiddle continues

ferrostaalThe fiddle continues, to the detriment of the Portuguese taxpayer, as the German consortium that supplied two submarines in return for an equal sum to be invested in Portugal, again has managed to bewitch Portugal’s compliant and complacent government.

A hapless secretary of state for the economy today was wheeled out to announce that German company Ferrostaal has finalised a €220 million investment as part of a consortium with Galp and Martifer for the construction of six wind farms.

The government therefore considers the Ferrostaal contra deal payment obligation as finished and the dossier is closed.

Ferrostaal represents the German Submarine Consortium which in 2004 sold two submarines to Portugal in return for cast-iron, solid, irrevocable and binding agreement that it would invest €600 million in Portugal in a ‘contra deal’ arrangement.

Ten years have passed and this is the first tranche of investment to be seen.

The almost unknown secretary of state Leonardo Mathias today gave us all a lesson in political mathematics, stating that the €220 million invested in the wind farm project is in fact €600 million because in addition to the direct investment of €220 million in the construction of the wind farms, it is estimated that there is a return of €244 million in VAT, €108 million in IRC, €25 million in municipal taxes, €18.6 million in some other state tax, €7 million in municipal surcharges, €5 million in stamp duty and €2.2 million in IMI.

These figures may or may not be massaged but the issue is that they stretch far into the future, to 2040 to be accurate.

"It's a step that closes the dossier on the contra deals. With this investment, by 2040 we should have a superior return to the €600 million for Portugal," said Mathias, fully expecting the public to accept his duplicitous explanation yet knowing deep down that he is stretching the truth beyond its limit.

Mathias wittered on to justify his astonishing statement, "Not everything in the contra deals agreement must translate into direct investment (sic). What is important is that the total return for the country complies with what was established in the original agreements" that date back to 2004.

So, despite running the figures to 2040 the secretary of state expects the public to agree that this is what was intended in the original agreement with the Germans. It is not.

The wind farm investment is better than the original fudge when the Germans reluctantly and perhaps rather cunningly picked the Alfamar hotel near Albufeira as an investment target which they said was to be bought and tarted up as part of its investments in Portugal unde the deal.

Strangely, despite a high profile launch of this hotel project by then minister for the economy Alvaro Santos Pereira, the parties conveniently ‘could not agree a price’ and the deal quietly was shelved.

The current fall guy Leonardo Mathias said he will ensure that 200 direct jobs will be created, some of them in a wind turbine factory which will supply “about 84 wind turbines by 2016” to be installed in the north of the country.

Ferrostaal management arranged the payment of 'fees' to intermediaries and got the original submarine deal through. Later later a court in Germany gave suspended sentences and fines to two of the Ferrostall directors involved.

The parallel case in Portugal was dropped in a decision that surpised the country and was greeted with relief by those involved.

The money trail now is being reinvestigated as part of the BES inquiry as €30 million was transferred offshore.

hope that today’s laughable commentary on the latest Ferrostaal deal will fool the taxpayer is a long shot in this shoddy and corrupt affair.

The only surprise is that Mathias' statement today only took the tax revenue projections to 2040.

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+6 #1 Pedro Marmelos 2014-12-04 09:50
Mathias' statement today only took the tax revenue projections to 2040....

What this chap has let out of the bag (one of your english sayings eh?) is that - with other regions leaving Spain this creates an opening for Portugal to rebuild bridges and join a Greater Iberia.

In 2040 - having looked closely at the dregs of my coffee cup - I can reliably tell you all that Portugal will have become part of Spain.

Dukey Braganza's people will be back on the throne so there will be a main Spanish king and a local Pt one.

But some things do not change - in 2040 most of Portugal's wealth will still be offshore !

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