05.19.22

EPO Eating Its Own (and Robbing Its Own)

Posted in Europe, Finance, Patents at 6:01 pm by Dr. Roy Schestowitz

Video download link | md5sum 1c69d41dffdcfaffdea986ed5a95a130
Lying to EPO Staff About Deficit
Creative Commons Attribution-No Derivative Works 4.0

Summary: António Campinos is lying to his staff and losing his temper when challenged about it; Like Benoît Battistelli, who ‘fixed’ this job for his banker buddy (despite a clear lack of qualifications and relevant experience), he’s just robbing the EPO’s staff (even pensioners!) and scrubbing the EPC for ill-gotten money, which is in turn illegally funneled into financialization schemes

The Central Staff Committee of the EPO has circulated the document shown in the video above or as text below.

This is important!

“The EPO does not serve the public interest; heck, it does not even serve the interest of its own staff!”Writing to colleagues, their elected representatives wrote: “The Office systematically presents the operating results (i.e., the difference between the operating income or revenue and the operating expenditure) by referring to the standardised operating results, in accordance with the IFRS accounting method. By reading these figures, one would get the impression that the operating results of the Office are close to zero and may also move into negative territory. However, the actual or real achieved operating results have been strongly positive in the last years and are forecast to remain strongly positive in the upcoming years. The difference between standardised operating results and actual operating results and the influence of the IFRS accounting method is worsening the picture of the financial situation of the Office as explained in the full publication…”

Here’s the full publication as HTML:

Zentraler Personalausschuss
Central Staff Committee
Le Comité Central du Personnel

Munich, 12/05/2022

sc22056cp

Office’s operating results and IFRS accounting
Is the financial situation of the EPO as critical as the management presents it?

Dear Colleagues,

The Office systematically presents the operating results (i.e., the difference between the operating income or revenue and the operating expenditure) by referring to the standardised operating results. By reading these figures, one would get the impression that the operating results of the Office are close to zero and may also move into negative territory.

However, the actual or real achieved operating results have been strongly positive in the last years and are forecast to remain strongly positive in the upcoming years.

Standardised operating results and actual operating results

When one reads the monthly Financial Status Reports, the monthly MAC (Management Advisory Committee) reports or the presentation on the financial situation of the Office given this year, one would get the impression that the total income (or revenue) and the total operating costs are substantially equal, i.e., that the operating result of the Office is close to zero. The example with the most recent data is the Financial status report December 20211, which reads:

“The standardised operating result for 2021 was €47.0m, which is €4.2m (9.8%) better than 2020”.

In this formulation the key word is standardised, which implies that the given figure has been subjected to some modification in order to comply with some standard. Indeed, the used standard is the IFRS accounting method, which comprises a set of international accounting standards, which state how particular types of transactions and other events should be reported in financial statements.

On the other hand, the yearly actual operating results tell a totally different story; the following is the sequence of the actual operating results of the last years:

2019 | EUR 391m (actual)2
2020 | EUR 376m (actual)3
2021 | EUR 332m (forecast)3
2022 | EUR 304m (budget)3

In particular, for 2020, the last year for which the actual figures are available, the operating income has been of EUR 2189m and the operating expenditure of EUR 1813m: the income is about 20% higher than the expenditure!

______
1 Financial status report December 2021
2 2021 Budget – CA/D 1/20 (p. 18/167)
3 2022 Budget – CA/D 1/21 (p. 21/185)


It is also to be pointed out that the operating expenditure comprises the expenditure for the Pension and Social Security Schemes (PSSS), which amounted to EUR 309m in 2020, is forecast at EUR 325m in 2021 and is budgeted at EUR 361m in 2022.

A further indication that said actual operating results represent the real numbers is given by the significant yearly cash transfers from the Office’s Treasury to the Pension Reserve Fund of the RFPSS (Reserve Funds for Pension and Social Security) and to the EPOTIF (EPO Treasury Investment Fund). In 2021 the cash transfer to the RFPSS amounted to EUR 150m4 and the cash transfer to the EPOTIF to at least EUR 250m5.

