EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

05.23.18

Saint-Germain’s Poisonous Legacy of “Toxic Loans”: The Cautionary Tale of SIDRU and Its “Toxic Loans”

Posted in Europe, Finance, Patents at 10:55 pm by Dr. Roy Schestowitz

Summary: The town where the EPO‘s President (Battistelli) is a deputy mayor has a track record of financial hardship and alleged financial misconduct, attributed to the same financial practices Battistelli has just implemented at the EPO

The cautionary tale which follows concerns the Syndicat Intercommunal de Destruction des Résidus Urbains (SIDRU), a communal waste disposal service which is a joint enterprise of fifteen municipalities in the Greater Paris region, including the township of St. Germain-en-Laye.

An official report into the affairs of the SIDRU was issued in 2012 by the competent local public audit body (Chambre Régionale des Comptes d’Île de France). PDF document can be found here [PDF] (local copy [PDF]).

“Between 2003 and 2007, that is to say under Lamy’s chairmanship, SIDRU concluded a number of loan contracts with various banks.”This report confirms that from 1999 onwards the chairman of the SIDRU was none other than the late Emmanuel Lamy, the longtime Mayor of St. Germain-en-Laye from 1999 until 2017.

Between 2003 and 2007, that is to say under Lamy’s chairmanship, SIDRU concluded a number of loan contracts with various banks.

The loans were related to the financing of a new intercommunal waste processing and incinerator facility Azalys located in Carrières-sous-Poissy.

Azalys and Lamy

The Azalys incinerator had initially been financed with a conventional loan totalling around € 49 million at a fixed interest rate of about 5%.

After some time the SIDRU management came to the conclusion that the interest rate was too high. During the period 2003 to 2007 it was decided to “swap” the original fixed interest loan for a number of more sophisticated “structured debt products”. These “structured debt products” took the form of adjustable-rate loans whose interest rates were indexed to the movements of foreign exchange rates between the Euro and other currencies.

Back in 2003, or even in 2007 before the collapse of Lehman Brothers, such “structured debt products” may have seemed like a good idea.

“DEPFA has since been “wound down”. It achieved notoriety in 2008 after it ran into liquidity problems as a result of the economic and financial turmoil in the United States which in turn unleashed shock-waves in the German financial sector and ultimately necessitated a multi-billion bailout of its parent company Hypo Real Estate.”Or at least it was comparatively easier for the snake-oil salesmen pushing them to dazzle prospective customers by exaggerating the claimed advantages while downplaying the risks.

However as chaos and instability engulfed the financial markets in 2008, the unfortunate customers all too often woke up to find that what had been sold to them as sophisticated “structured debt products” had suddenly metamorphosed into “toxic loans” saddling them with dire financial consequences which in many cases still remain to be resolved.

One of the SIDRU loans negotiated by Lamy in 2007 was with the DEPFA Bank, the Dublin-based public-sector financing subsidiary of the German Hypo Real Estate (HRE).

DEPFA BANK

DEPFA has since been “wound down”. It achieved notoriety in 2008 after it ran into liquidity problems as a result of the economic and financial turmoil in the United States which in turn unleashed shock-waves in the German financial sector and ultimately necessitated a multi-billion bailout of its parent company Hypo Real Estate.

“The interest rate of the DEPFA loan rose dramatically in 2011, jumping from 13.35% to 25% in March, then reaching 34% in April and eventually hitting a peak value of 55% in August 2011!”The loan which Lamy concluded with DEPFA for a tranche of SIDRU’s debt was scheduled to run for a ten year period.

For the first year from 15 December 2008 to 15 December 2009 a fixed rate of interest of 3.68% was to be charged.

For the remaining 9 years the interest rate on the loan depended on the difference between the exchange rate of the Euro in US Dollars and the exchange rate of the Euro in Swiss francs and it was to be calculated based on the following formula:

4.68 + 1.7 x max (0; EURUSD – EURCHF)

The arrangement turned out to be catastrophic when instability in the global financial markets unexpectedly led to both a strong rise in the Euro against the Dollar and a strong rise in the Swiss Franc against the Euro.

The interest rate of the DEPFA loan rose dramatically in 2011, jumping from 13.35% to 25% in March, then reaching 34% in April and eventually hitting a peak value of 55% in August 2011!

DEPFA loan interest rates

The fluctuation of the interest rates on the DEPFA loan between December 2009 and December 2014 can be seen in a graphic posted on the website of the opposition group Saint-Germain Autrement.

