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06.28.18

President Benoît Battistelli is Finished, But the Huge Mess He Has Created is Not

Posted in Europe, Finance, Law, Patents at 12:59 pm by Dr. Roy Schestowitz

Dutch EPO protest

Summary: Benoît Battistelli is leaving the EPO after another ruinous and disastrous week in which he lost all of his cases against staff representatives (more than 2 years after his union-busting crusade resulted in sackings and culminated in a climate of unprecedented terror inside the Office)

IT’S OVER. He’s done breaking things. Will the EPO survive this breakage? Time will tell.

Benoît Battistelli has just published (warning: epo.org link) his “Farewell Message” and it was promoted in Twitter almost immediately.

“Justice can be notoriously slow, as many EPO insiders are abundantly aware, and laws are selectively applied, typically to protect those in positions of power.”Many serious abuses under his belt. Many people think (or hope) he might get arrested in the future, just like Nicolas Sarkozy. Justice can be notoriously slow, as many EPO insiders are abundantly aware, and laws are selectively applied, typically to protect those in positions of power.

The EPO refuses to talk about justice. Still not a word about ILO/ILO-AT. Still publishing yet more Battistelli photo ops in a construction site which was a failed project (massive losses). They have also just retweeted nighttime pictures from an angle that hides how crude and unfinished this project really is.

“The EPO refuses to talk about justice. Still not a word about ILO/ILO-AT.”Battistelli’s blog post is the same old nonsense which requires a bag within reach (in case of vomiting). It remains to be seen whether António Campinos will carry on with the same stained (full of lies) blog.

We’re still trying to find more coverage about yesterday’s protest.There are tweets in Dutch [1, 2, 3, 4] about the protest at the EPO but barely any press coverage (i.e. the usual). There’s the photo shown above (no faces). SUEPO now links to an article about it — the sole one we saw (so far). One more article about ILO-AT has just been published by WIPR, two days after the historic rulings. To quote some bits:

The International Labour Organization’s Administrative Tribunal (ILOAT) reversed the downgrading of one staff member of the European Patent Office (EPO) and reinstated another in decisions handed down earlier this week.

In case 4042, the ILOAT ordered the reinstatement of Malika Weaver, who had challenged the EPO’s decision to downgrade her for misconduct.

[...]

The SUEPO Munich committee chairman was accused of having actively incited Weaver to unduly pressure C and of forwarding the confidential letter to the Munich committee.

While the disciplinary committee found there was insufficient evidence of Brumme’s active involvement in the exercise of undue pressure, it did find that he had disclosed confidential information.

The committee recommended downgrading, but Battistelli dismissed him.

Earlier this week, the ILOAT set aside the EPO’s decision and ordered the organisation to reinstate Brumme. He was awarded moral damages of €30,000 and costs of €8,000.

In case 4047, another complainant challenged the EPO’s decision to dismiss her for serious misconduct.

The ILOAT found that the disciplinary committee and president hadn’t correctly applied the appropriate standard of proof and remitted the case to be “considered afresh”.

The tribunal backed the EPO in another case, dismissing a complaint against relegation in case 4050.

Out of 75 Judgments, 17 concerned the EPO. Of those 17, the ILOAT ruled against the complainants in 10 cases.

Don’t forget Judge Corcoran, whose case demonstrates that the EPO still refuses to obey ILO and implement resolutions. Will Campinos give any jobs back, reinstating fired workers? Time will tell. The EPO has just said: “This year’s conference will update participants on the reform of the structure of the Boards of Appeal and of the Boards’ Rules of Procedure.”

“But worry not, as a former banker who is loyal to Battistelli (since many years ago) Campinos won’t dare investigate.”“They totally lost their independence when Battistelli repeatedly did illegal things,” I told them. “He should be put on trial.”

But the EPO’s PR people, even after Battistelli says “farewell” (technically his last day is tomorrow), are still bossed by Team Battistelli and they push the same toxic agenda, suppressing particular facts while pushing lies. Their account also retweets UPC pushers from CIPA today. What does the future hold? Campinos is indebted to Battistelli, so it doesn’t look bright. Maybe Battistelli will still be around in Munich next week, sharing alcoholic drinks like very expensive wines at the pub he built for himself (and now Campinos). It’s alleged that he misused money dedicated for the building in the Netherlands to secretly build that 'penthouse' of his. But worry not, as a former banker who is loyal to Battistelli (since many years ago) Campinos won’t dare investigate. Besides, he benefits from this ‘inheritance’.