Is the IFRS accounting method suitable for depicting the financial situation of the Office?

The management argues that the actual operating results are not suitable for depicting the actual financial situation of the Office and that the IFRS accounting method provides on the contrary the correct picture. Such statement has for example been made in said presentation on the financial situation of the Office given this year. However, no substantial arguments in support of this statement are provided, apart from generic arguments such as “Allows comparability and consistency over time” and “Recognises accrued pension rights of current active employees”.

On the other hand, a panel of financial experts has stated that the IFRS accounting method does not provide a good picture of the real financial situation of the Office. These experts are the actuaries of the Actuarial Advisory Group (AAG)6, which have given their opinion on the IFRS accounting method in the Joint report of the Actuarial Advisory Group to the President of the Office – Actuarial valuation as at 31.12.20207.

According to the actuaries, the advantage of having a prescribed basis for all employers is that it helps financial analysts compare results across a wide range of schemes and employers. It is therefore particularly appropriate for employers’ accounts.

However, IFRS has some major disadvantages:

The discount rate may be very volatile from one balance sheet date to the next, generating volatility in the liability and pension cost accordingly;

The choice of the discount rate does not take account of the scheme’s actual investment strategy; and

The determination of the liability of the pension cost does not take into account the existence of funding assets held in a reserve fund at all.

There is therefore often a mismatch between the prescribed accounting basis and what the scheme expects to happen in real life. The result can show considerable volatility in the level of coverage shown in the accounting valuation and thus on the employers’ balance sheet. This is particularly true where the scheme invests predominantly in equities in order to obtain higher returns in the long term, as is common practice for funded plans and as is applicable for the Reserve Funds for Pensions and Social Security (RFPSS).

What the actuaries have stated for the RFPSS also applies to the EPOTIF, which also invests a significant part of its assets in equities.

______
4Summary of Conclusions of the 127th BFC meeting – CA/67/21 (p. 5/6)
5 EPOTIF Performance and Risk Report Q3 2021 – CA/F 31/21 (p. 3/62)
6 The AAG consists of three independent actuaries and advises the Office on the conditions to be met in order to ensure the equilibrium of its pension scheme; was established by the President of the Office in 1992.
7 CA/41/21 (p. 10/44)


Conclusion

It is recommendable to be very critical when considering the picture of the financial situation of the Office provided by the management, who acts in the opposite way to the managers of private or public companies, who usually try to give a favourable picture. An overly negative picture of the financial situation of the Office is intended mainly to justify the massive cuts to the employment conditions that have already been made in the last years and further future potential cuts, which are absolutely ungrounded when considering the real situation.
The real numbers of the operating results show on the other hand yearly surpluses between about 15% and 20% of the operating expenditure. This is also true at least on the medium term, as shown by the estimates for the years 2025 and 20263. And again, the operating expenditure also comprises the expenditure for the Pension and Social Security Schemes.

These are quite healthy figures for a non-profit organisation8.

The Central Staff Committee

______
8 According to Article 42 EPC, the budget of the Organisation shall be balanced.

As noted repeatedly in the video, many of the financial gains of the EPO (surplus) are due to violations of the law, like granting tons of bogus patents — not limited to software patents — and then charging “renewal” fees (to maintain ill-gotten monopolies that harm European individuals and businesses). The EPO does not serve the public interest; heck, it does not even serve the interest of its own staff!

[Meme] EPO Budget Tanking?

Posted in Europe, Finance, Patents at 5:42 pm by Dr. Roy Schestowitz

Public budget:

What EPO Wants you to think of budget for employees; The F-ing president; meme

Private budget (EPOTIF):

EPO panzer

Summary: While the EPO‘s António Campinos incites people (and politicians) to break the law he’s also attacking, robbing, and lying to his own staff; thankfully, his staff isn’t gullible enough and some MEPs are sympathetic; soon to follow is a video and publication about the EPO’s systematic plunder (ETA midnight GMT)

05.16.22

Reminder: Linux Foundation’s Last IRS Filing is Very Old (Same Year the CFO Left)