In July 2011 SIDRU decided to suspend its payments on the DEPFA loan.

“In July 2011 SIDRU decided to suspend its payments on the DEPFA loan.”The controversy surrounding the DEPFA loan and other “toxic loans” dragged on [PDF].

After the local elections in 2014 Lamy was replaced as Chairman of SIDRU by Jean-Frédéric Berçot, the Deputy Mayor of the neighbouring municipality of Poissy.

Following SIDRU’s suspension of payments in July 2011 the matter of the DEPFA loan eventually ended up in court.

“On 4 November 2016 the Court of Appeal of Paris issued a final judgment against SIDRU and ordered it to pay DEPFA all outstanding debts plus other charges which in total amounted to just over € 20 million!”On 4 November 2016 the Court of Appeal of Paris issued a final judgment against SIDRU and ordered it to pay DEPFA all outstanding debts plus other charges which in total amounted to just over € 20 million!

A PDF file of the judgment can be found here [PDF] (local copy [PDF]).

The judgment underlined the personal responsibility of Emmanuel Lamy in the affair.

“The SIDRU is an informed party to the contract, whose director, Emmanuel Lamy, Mayor of the commune of Saint-Germain-en-Laye, ENArque, head of mission for general economic and financial control for the Ministry of Finance, had all the skills required to understand and analyse the possible consequences of both a strong rise in the Euro against the Dollar and a strong rise in the Swiss Franc against the Euro even if such a scenario had been presented as unlikely”.

In a statement published in the “Free Opinion” column of issue no. 697 [PDF] of the Journal de Saint-Germain the opposition group Saint-Germain Autrement spoke in terms of a “damning judgment” against Lamy: “SIDRU: le jugement accable E. Lamy”.

Journal de Saint-Germain Journal 18 Nov 2016

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. Links 23/3/2019: Falkon 3.1.0 and Tails 3.13.1

    Links for the day



  2. The Unified Patent Court is Dead, But Doubts Remain Over the EPO's Appeal Boards' Ability to Rule Independently Against Patents on Nature and Code

    Patents used to cover physical inventions (such as engines); nowadays this just isn't the case anymore and judges who can clarify these questions lack the freedom to think outside the box (and disobey patent maximalists' dogma)



  3. Patent Law Firms Still Desperate to Find New Ways to Resurrect Dead Software Patents in the United States

    There's no rebound and no profound changes that favour software patents; in fact, judging by caselaw, there's nothing even remotely like that



  4. Links 22/3/2019: Libinput 1.13 RC2 and Facebook's Latest Security Scandal

    Links for the day



  5. Why the UK Intellectual Property Office (UK-IPO) Cannot Ignore Judges, Whereas the EPO Can (and Does)

    The European Patent Convention (EPC) ceased to matter, judges' interpretation of it no longer matters either; the EPO exploits this to grant hundreds of thousands of dodgy software patents, then trumpet "growth"



  6. The European Patent Office Needs to Put Lives Before Profits

    Patents that pertain to health have always posed an ethical dilemma; the EPO apparently tackled this dilemma by altogether ignoring the rights and needs of patients (in favour of large corporations that benefit financially from poor people's mortality)



  7. “Criminal Organisation”

    Brazil's ex-President, Temer, is arrested (like other former presidents of Brazil); will the EPO's ex-President Battistelli ever be arrested (now that he lacks diplomatic immunity and hides at CEIPI)?



  8. Links 21/3/2019: Wayland 1.17.0, Samba 4.10.0, OpenShot 2.4.4 and Zorin Beta

    Links for the day



  9. Team UPC (Unitary Patent) is a Headless Chicken

    Team UPC's propaganda about the Unified Patent Court (UPC) has become so ridiculous that the pertinent firms do not wish to be identified



  10. António Campinos Makes Up Claims About Patent Quality, Only to be Rebutted by Examiners, Union (Anyone But the 'Puff Pieces' Industry)

    Battistelli's propagandistic style and self-serving 'studies' carry on; the notion of patent quality has been totally discarded and is nowadays lied about as facts get 'manufactured', then disseminated internally and externally



  11. Links 20/3/2019: Google Announces ‘Stadia’, Tails 3.13

    Links for the day



  12. CEN and CENELEC Agreement With the EPO Shows That It's Definitely the European Commission's 'Department'

    With headlines such as “EPO to collaborate on raising SEP awareness” it is clear to see that the Office lacks impartiality and the European Commission cannot pretend that the EPO is “dafür bin ich nicht zuständig” or “da kenne ich mich nicht aus”



  13. Decisions Made Inside the European Patent Organisation (EPO) Lack Credibility Because Examiners and Judges Lack Independence

    The lawless, merciless, Mafia-like culture left by Battistelli continues to haunt judges and examiners; how can one ever trust the Office (or the Organisation at large) to deliver true justice in adherence or compliance with the EPC?