06.26.18

Battistelli is ‘Pulling a Lamy’ With a Lot More Money at Stake (and Examiners’ Future)

Posted in Europe, Finance, Patents at 2:03 am by Dr. Roy Schestowitz

Quietly during the last Christmas holiday when nobody paid any attention: EPO Has Become an ‘Investment Bank’

SIPO Lamy and Battistelli
Saint-Germain-en-Laye as the EPO’s clandestine ‘branch’? Battistelli and Lamy with Commissioner Shen of the Chinese State Intellectual Property Office and Raimund Lutz lurking in the background.

Summary: Benoît Battistelli is gambling with the future of EPO examiners and the EPO at large (applicants and EP holders rely on the EPO’s stability), as even SUEPO belatedly notes in a letter one anonymous source has passed to us

It was exactly one month ago (May 26th) that we concluded our toxic loan series and its relevance to the EPO. Here are all the relevant posts:

Readers may also want to read parts 1, 2 and 3 of St. Germain’s “Système Lamy” and Its EPO Clone.

As we noted a few days ago, Wirtschaftswoche WIWO now covers these issues. Better late than never, right? German media belatedly covers EPO scandals (while Battistelli has 5 days of diplomatic immunity left). SUEPO took note of it (two pages/articles) and we expect translations to show up soon. Petra Sorge authored it and Thorsten Bausch is mentioned in it. We presume they also used our information (as above) in their research; Bausch had certainly read that with interest.

“What would that make stakeholders think (if they all knew about it)?”What will António Campinos, a former banker (at a notorious Portuguese bank), do about all this? He can’t quite defy Battistelli’s will, can he? He knows where his job came from and they’ve long been close. Will he carry on gambling with stakeholders’ money? What would that make stakeholders think (if they all knew about it)?

Well, the main stakeholder in all this is EPO staff, e.g. their pensions. And SUEPO has just written about this as follows:

22 June 2018

The new EPO Treasury Investment Fund – institutionalized gambling with someone else’s1 money?

Dear colleagues,

Through a combination of reduced career progression and extraordinary productivity gains, the Office has made an operating surplus of the order of several hundred million Euros each year as well as paid for in full for its new building in The Hague. Yet the Office’s cash reserve today still amounts to around €2.4 billion.

It was foreseen by a decision2 of the Administrative Council (AC) that any such surplus generated by staff’s work was to be transferred into the Reserve Fund for Pensions and Social Security (RFPSS) to cover future obligations. The RFPSS was set up and financed by staff (1/3rd) and the Office (2/3rd) and has performed very well since its inception: it now has a value of over €8 billion.

However, in more recent years the Office has departed from this decision and instead injected only a fraction of the operating surplus into the RFPSS while retaining large parts of the money within the EPO treasury.

According to the IFRS2 accounting method, the EPO accounts show a negative equity of about €12 billion, mainly due to long term obligations such as pension obligations4. As should be apparent from the example in the footnote below, this negative equity is very sensitive to the discount rate applied to these obligations. The discount rate applied according to the

IFRS depends on the bond markets and is thus inherently volatile from one year to the next. For example, in 2011, this negative equity was €1.9 billion (applying a discount rate of
5.38%), which is less than the start-up capital for the EPOTIF. In 2014, it was calculated at some €12 billion (applying a discount rate of 1,61%),very similar to today’s figure. However, in 2015 some €4,5 billion of the negative equity “disappeared” without any substantive change in the operational income, simply due to applying the higher discount rate of 2,6%. Therefore, there would appear is no reason to now panic and take hasty or rushed decisions.

The President has followed a proposal in the second financial study to invest the present and future office treasury money to cover for these huge, fictive obligations in a new fund under new management. The more straight forward approach would have been to simply invest the money in the existing RFPSS.

However, on the proposal of the President, the Budget and Finance Committee (BFC) approved the setting-up of a new external EPO Treasury Investment Fund (EPOTIF)5.

The staff representation is strongly opposed to the creation of another fund, in particular one that is managed externally and whose investment strategy will lack the necessary internal checks & balances to avoid high risk investments, see sc17207cl, su18038cl and su18039cl (letters sent to AC and Auditors). At the last BFC meeting, the delegations also
asked for more information: the German Delegation requested to review any contracts ahead of any decision on fund management. In 2017, the German Bundesrechnungshof gave a negative opinion on setting up such risky funds in 2017. Perhaps unsurprisingly, the President declined all requests to provide any detailed contract data to the BFC, the very body who are supposed to make informed decisions based on the financial situation of the EPO.

The RFPSS fund management provides already for the appropriate checks and balances and risk limiting mechanisms. Furthermore, the costs of the RFPSS management are only a third of those estimated for the new outsourced EPOTIF. Finally, the RFPSS has to date performed very well, producing higher returns on average than those predicted for the EPOTIF.

It is extraordinary that this far reaching proposal with no meaningful risk limits (the only one contained in the proposal is ill-defined and therefore does not cover a number of risks6) has not been put to the AC for vote, rather only to the BFC in 2017. As such, we believe that this decision was taken ultra-vires by the BFC. Further to the above obvious argument raised by the staff representation, a number of AC delegations stated back in 2017 that this important and far reaching decision should be deferred until the new President takes up office next month. However, the incumbent President stated that it would be only a further loss of time and money if the cash reserves (€2.4 billion) were not be invested as soon as possible. According to his estimates, the gain foreseen for the first year is estimated to €70 million and then €100 million per annum from the next year onwards.

Had the President, however, simply followed the AC decision in the early 1980’s (CA/27/83 point 19) to transfer any surplus into the RFPSS, then the EPO would have already accumulated gains in the order of several hundred million Euros over the past years and the money would have been safely placed in low-risk investments.
SUEPO strongly opposes such risky institutionalized gambling with the staff’s and the applicant’s money. If it all goes wrong, who will foot the bill?

SUEPO have informed the Auditors on the situation and asked them for their opinion.

SUEPO will urgently address this issue with the new President Mr. Campinos: a swift return to a more meaningful and safe financing of our own social security. Meanwhile, all legal means will be explored to minimise the impact of the new fund on the Office’s finances and any appropriate action will be taken.

SUEPO fights for your rights.

Your SUEPO Central

_____
1 EPO staff and the applicants
2 BFC document CA/27/83 point 19 endorsed by the AC in June 1983 with CA/PV 16 pg 69, para 195ff
3 a method introduced for listed companies and which is not properly adapted for “business models” such as public services, particularly for those of patent offices like the EPO
4 The vast majority of the EPO’s long term obligations are pension obligations whose present value strongly depends on the discount rate applied. For illustration, to pay someone €1000 pension in 50 years’ time, you would have to put aside today either €68,77 [1000/(1+5.5%)50] if you apply a discount rate of 5,5% or €475 [1000/(1+1.5%)50] with a discount rate of 1,5%,a difference of €406. The actuaries who make a recommendation for the EPO’s pension contributions use the same calculation method as IFRS for this calculation, but apply a discount rate of 5.5%. Since the IFRS discount rate is currently much lower than that, the apparent long term pension obligations calculated according to the IFRS method are much higher, thereby suggesting that the EPO should have put much more money aside to cover these pension obligations than it actually did. This over-valued obligation directly inflates the negative equity. Consequently, it is this perceived underfunding that contributes the lion share to the negative equity. This would change drastically through raising discount rates and rates do change considerably with time. For example, in the first years of this century, with higher discount rates, the equity gap was rather small. If the discount rate were to increase to figures like we enjoyed in the 1980’s, then any lingering negative equity due to pension obligations could be transformed into a high surplus.
5 The German delegation voted against as the Bundesrechnunghof had not provided its consensus; three delegations abstained (IT, IE, CZ); two delegations (PT, LI) were absent. All others voted in favour.
6 There, actually, isn‘t a single risk measure which can cover all the aspects of financial risks arising from different assets. This is why the RFPSS and similar funds use a combination of different risk measures.

This won’t end well and we certainly don’t expect Mr. Campinos to do anything about it. Maybe he too stands to benefit from the gamble.

06.25.18

Benoît Battistelli’s ‘Dowry’ From the Administrative Council of the EPO

Posted in Europe, Finance, Fraud, Patents at 8:02 am by Dr. Roy Schestowitz

It might not be the last, either

EPO budget
Image source

Summary: The dreadful state of the EPO, where one man controls everything and mismanages money (sending a huge amount of money to his other employer, giving himself a massive bonus or a “golden parachute”, allegedly paying for national delegates’ votes and gambling with EPO budget), won’t be improved until the entire organisation removes “Team Battistelli” (the manifestation of Battistelli’s 8-year rogue regime)

Battistelli’s very last day at work is this coming Friday. António Campinos will take over after that; he’s more or less Battistelli’s own choice and he too is French.

Another quarterly congregation of the Administrative Council of the EPO will commence in 2 days. Last time it was so secretive that it was hard to confirm that they had given Battistelli a massive bonus (like three years of additional work but without doing anything!).

“It is far worse than FIFA has ever been.”Isn’t it odd that the Administrative Council never said anything (at least not on the record) about Battistelli sending millions of euros (EPO budget) to his other employer? Well, thankfully (albeit very belatedly) German media says something about it (see “Die unheimliche Wette”, as mentioned in our recent post). Just a few hours ago SUEPO wrote: “Publication rights requested and awaiting confirmation…” (so expect an English (and probably French) translation some time soon).

Campinos, a former banker, will likely cover up Battistelli’s financial recklessness and misbehaviour. Remember that a person close to Battistelli (also French) is in the relevant committee. We last mentioned this aspect when dealing with the toxic loans scandals at Battistelli’s other employer. Don’t forget what was mentioned here before in relation to the Greek element in the Finance and Budget Committee (Loredana Gulino). The following comment brought it up again earlier this month. It said this:

What do you expect from someone [Battistelli] with a greek best friend in the Finance and Budget Committee until 2016 (for two years this greek guy was the head of the committee without even having a position in his own country!!!! …and every single one just covered it). However, rumor has it, that during his past tenancy in the greek patent institute (2005-2013) he was a master in bullying….

The EPO is corrupt to the core. It’s worth saying this again: at this stage, considering Ernst’s complicity and Campinos’ ‘selection’ (with Battistelli calling many shots), not to mention Team Battistelli remaining in tact at the very top, the EPO needs to be completely rebooted. High-level management needs to be ‘flushed’ and they need to start all over again to salvage the institution. It is far worse than FIFA has ever been.

06.09.18

Benoît Battistelli Should Have Received an Award for Corruption, But He Completely Controlled the Show in His Own Theatre

Posted in Europe, Finance, Patents at 8:46 am by Dr. Roy Schestowitz

Battistelli has just ‘pulled a Henry Kissinger’

Son of Campinos

Summary: Having abused/misused diplomatic immunity for about 8 years, Benoît Battistelli now passes this immunity to his old friend (António Campinos) and arranges to receive an award in France, for fighting what they call “piracy”

THE king of EPO corruption is about to officially — at least on paper — finish his term, but not before he gets some 'royal' treatments in the unfinished Dutch branch. It’s pretty incredible what he got away with; like a true king, he’s demonstrably above the law and he’s never reluctant to break laws which he subjects others to. The USPTO, which is a federally-enshrined institution, operates differently, so staff does not enjoy the same sort of immunity (not even the chiefs).

“We wish to remind our readers that Battistelli’s immunity expires in a few weeks with no imminent role (anywhere) to expand this thug’s protection from the Rule of Law.”Speaking of immunity, remember what happened at EU-IPO. Caricatures like the above were made about it last year (and circulated inside the EPO).

Currently, the EU-IPO is all about António Campinos, who starts his job at the EPO in about 3 weeks, taking over from another Frenchman whom he knew for many years. He made the EU-IPO 'study' all about himself this past week (we’ve seen him explicitly mentioned in about 50 articles; here’s one in English) — a very Battistelli-like style of personification and self promotion.

We wish to remind our readers that Battistelli’s immunity expires in a few weeks with no imminent role (anywhere) to expand this thug’s protection from the Rule of Law. As for Campinos, he has enjoyed diplomatic immunity for a number of years and 5 years inside the EPO’s management team may mean that it will be impossible to sue him until 2023 (if not much later). Will he exploit such immunity the way Battistelli did? That remains to be seen. Can lawsuits be filed against monsters/mobsters like Battistelli for what he did whilst immune? We’re not lawyers (none of us), so we’re not sure about the scope and limits of diplomatic immunity; we urge EPO staff (past and present) to investigate this matter and consider action. Battistelli and his thugs were very eager to hire several law firms and legally bully me, knowing that they enjoyed disproportionate legal power because they’re resistant to prosecution and probably to subpoenas too.

“Battistelli and his thugs were very eager to hire several law firms and legally bully me, knowing that they enjoyed disproportionate legal power because they’re resistant to prosecution and probably to subpoenas too.”Battistelli won’t leave the Office without insulting everything and everyone associated with the Office. He already tarnishes any remnant of reputation, falsely believing that hiring not one but several PR agencies (external to the EPO itself) will help compensate for it. We’ve quietly and patiently observed puff pieces from “media partners” (as usual) and press releases over the past few days. We would rather not link to these but only point out that the EPO works again (just like last year) with Shepard Fox Communications. From one of the press releases (trying to appeal to the cause of feminism, emphasising an ethical aspect, at least a perceived one after that "diversity" ploy celebrated a day beforehand) we have extracted the role of Shepard Fox Communications, but from another press release we extract the following again:

UK media contact:
Barbara Geier
echolot pr
Tel: 0044 (0)7983 242 195
barbara@bconnects.net

We have mentioned her before [1, 2]; they’re literally writing some of the ‘articles’ (their name remains in the metadata).

Now, on to the event — the one that the EPO wastes a fortune on (European Inventor Award). It’s all about the ‘king’, who is presenting the show in his own theatre that he’s responsible for! From the EPO’s official account: “President Battistelli: “We are here to celebrate these inventors and I would like you to consider that all our nominees deserve our congratulations and out thanks” [] We wouldn’t have been able to produce this shortlist of impressive nominees without our international jury, says President Battistelli. [] President Battistelli officially opens the Ceremony: “I would like to offer you a very warm welcome to the European Inventor Award 2018”…”

So the star of the show is — as usual — the ‘king’ himself.

“…they’re [PR firms] literally writing some of the ‘articles’ (their name remains in the metadata).”Here’s what the EPO wrote at the end (warning: epo.org link), after about 60 (re/)tweets that day. Yes, this charade of Battistelli is all about Battistelli himself. He pays not a dime for it (not his own anyway) and gains financially from it, as do his colleagues in France. We prefer not to heckle scientists who were there, e.g. to accept prizes (they’re not part of the abuse and some may not even be aware of how they’re being used for a money-passing ‘cover’). We prefer not to name them or give ‘free’ publicity to this terrible festival, which Battistelli celebrates for his own personal interests.

Call it laughable or call it outrageous, but crooked Battistelli is ‘giving’ a bogus award to himself on the same day that he loots the EPO (the ‘crime’). We believe that crooks like him and Sarkozy would get away with murder, albeit what happens after he loses his immunity remains to be seen (Sarkozy got arrested some months ago, well after he was leader of France). The award of Battistelli was “presented to him in Paris,” according to the EPO (warning: epo.org link). It looks like a prearranged and staged ceremony, wherein “Global Anti-Counterfeiting Group” (we never heard of it before!) was trying to frame a likely criminal as an anti-crime person. It’s like that Nobel peace prize granted to Henry Kissinger. It took decades for the Nobel ‘franchise’ to recover from that (if it ever recovered at all). Battistelli is trying to legitimise himself while he’s engaging in serious corruption in the theatre which he manages. Yes, published “7 June 2018″ (same day as European Inventor Award) and also in France:

The Global Anti-Counterfeiting Group (GACG) today honoured EPO President Benoît Battistelli with a special award for his services to intellectual property. The 2018 prize in the individual achievement category was presented to him in Paris on the occasion of an Awards ceremony celebrating the World Anti-Counterfeiting Day- which recognises national and international efforts to curb counterfeiting and piracy.

“Marking their 20th year, the GACG Awards were held at the Museé de Contrefaçon, housed at the Headquarters of the Union des Fabricants (UNIFAB),” it says. So they didn’t even exist until the late nineties and we never ever heard of them before. Sounds dodgy or what?

“Even the Oscars don’t reach these levels of corruption,” I told this person, who laughably enough wrote (to soon be retweeted by the EPO):

European Inventor Award 2018 – think the Oscars for Patents – EPO put on an incredible program. Block out your calendar for this in 2019. @aipla @EPOorg #inventoraward pic.twitter.com/OiK9TnSrAt

Oscars?!

Got to be joking! It’s not even remotely comparable. The Oscars are watched by hundreds of millions worldwide. How many people tuned in for European Inventor Award? Several thousands on a live feed?

“…this scheme will soon be managed by a former banker, whose employer (the bank) is notorious for corruption. How’s that for EPO hope or optimism?”What the European Inventor Awards are nowadays stigmatised for (past and present) is fraud, scams, and corruption. This is Battistelli’s legacy. He kept placing them in France, in spite of the long tradition of hosting in the EU Presidency’s nation, and he ended up landing the event in the theatre that he’s managing.

Märpel has just brought up the word “corruption” in relation to the lack of accountability at the EPO. To quote:

After the last article, some people approached Märpel with questions. The word “corruption” was used.

Märpel would like to point out that she did not use that word.

Let us just say that there are many ways to win people to one’s cause but that it is always much easier when they believe that your cause is also theirs. Mr. Petrović was always convinced that this cause was just.

[...]

Märpel believes that this is exactly what happened at the EPO. President Battistelli saw the opportunity to seize power and turned the organisation to a ghost of its former self: it does not fulfil its mission of examining patents any more, it is haemorrhaging staff, its financial assets have been seized by what could be a Ponzi scheme (over 2 billions Euros). All what was needed was complacency from the judiciary.

What Märpel refers to as “Ponzi scheme” was recently covered by Märpel. Well, this scheme will soon be managed by a former banker, whose employer (the bank) is notorious for corruption. How’s that for EPO hope or optimism?

05.30.18

Märpel Looks at Benoît Battistelli’s Toxic Financial Affairs at the EPO

Posted in Europe, Finance, Patents at 11:55 pm by Dr. Roy Schestowitz

Recent: Benoît Battistelli the Latest Example of Massive Bonuses Given to People Who Destroyed Their Own Organisation

Financial image

Summary: More and more people/circles raise serious questions about Battistelli’s financial dealings at the EPO

THE scandals at the EPO are greater in number and magnitude than it may seem. Some of them may take years to come to the surface. The USPTO, by contrast, has barely any scandals (we covered one yesterday, but those are rare).

Recently, the ‘gambling’ with EPO funds was brought up again (it happened around Christmas time when almost nobody paid attention). Märpel has just published this long post about it:

Now President Battistelli has decided he needed a blank check to play with that money on the stock and derivatives market. Apparently he did not learn about the toxic loans of Saint-Germain. Or maybe he knows them too well, Märpel cannot say. Usually money lost in risky investments is not lost for everybody.

The Council, in its rubber-stamping majesty, decided to approve the new investment guidelines last December. Lately the budget and finances committee cleared the small details. Interested readers having access to the EPO intranet may look for document CA/F 10/18.

Märpel finds difficult to believe what that document says. Apparently, the EPO is going to set aside “around 250 millions Euros” every year in the next 20 years and expects that the total treasury will reach EUR 12 billions Euros after a period of 20 years, which is lots of money even for cats. The expected long term return on the modelled portfolio is 4,0% and the annual risk is 15,1% of the Net Assets Value, which Märpel understands to mean that the EPO will invest in relatively high risk assets to get that level of return. Märpel’s compound interests calculator also notes that the figures do not match, even if the EPO would invest its complete cash reserve in that risky scheme (2.3 billions Euros) Märpel is short of some money. Märpel also notes that up to 75% can be invested in risk investments (equities, commodities, real estate and “alternatives”), which probably explains the 4% annual return in times when one is lucky to get 0.5%.

Nobody knows what the EPO is going to do with 12 billions Euros in 20 years. If the scheme succeeds (and that is a big “if”), the next-next-next-next President is going to have lots of money to play with. Or will he?

This subject was not too long ago tackled in a series of posts by Thorsten Bausch and recently by us as well. Bausch has just published this post about the Federal Court of Justice of Germany (not to be mistaken for FCC). He said:

The FCJ ordered that the petitioner must be granted access to the entire file wrapper. The objections raised by the plaintiff with regard to parts of the file which allow conclusions to be drawn on infringement proceedings conducted in parallel or which contain information on the designs challenged there were unfounded.

Bausch comes from a different world than yours truly because he works for a law firm, but judging by recent interactions he remains concerned about the financial dealings at the EPO. We’re now just one week away from the massive passage of EPO’s budget (i.e. stakeholders’ money) to Battistelli’s other employer in Saint-Germain. It remains to be seen what happens to all that money and whether Battistelli will be held belatedly accountable after his diplomatic immunity is voided (António Campinos had already enjoyed it under EU-IPO).

05.26.18

Index for EPO and Saint-Germain’s Poisonous Legacy of “Toxic Loans” Series

Posted in Europe, Finance, Patents at 5:43 pm by Dr. Roy Schestowitz

Emperor's new clothes

Summary: A roundup or an index of this past week’s series about financial gambles at the EPO — Battistelli's own dubious idea

THE Frenchman (dual nationality) and former banker António Campinos will take Battistelli’s place at the EPO next month, whereupon Battistelli will lose his diplomatic immunity. Will he ever be held accountable for his actions? That remains to be seen. The facts, however, will be documented regardless shall anyone require access to them.

Here are the six parts of this series:

Remember that Battistelli and his protector (Jesper Kongstad) made Battistelli’s contract — and salary — a closely-guarded secret never to be known or shown to the public. Kongstad's own scandals were covered here two years ago and not too long afterwards we got told that he had, in effect, been fired by the Danish government (we never saw hard evidence of that). Is Battistelli next? Kongstad helped Battistelli get elected as President, so he is in many ways accountable for all that happened after 2010. In our view, these people have blood on their hands (not only chinchillas’). There was an institutional murder, suicides aside. The future of the EPO remains unclear; it’s now in the hands of speculators.

Saint-Germain’s Poisonous Legacy of “Toxic Loans”: Quo Vadis EPO?

Posted in Europe, Finance, Patents at 5:33 pm by Dr. Roy Schestowitz

Take the money and run!

Summary: In spite of the SIDRU “toxic loans” scandal in St. Germain-en-Laye, where Battistelli is Deputy Mayor, the EPO’s Administrative Council repeats similar mistakes with opposition only from one country — the only country that actually bothered to study the matter before voting on it

It is generally known that the soon-to-depart (to be replaced by António Campinos) EPO “Sun-King” Battistelli sat on the municipal council of St. Germain-en-Laye as Deputy Mayor for culture from 2008 to 2014.

From 2014 to 2017 he was a delegated councillor in charge of the Théâtre Alexandre Dumas.

In October 2017 he reassumed his former position as Deputy Mayor for culture.

Given his close involvement with the political life of St. Germain-en-Laye it’s almost impossible to believe that he is not fully aware of the poisonous legacy of SIDRU’s “toxic loans” which his political mentor the late Emmanuel Lamy bequeathed to the citizenry of the urban agglomerations of Grand Paris Seine et Oise and Saint Germain Boucles de Seine.

“From 2014 to 2017 he was a delegated councillor in charge of the Théâtre Alexandre Dumas.”Battistelli’s official EPO profile (see CV [PDF]) also emphasises that he plays “an active role in public and community life” in France. So it would also be surprising if he was not au fait with the more general problems caused by “toxic loans” in his home country and the risks of speculative gambling with public money in the global casino of the international financial markets.

Against this backdrop it remains a mystery as to why Battistelli in his role as EPO President has been so keen to push for the inclusion of exotic and speculative “financial products”, such as derivative instruments, asset-backed securities (ABS), mortgage-backed securities (MBS) and Credit Default Swaps (CDS), in the provisions of the EPO’s New Investment Guidelines.

It is also something of an enigma as to why the Administrative Council was so quick to rubber-stamp these questionable proposals and to subsequently approve the allocation of the EPO’s whopping cash surplus of around € 2.3 billion to the newly established “treasury investment fund”.

According to EPO insiders the sole dissenting voice on the Administrative Council was that of the German delegation which seems to have been the only one of the 38 national delegations to have done its homework properly.

“Against this backdrop it remains a mystery as to why Battistelli in his role as EPO President has been so keen to push for the inclusion of exotic and speculative “financial products”, such as derivative instruments, asset-backed securities (ABS), mortgage-backed securities (MBS) and Credit Default Swaps (CDS), in the provisions of the EPO’s New Investment Guidelines.”One might have expected more prudence and “due diligence” from the governing body of such an economically significant pan-European intergovernmental organisation.

However, when we recall that this is basically the same Administrative Council which agreed to the abolition of its own independent Audit Committee at the behest of Battistelli in 2011, then perhaps current events surrounding the New Investment Guidelines and the “treasury investment fund” are not really so surprising.

Defenders of the New Investment Guidelines will undoubtedly point out that the inclusion of exotic and speculative “financial instruments” is limited to 15% of the total investment portfolio.

But to argue like this is to miss the point.

Even if only a subset of the investments within this 15% speculative slice were to turn “toxic” the fallout could be catastrophic. A few “bad apples” have the potential to significantly reduce or even obliterate the return from other more conservative investments. In a worst case scenario if some of the speculative investments were to go “pear-shaped” this could lead to an erosion of the fund’s capital.

“According to EPO insiders the sole dissenting voice on the Administrative Council was that of the German delegation which seems to have been the only one of the 38 national delegations to have done its homework properly.”Those who try to dismiss such “horror scenarios” by saying that they are unlikely to materialise need look no further than the débacle of SIDRU’s “structured debt products” and the myriad other cases of “toxic loans” which continue to plague municipal councils throughout France.

Another as yet unsolved riddle relating to the EPO’s new “treasury investment fund” concerns its management.

From the comments made by Dr. Thorsten Bausch on the Kluwer Patent Blog in March of this year it seems that the general idea is to have “a diversified portfolio managed by external experts”.

Information from EPO sources indicates that a decision has already been approved by the Administrative Council’s Budget and Finance Committee to allocate the EPO’s surplus of around € 2.3 billion to the new fund.

“Information from EPO sources indicates that a decision has already been approved by the Administrative Council’s Budget and Finance Committee to allocate the EPO’s surplus of around € 2.3 billion to the new fund.”However, it has not yet been revealed which “external experts” will be entrusted with the management of this impressive cash pile and how their “compensation package” is going to be structured.

Presumably these details will be revealed in due course.

In the meantime let us hope for the sake of all concerned that the persons selected for this task will not be “experts” from the POTT school of investment management who operate according to the motto: “Prends l’oseille et tire-toi!” – “Take the money and run!”

Saint-Germain’s Poisonous Legacy of “Toxic Loans”: The SIDRU “Toxic Loan” Débâcle a Case of “Take the Money and Run…”

Posted in Europe, Finance, Patents at 5:29 am by Dr. Roy Schestowitz

Dette ToxiqueSummary: The fourth part of the series exploring the debt crisis at Battistelli’s town (where he’s deputy mayor) in light of the EPO’s gambling with financial speculators, potentially adding to the many EPO scandals

The judgment of the Court of Appeal of Paris in the case of the DEPFA loan in November 2016 did not bring the saga of SIDRU and its “toxic loans” to a close.

A little over a year later in December 2017, the local newspaper La Gazette en Yvelines reported that Lamy’s successor as Chairman of SIDRU, Jean-Frédéric Berçot, had been replaced by Jean-Luc Gris, the Mayor of Gaillon-sur-Montcient and communal delegate for the urban agglomeration of Grand Paris Seine et Oise.

The article is titled Dette du Sidru : le président éjecté, les agglos devront payer [Translation: SIDRU’s debt – chairman dismissed, the urban agglomerations have to pay] and we have made local copies of the text [PDF] and the original [PDF] with a screenshot below (click to ‘zoom’).

Gazette-en-Yvelines-20-12-2017

After SIDRU had failed to raise a new loan to pay off the outstanding amounts due on the DEPFA loan, the liabilities were finally taken over by two urban agglomerations of Grand Paris Seine et Oise and Saint Germain Boucles de Seine.

La Gazette en Yvelines also reported that a second “toxic loan” which SIDRU had contracted with the bank Natixis was due to be the subject of a court judgment in 2018.

The expected liabilities for SIDRU in relation to the Natixis loan are estimated to be of the order of € 50 million.

Until all of the pending legal actions are concluded, it is difficult to put a final figure on the total financial fallout from the affair but it is likely to be of the order of at least € 70 million:

€ 20 million from the DEPFA loan and € 50 million from the Natixis loan.

For readers who are unfamiliar with local politics in France it may also be worth mentioning that the case of SIDRU is merely one example of a much more widespread problem which has caused a lot of controversy and unrest at the municipal political level throughout the country.

“During the period 2013-2014, it is estimated that the average rate of interest on these “toxic loans” was around 25%.”Over the last decade and a half many communities have been devastated by the predatory financial practices of banks such as Dexia, Deutsche Bank, Calyon (Crédit Agricole), Depfa, Natixis, and Royal Bank of Scotland.

An article published in the French magazine Capital in December 2016 explained how these communities had permitted themselves to be trapped into “toxic loan” contracts with banks and included a map of France showing some of the most noteworthy examples of towns which were suffering under exorbitant interest rates. See “Emprunts toxiques : comment les villes se sont laissé piéger par les banques” [Translation: Toxic loans: how municipalities let themselves be trapped by the banks] with the image below.

France-toxic-loans

Similar to the loans which Lamy contracted on behalf of SIDRU, these “structured debt products” were long-term loan arrangements over periods ranging from ten to thirty years which offered an attractive fixed rate of interest for the first number of years, typically somewhere between 0% and 3% depending on the term of the loan.

But once the “honeymoon period” was over the debtors were thrown to the mercy of global financial markets.

During the period 2013-2014, it is estimated that the average rate of interest on these “toxic loans” was around 25%.

“According to Capital, the bankers involved in pushing these “structured debt products” referred to them internally under the code-name POTT (“Prends l’oseille et tire-toi!”) which translates into English as “Take the money and run!”In a number of cases it rose above 50% and in one extreme example in the town of Angers it even reached 81%!

One specific example cited by Capital is the case of the town of Nîmes where an original loan for the amount of € 12.5 million resulted in estimated liabilities for the municipality of € 59 million!

According to Capital, the bankers involved in pushing these “structured debt products” referred to them internally under the code-name POTT (“Prends l’oseille et tire-toi!”) which translates into English as “Take the money and run!”

toxic-loans

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