Posted in Finance at 8:42 am by Dr. Roy Schestowitz

As of this morning:

Linux Foundation and IRS

Summary: People really need to ask the Linux Foundation, directly, why its filings are years behind; this seems like a sensitive subject

05.03.22

Financialization of the EPO Will Doom Europe’s Largest Patent Office

Posted in Europe, Finance, Fraud, Patents at 2:01 pm by Dr. Roy Schestowitz

Is the EPO an investment bank
Busy turning the Office into a “24/7″ “day and night” bank, working around the clock and treating monopolies as products

Summary: The EPO is being killed off and effectively sold by Benoît Battistelli and his close friend António Campinos, who comes from a rogue banking sector; they’ve lowered the legitimacy of patents very considerably (now they pursue a court system which would/can allow European software patents) as well as the quality of examination/examiners because it’s more profitable to just allow everything

LAST year we noted and quoted that “[t]he EPO is wasting money on stock market gambling,” having spoken to another person who further asserted that “they start to bring in more money through gambling than through the normal work activities. At that point the normal work activities become a charade at best, so they can pretend that they are active in a particular field of endeavor. More often the normal work activities just get in the way of the gambling so in response any staff still involved in normal work activities get fired in one way or another.”

“They pretend things are improving, even as they rapidly get a lot worse and slip out of hand (or tongue).”Remember that the EPO is gradually being privatised (even outsourced to Belarus, way outside the EPO and outside the EU) and eventually treated like a for-profit corporation; see the job titles in today's top-level management of the EPO. Suffice to say, the quality of work/workers/service is deliberately lowered for the sake of “profits” and of course part of that is just lying about “customer experience” etc.

They pretend things are improving, even as they rapidly get a lot worse and slip out of hand (or tongue). These are not public servants but self-serving autocrats.

As our associate put it today, “the privatisation scam is hitting the EPO, soon they will move to financialization and patents won’t even be a charade/fascade, they will simply spend all their time and money “investing” in stocks all the while declaring themselves a patent office.”

See the paper “Beware Financialization, Attractive and Dangerous, but Mostly Dangerous” by Donald Tomaskovic-Devey.

Beware Financialization, Attractive and Dangerous, but Mostly Dangerous

05.01.22

Teaser: Fortunately Stable

Posted in Deception, Europe, Finance, Humour, Patents at 8:39 pm by Dr. Roy Schestowitz

My income and my fortune from the EPO is fortunately stable

Summary: Andrej Bakhirev (et al) from SaM has made millions from the EPO while Benoît Battistelli took away permanent contracts from EPO staff and António Campinos lowered salaries, pensions etc. (based on complete lies)

04.17.22

[Meme] Godly Oversight at the EPO

Posted in Europe, Finance, Patents at 11:06 am by Dr. Roy Schestowitz

Run is like a bank
Converting monopolies into money. At whose expense?

Summary: The EPO will never be the same; for 12 years it has been governed by gangsters, mobsters or banksters from France [1, 2]; they don’t know how patents work and they run the EPO like its sole goal is to make money, so they’ve obliterated oversight and brag about revenue (while granting hundreds of thousands of invalid monopolies in Europe)

04.09.22

[Meme] EPO Moving Backwards

Posted in Europe, Finance, Patents at 6:02 pm by Dr. Roy Schestowitz

Inflation? Let's take salaries down
Violating the EPC, using a lie

Summary: As we’ve just seen, the EPO isn’t interested in employing the people it absolutely must employ

03.31.22

Aaron Wolf on Funding Freedom-Respecting Software

Posted in Finance, Free/Libre Software at 12:13 am by Dr. Roy Schestowitz

Video download link

Summary: This talk was uploaded 12 hours ago. “Aaron is co-founder of Snowdrift.coop and a long-time free software and free culture activist,” the description says. “In his day job as an independent music teacher, he pushes his students to use free/libre tools and release their music under free licenses. This talk is a discussion of the economic distinctions between private goods, club goods, commons, and public goods; and why software freedom struggles to get economically supported.”

Licence: CC BY SA 4.0

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