  14. Team UPC Buries Its Credibility Deeper in the Grave

    The three Frenchmen at the top do not mention the UPC anymore; but those who promote it for a living (because they gambled on leveraging it for litigation galore) aren't giving up and in the process they perpetuate falsehoods



  15. The EPO Has Sadly Taken a Side and It's the Patent Trolls' Side

    Abandoning the whole rationale behind patents, the Office now led for almost a year by António Campinos prioritises neither science nor technology; it's all about granting as many patents (European monopolies) as possible for legal activity (applications, litigation and so on)



  16. Where the USPTO Stands on the Subject of Abstract Software Patents

    Not much is changing as we approach Easter and software patents are still fool's gold in the United States, no matter if they get granted or not



  17. Links 19/3/2019: Jetson/JetBot, Linux 5.0.3, Kodi Foundation Joins The Linux Foundation, and Firefox 66

    Links for the day



  18. Links 18/3/2019: Solus 4, Linux 5.1 RC1, Mesa 18.3.5, OSI Individual Member Election Won by Microsoft

    Links for the day



  19. Microsoft and Its Patent Trolls Continue Their Patent War, Including the War on Linux

    Microsoft is still preying on GNU/Linux using patents, notably software patents; it wants billions of dollars served on a silver platter in spite of claims that it reached a “truce” by joining the Open Invention Network and joining the LOT Network



  20. Director Iancu Generally Viewed as a Lapdog of Patent Trolls

    As Director of the Office, Mr. Iancu, a Trump appointee, not only fails to curb patent trolls; he actively defends them and he lowers barriers in order to better equip them with bogus patents that courts would reject (if the targets of extortion could afford a day in court)



  21. Links 17/3/2019: Google Console and IBM-Red Hat Merger Delay?

    Links for the day



  22. To Team UPC the Unified Patent Court (UPC) Has Become a Joke and the European Patent Office (EPO) Never Mentions It Anymore

    The EPO's frantic rally to the very bottom of patent quality may be celebrated by obedient media and patent law firms; to people who actually produce innovative things, however, this should be a worrisome trend and thankfully courts are getting in the way of this nefarious agenda; one of these courts is the FCC in Germany



  23. Links 16/3/2019: Knoppix Release and SUSE Independence

    Links for the day



  24. Stopping António Campinos and His Software Patents Agenda (Not Legal in Europe) Would Require Independent Courts

    Software patents continue to be granted (new tricks, loopholes and buzzwords) and judges who can put an end to that are being actively assaulted by those who aren't supposed to have any authority whatsoever over them (for decisions to be impartially delivered)



  25. The Linux Foundation Needs to Speak Out Against Microsoft's Ongoing (Continued) Patent Shakedown of OEMs That Ship Linux

    Zemlin actively thanks Microsoft while taking Microsoft money; he meanwhile ignores how Microsoft viciously attacks Linux using patents, revealing the degree to which his foundation, the “Linux Foundation” (not about Linux anymore, better described as Zemlin’s PAC), has been compromised



  26. Links 15/3/2019: Linux 5.0.2, Sublime Text 3.2

    Links for the day



  27. The EPO and the USPTO Are Granting Fake Patents on Software, Knowing That Courts Would Reject These

    Office management encourages applicants to send over patent applications that are laughable while depriving examiners the freedom and the time they need to reject these; it means that loads of bogus patents are being granted, enshrined as weapons that trolls can use to extort small companies outside the courtroom



  28. CommunityBridge is a Cynical Microsoft-Funded Effort to Show Zemlin Works for 'Community', Not Microsoft

    After disbanding community participation in the Board (but there are Microsoft staff on the Board now) the "Linux Foundation" (or Zemlin PAC) continues to take Microsoft money and polishes or launders that as "community"



  29. Links 14/3/2019: GNOME 3.32 and Mesa 19.0.0 Released

    Links for the day



  30. EPO 'Results' Are, As Usual, Not Measured Correctly

    The supranational monopoly, a monopoly-granting authority, is being used by António Campinos to grant an insane amount of monopolies whose merit is dubious and whose impact on Europe will be a net negative


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts