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10.06.16

Danish Stories – Part II: Kongstad’s Political Masters in Denmark and Rumoured Connections to the Venstre Party

Posted in Europe, Finance, Patents at 4:44 am by Dr. Roy Schestowitz

Another classic graphic on the Danish theme…

Danish story

Summary: A look at the political context surrounding the Chairman of the Administrative Council of the European Patent Organisation

IN the opening part of this series and in the previous post (with addendum that contains photos) we introduced readers to the Chairman of the Administrative Council of the EPO, Mr. Kongstad. Our exploration of this topic is very much relevant to the EPO, as shall become apparent towards the end of this long series.

“Kongstad seems to be in a position of significant power as the Chairman of the EPO Administrative Council. But it’s important to remember that this position is essentially that of a “primus inter pares” in relation to the delegates of the other member states of the EPO.”Mr. Kongstad is no orodinary person. Kongstad seems to be in a position of significant power as the Chairman of the EPO Administrative Council. But it’s important to remember that this position is essentially that of a “primus inter pares” in relation to the delegates of the other member states of the EPO.

For example, under the Administrative Council’s Rules of Procedure, any delegate can raise objections to the Chairman’s conduct of business and, if the objection is not upheld, the delegate may call for a decision by the Council.

Apart from this it should not be forgotten that as Director of the DKPTO, Kongstad is effectively a mid-ranking national civil servant who is ultimately subject to the authority of his political masters back home in Denmark.

For that reason it could be interesting to have a closer look at where the buck stops back in Copenhagen.

“Apart from this it should not be forgotten that as Director of the DKPTO, Kongstad is effectively a mid-ranking national civil servant who is ultimately subject to the authority of his political masters back home in Denmark.”The Ministry responsible for oversight of the DKPTO is the Ministry of Business and Growth. The current Minister is Troels Lund Poulsen who is a member of the Venstre party.

Before scrutinising Poulsen’s colourful and chequered political career, a short digression to provide some background about the Venstre party might be useful for readers who are not familiar with Danish politics.

Venstre – a Danish political curiosity

The Danish word “Venstre” literally means “The Left” but the party which bears this name is actually a centre-right conservative-liberal party with agrarian roots.

Venstre was founded in 1870 as part of a farmers’ movement against the landed aristocracy. Traditionally it was a conservative party advocating free trade and farmers’ interests as opposed to the interests of the aristocracy which were the platform of the other conservative party Højre (The Right). In the 1960s Venstre reinvented itself as a more classical liberal party. Today it is the major party of the centre-right in Denmark, and the third largest party in the country. It espouses an economically liberal “free market” ideology and some people would classify it as belonging to the “neo-liberal” camp.

“The Danish word “Venstre” literally means “The Left” but the party which bears this name is actually a centre-right conservative-liberal party with agrarian roots.”The party has often been in government usually as a coalition partner and many Danish Prime Ministers have come from its ranks.

In the most recent Danish parliamentary elections in 2015, Venstre received 19.5% of the vote, and 34 out of 179 seats. The government which formed following the election is a minority government consisting of Venstre alone which is supported by the other right wing parties. The current party leader and Prime Minister is Lars Løkke Rasmussen.

The Minister – Troels “Troelex” Lund Poulsen

Troels Lund Poulsen was appointed as Minister of Business and Growth in June 2015.

“It espouses an economically liberal “free market” ideology and some people would classify it as belonging to the “neo-liberal” camp.”Poulsen (D.o.B 1976) is a longtime member of Venstre who became politically active at 16, when he joined Venstre’s youth organisation Venstres Ungdom (“Liberal Youth”). A few years later, he had advanced to become its national chairman.

After finishing secondary school, Poulsen started university in 1996 but he never completed his history studies and left university without a degree.

His first and only non-elected jobs were as assistant to Venstre’s press chief, Michael Kristiansen, and as press coordinator for the Danish property development firm Ørestadsselskabet — two positions where he appears to have learned the fine art of spin doctoring.

In 2001, at age 25, Poulsen was elected to the Danish Parliament. Just six years later, he was appointed to the first of four ministerial posts which he has held:

  • Minister for the Environment from November 23rd 2007 to February 23rd 2010.
  • Minister for Taxation from February 23rd 2010 to March 8th 2011.
  • Minister for Education from March 8th 2011 to October 3rd 2011.
  • Minister for Business and Growth from June 28th 2015.

Source: Troels Lund Poulsen

“After finishing secondary school, Poulsen started university in 1996 but he never completed his history studies and left university without a degree.”Despite his meteoric rise in Venstre, Poulsen’s political career has also been dogged by controversy as documented by the Copenhagen Post in an article published in December 2011 entitled “Taxgate: Just who is Troels Lund Poulsen?”.

Source: Taxgate: Just who is Troels Lund Poulsen?

The Copenhagen Post article reveals that during his first ministerial appointment as environmental minister from 2007 to 2010, he brokered a deal to import and store the poisonous waste material hexachlorbenzene (HCB), a known animal carcinogen, from Australia. HCB is banned under the Stockholm Convention on persistent organic pollutants.

It was also during that time that Poulsen was widely criticised for accepting the gift of a 65,000 DKK (approx. 8,700 EUR) Rolex watch from the king of Saudi Arabia, the leader – and for then refusing to release his tax return to prove that he had declared the expensive gift. Poulsen finally decided to return the watch in order to silence his critics.

“The Copenhagen Post article reveals that during his first ministerial appointment as environmental minister from 2007 to 2010, he brokered a deal to import and store the poisonous waste material hexachlorbenzene (HCB), a known animal carcinogen, from Australia.”This incident earned him the nickname “Troelex” in the Danish media.

From 2010 to early 2011, Poulsen was Minister of Taxation – a job which he appeared to carry out without controversy until the so-called “Taxgate affair” surfaced in late 2011 some time after he had moved on to the Education Ministry.

Poulsen’s appointment to the Education Ministry in March 2011 was the result of another Venstre-government embarrassment which forced the then-PM Rasmussen to fire his Immigration Minister Hornbech and reshuffle the cabinet. During his seven months as education minister, Poulsen – who left university without a degree – was lampooned in the media as the “uneducated education minister”.

However, the incident which seems to have been most damaging to his reputation was the “Taxgate affair” which had been simmering in the background for some time previously but only really began to attract public attention in November 2011.

A timeline of the case can be found in an article entitled “Taxgate: How it all went down” which was published in the Copenhagen Post in December 2011 as an official enquiry was beginning.

Source: Taxgate: How it all went down

“During his seven months as education minister, Poulsen – who left university without a degree – was lampooned in the media as the “uneducated education minister”.”In December 2011 an official investigation was ordered into allegations that Poulsen and officials from the Taxation Ministry had been involved attempts to influence a tax audit of the opposition Social Democratic leader Helle Thorning-Schmidt and her husband Stephen Kinnock. At the same time Poulsen announced that he was taking a six month leave of absence from Parliament. One Danish journalist quipped that Poulsen might soon have the opportunity to complete his history degree now that his future in politics was looking less promising.

The Taxgate investigation went on for 16 months and involved the hearing of a total of 45 witnesses. The final cost to the Danish taxpayer was estimated in excess of 19 million DKK (approx. 2.5 million EUR) as reported by the Copenhagen Post in an article entitled “As Taxgate finally wraps up, total tab hits 19 million” published in December 2013.

Source: As Taxgate finally wraps up, total tab hits 19 million

“Poulsen is reputed to be fully loyal to his superiors “above and beyond the call of duty” and it seems that his loyalty to the party has been rewarded in spite of the many controversies which have overshadowed his career to date.”Political commentators have described “Taxgate” as one of the biggest scandals to hit Danish politics in recent times. Politiken newspaper’s editor-in-chief Bo Lidegaard has said that the case reeked of “political corruption” and “abuse of power”.

Although Poulsen’s reputation was undoubtedly damaged by the affair, he nevertheless managed to make a political come-back in June 2015 when he was appointed as Minister of Business and Growth in the newly formed Venstre minority government.

Poulsen is reputed to be fully loyal to his superiors “above and beyond the call of duty” and it seems that his loyalty to the party has been rewarded in spite of the many controversies which have overshadowed his career to date.

The “éminence grise” – Permanent Secretary Michael Dithmer

A significant figure in the chain of command between Kongstad and his Minister appears to be the Permanent Secretary at the Ministry of Business and Growth, Michael Dithmer.

“Bendtsen came under investigation for corruption in 2009 as a result of allegations that large Danish companies had paid for 23 hunting trips and 25 golf tours for Bendtsen and officials from his Ministry.”A long-serving career civil servant, Dithmer is also reputed to have strong Venstre connections. Both of his parents were lawyers and were Venstre members who sat on the Copenhagen City Council. It is suspected that Dithmer might also be a party member but this has not been confirmed.

In his role as a senior civil servant Dithmer is normally less exposed to the limelight than politicians like Poulsen but it turns out that he has also been involved in a fair share of controversies during his career.

From 2001 to 2008, Bendt Bendtsen, a member of the Conservative Party, acted as Deputy Prime Minister and Minister for Economic and Business Affairs under Prime Minister Anders Fogh Rasmussen. During this time Dithmer’s duties as Permanent Secretary included advising the Minister about potential conflicts of interest in relation to gifts and benefits in kind.

Bendtsen came under investigation for corruption in 2009 as a result of allegations that large Danish companies had paid for 23 hunting trips and 25 golf tours for Bendtsen and officials from his Ministry.

“It was also reported that in 2007 Dithmer used his official BMW 730i with chauffeur to buy a new hunting rifle during a trip to Jutland.”The total amounts of the benefits alleged to have been received were reported to be of the order of 250,000 DKK (approx. 33,500 EUR).

Source: Bendt Bendtsen meldt for bestikkelse

During the investigation into Bendtsen’s affairs it emerged that Dithmer himself had been a willing participant in a number of hunting trips which had been paid for by DHH (Det danske Hedeselskabet), a business foundation which is one of Denmark’s biggest firms in private forest management and is involved in the commercial trade of forest properties in Denmark and the Baltic region. It was also reported that in 2007 Dithmer used his official BMW 730i with chauffeur to buy a new hunting rifle during a trip to Jutland.

Source: Bendtsens højre hånd fik selv jagtture”

“By 2009 the Danish press was already reporting that the cumulative losses associated with Roskilde Bank had reached the level of DKK 10 billion (approx 1.35 billion EUR) and were expected to climb even higher.”Dithmer also came under fire in connection with the collapse of Roskilde Bank, a regional lender that had existed since 1884. During the years preceding the recent global financial crisis the bank became a test laboratory for “innovative accounting”. It was later found to have grossly exaggerated the value of its assets, while the management indulged in self-enrichment by awarding itself millions in stock options and bonuses. After unsuccessful government-backed attempts to find a buyer, Roskilde Bank was finally declared insolvent in August 2008. By 2009 the Danish press was already reporting that the cumulative losses associated with Roskilde Bank had reached the level of DKK 10 billion (approx 1.35 billion EUR) and were expected to climb even higher.

Source: Roskilde Bank – taxpayers’ nightmare

Following the Roskilde insolvency, about one-third of Denmark’s banks either collapsed or were absorbed by bigger rivals.

In September 2009, the Danish Social Democrats called for an investigation into what Bendtsen had known about Roskilde back in 2006 at a time when the Danish Financial Supervisory Authority (FSA) was already aware that the bank was in trouble.

“In January 2012, reports appeared in the Danish press that Dithmer had been the main inspiration behind economic measures which had cost the treasury at least 2.1 billion DKK (approx. 280 million EUR).”It was claimed that although the Ministry had been repeatedly briefed about the situation at Roskilde, officials in the Ministry had failed to pass the relevant information on to the Minister. Dithmer’s role in the affair came under scrutiny and questions were asked about what was claimed to be his close personal relationship with the Director of the FSA, Henrik Bjerre-Nielsen.

Source: Kendte Bendtsen til Roskilde Banks problemer?

In January 2012, reports appeared in the Danish press that Dithmer had been the main inspiration behind economic measures which had cost the treasury at least 2.1 billion DKK (approx. 280 million EUR). According to one report, in his role as Permanent Secretary he had pushed through a special government guarantee of 13.6 billion DKK (approx. 1.83 billion EUR) to Amagerbanken under Brian Mikkelsen, Bendtsen’s successor as Minister of Economic and Business Affairs. The measure was approved despite the fact that the Ministry had been advised against issuing a guarantee by Finansiel Stabilitet, a state-owned public limited company which was responsible for winding up the activities taken over from distressed banks.

Source: This page about Michael Dithmer

“In the next installment we shall start to look at Mr. Kongstad’s private entrepreneurial activities which he seems to pursue with almost as much enthusiasm as his day-job as Director of the DKPTO.”As a seasoned political operator Dithmer managed to weather these storms and to hold on to his position as the ” éminence grise” of the Ministry of Business and Growth. It has been rumoured that his connections to Venstre may have helped him to emerge relatively unscathed from the various controversies in which he has been implicated but this cannot be confirmed.

That concludes our little excursion through the corridors of power in Copenhagen where the political masters of the DKPTO reside. In the next installment we shall start to look at Mr. Kongstad’s private entrepreneurial activities which he seems to pursue with almost as much enthusiasm as his day-job as Director of the DKPTO.

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