Bonum Certa Men Certa

Saint-Germain's Poisonous Legacy of "Toxic Loans": The SIDRU “Toxic Loan” Débâcle and Criticism of Lamy From Local Opposition Groups

Last week: Système Battistelli (ENArque) at the EPO is Inspired by Système Lamy in Saint-Germain-en Laye

Bosch the conjurer

Summary: The EPO's entrance into the "toxic loans" trap as of a few months back (just like in Saint-Germain*) is a sign of potential trouble ahead; The SIDRU “toxic loan” débâcle is highlighted as per criticism of mayor Lamy (St Germain-en-Laye, where Battistelli is deputy mayor) from local opposition groups

Following the judgment of the Court of Appeal of Paris which found SIDRU liable for all of the outstanding debts and interest charges on its DEPFA loan, the former SIDRU chairman Emmanuel Lamy was obliged to defend himself at the meeting of the municipal council of St Germain-en-Laye which took place on 16 November 2016.



According to a commentary on the affair written by Jean-Claude Merle, a former municipal councillor of the neighbouring municipality Marly-le-Roi, Lamy tried to evade the question of his personal responsibility for the débâcle by referring to the collective responsibility of the 15 municipal councils that are the stakeholders of SIDRU as well as to the roles of other authorities such as the regional Prefect and the regional Chamber of Auditors.

"Following the judgment of the Court of Appeal of Paris which found SIDRU liable for all of the outstanding debts and interest charges on its DEPFA loan, the former SIDRU chairman Emmanuel Lamy was obliged to defend himself at the meeting of the municipal council of St Germain-en-Laye which took place on 16 November 2016."See "Emprunts toxiques du SIDRU, qui paiera ?" [Translation: "SIDRU's toxic loans, who is going to foot the bill?"]

As for the financial consequences Lamy tried to reassure the taxpayers of St Germain-en-Laye that the financial consequences of Court of Appeal judgment were being discussed by the affected urban agglomerations with a shared will to define "a course of action that would not impact the level of local taxes of the 200,000 inhabitants concerned".

Without providing precise details he indicated that the two urban agglomerations of Grand Paris Seine et Oise (covering 73 municipalities and more than 400 000 inhabitants) and Saint Germain Boucles de Seine (covering 20 municipalities and 340 000 inhabitants) could be relied upon to absorb the fallout from SIDRU's toxic loans (which directly affected 200,000 inhabitants).

“Doit-on spéculer avec l’argent public?”



"According to a commentary on the affair written by Jean-Claude Merle, a former municipal councillor of the neighbouring municipality Marly-le-Roi, Lamy tried to evade the question of his personal responsibility for the débâcle by referring to the collective responsibility of the 15 municipal councils that are the stakeholders of SIDRU as well as to the roles of other authorities such as the regional Prefect and the regional Chamber of Auditors."The local left-wing opposition group Saint-Germain Autrement, formerly Saint-Germain Gauche Plurielle, has been a longtime and persistent critic of Lamy’s management of SIDRU and his imprudent dabbling in speculative "financial instruments".

As far back as July 2007 the group published a short party political statement in the local Journal de Saint-Germain under the title “Doit-on spéculer avec l’argent public?”.

See below (click to 'zoom' in).

JSG-512_6-juillet-2007

In this statement the group expressed its serious concerns about the speculative nature of the financial contracts concluded by Lamy in his role as chairman of SIDRU and warned of the potential for losses of the order of several millions of Euros for the public purse.

"In this statement the group expressed its serious concerns about the speculative nature of the financial contracts concluded by Lamy in his role as chairman of SIDRU and warned of the potential for losses of the order of several millions of Euros for the public purse."Throughout the remainder of 2007 the group published a series of articles on its website presenting a detailed analysis of the situation at SIDRU and the risks involved, e.g. [1, 2, 3, 4, 5, 6].

One of the leading figures in the group’s campaign for transparency about SIDRU’s finances and its criticism of Lamy’s speculative use of public funds is Emmanuel Fruchard (pictured below), a financial analyst by profession, who has been fêted in the local press as “the sworn enemy of toxic loans”.

Emmanuel Fruchard

Emmanuel Fruchard with paper

Some video footage of the “two Emmanuels” – Fruchard and Lamy – each presenting his own view of the SIDRU affair can be found in an online report from 2011 by a freelance French journalist, Mélanie Houé.

"One of the leading figures in the group’s campaign for transparency about SIDRU’s finances and its criticism of Lamy’s speculative use of public funds is Emmanuel Fruchard..."After its initial series of articles in 2007 the Saint-Germain Autrement group continued to monitor the situation at SIDRU over the course of the next decade and regularly published updates on its website.

In November 2016 in response to the judgment of the Court of Appeal of Paris, the group published a statement in the "Free Opinion" column of issue no. 697 [PDF] of the JSG in which it spoke in terms of a “damning judgment” against Lamy: "SIDRU: le jugement accable E. Lamy".

JSG article

“Monsieur le Président, expliquez-vous”



Criticism of Lamy’s management of SIDRU has also come from the local conservative opposition group Agir pour Saint-Germain whose members include the former Deputy Mayor, Anne Gommier.

"Criticism of Lamy’s management of SIDRU has also come from the local conservative opposition group Agir pour Saint-Germain whose members include the former Deputy Mayor, Anne Gommier."Ms Gommier had already expressed a general dissatisfaction with Lamy’s political style in an interview given to the local press during the 2014 municipal election campaign.

On that occasion she spoke of an unacceptable “disconnect” with the local populace as well as problems with a lack of transparency and consultation.

"On that occasion she spoke of an unacceptable “disconnect” with the local populace as well as problems with a lack of transparency and consultation."She also deplored the way in which the municipal council had been turned into a rubber-stamping chamber: “Le conseil municipal est une chambre d’enregistrement”.

In October 2016 the Agir pour Saint-Germain group joined in the chorus criticising Lamy’s handling of the SIDRU affair. It published a statement in the "Free Opinion" column of issue no. 695 [PDF] of the Journal de Saint-Germain under the title “La Dette du SIDRU: un mauvais suspense” which could be translated freely into English as “SIDRU’s debt: the suspense is killing us”.

JSG article

In this statement the group complained that although the annual report of SIDRU had been placed on the agenda for the municipal council meeting of 29 September 2016 there had in fact been no discussion at the meeting and the council had not been informed of the state of SIDRU’s finances. They referred to estimated losses of the order of € 70 million from SIDRU’s toxic loans (€ 20 million from the DEPFA loan and € 50 million from a second loan with Natixis). In view of Lamy's status as a graduate of the illustrious Institut d'études politiques de Paris (Sciences PO) and the Ecole Nationale d’Administration, a former advisor to the Minister of Finance and someone who had held a senior position in the Finance Ministry (“Bercy”), one could only surmise that he must have known the risks involved. But irrespective of whether or not he was aware of the risks, in the end it was the local taxpayers who were the “turkeys” (“dindons de farce”) left to foot the bill.

"In view of Lamy's status as a graduate of the illustrious Institut d'études politiques de Paris (Sciences PO) and the Ecole Nationale d’Administration, a former advisor to the Minister of Finance and someone who had held a senior position in the Finance Ministry (“Bercy”), one could only surmise that he must have known the risks involved."In November 2016, following the judgment of the Court of Appeal of Paris, the group published a further statement in the issue no. 697 of the JSG under the title "Monsieur le Président, expliquez-vous" in which it strongly criticised the use of public monies for speculative purposes and called on Lamy to account for his actions as the chairman of SIDRU at the time when the DEPFA loan contract was signed.

In December 2016 the group published a follow-on statement in the JSG [PDF] under the title of “Illusions, Désillusions” which could be translated into English as “Illusions and rude awakenings”.

JSG article

Starting off with an ironic reference to the famous picture (at the top of this article) of “the Conjurer” by the Dutch Renaissance painter Hieronymous Bosch which was on display in Saint-Germain as part of an exhibition of his works, they repeated their criticism of Lamy’s financial conjuring tricks at SIDRU (the “illusion”) and referred to the findings of the Court of Appeal of Paris (the “rude awakening”).

"But irrespective of whether or not he was aware of the risks, in the end it was the local taxpayers who were the “turkeys” (“dindons de farce”) left to foot the bill."They deplored the fact that despite repeated calls for Lamy to account for his role in the affair he had not seen fit to offer an apology for his mistakes nor had he even made any attempt to explain himself: “Et pourtant, au Conseil Municipal comme au Conseil Communautaire, le Maire interpellé par notre groupe sur ses erreurs et sa responsabilité n’a pas daigné faire amende honorable, ni même s’expliquer.”

[Translation: "And yet, in the municipal council as in the communal council the Mayor, having been questioned by our group about his mistakes and his responsibility, did not deign to make amends, nor even explain himself."]

"The concluding advice given to the citizens of Saint-Germain was to pay attention to the lesson of Bosch’s painting and not to be gullible spectators who passively watched as their quality of life was whittled away by the deceit and legerdemain of others."After referring to a number of other contentious local issues, they asked how many more “bad tricks” remained to be pulled out of the conjurer’s bag: “Combien de mauvais tours encore dans le sac ?”

The concluding advice given to the citizens of Saint-Germain was to pay attention to the lesson of Bosch’s painting and not to be gullible spectators who passively watched as their quality of life was whittled away by the deceit and legerdemain of others. __________ * An article by Carmen Nobel, senior editor of Harvard Business School Working Knowledge, provides some additional background information about the "toxic loan" crisis in France. We covered that in previous parts and would like to highlight some selected bits:

A new study by Boris Vallée and Christophe Pérignon offers evidence that local politicians in France (and probably elsewhere) used high-risk loans for political gain in the years leading up to the recent financial crisis. The strategy worked: Toxic loans helped mayors get reelected.

[...]

The researchers focused their study on France, having gained access to two valuable data sets: The first contained the entire debt portfolio for most of the 300 largest French local governments as of December 31, 2007; and the second contained the loan-level data for all the outstanding structured transactions of Dexia, the leading bank in the market as of December 31, 2009. (Shortly thereafter, Dexia fell apart in the European debt crisis.) The data showed that so-called structured loans accounted for 20.1 percent of the 52 billion euros in total debt for the municipal sample.

Similar to subprime mortgages, structured loans usually carry a few years of guaranteed low interest, which allows local governments to reduce the cost of their debt quickly and obviously. But after the honeymoon period, these loans end up carrying highly variable interest rates resulting from exotic exposures. For example, the City of Saint-Etienne saw the interest rates on one of its major loans rise from 4 percent to 24 percent in 2010, due to the depreciation of the pound sterling. In total, losses on toxic loans doubled the city's debt levels.

[...]

Toxic loan transactions were especially frequent for incumbent politicians running in "swing" areas. Incumbent politicians running in politically contested areas (where the local government had been ruled by the same party for fewer than 10 years) were more inclined to use structured loans than those in political strongholds (where the ruling party had been in power for more than 20 years).

Vallée and Pérignon analyzed how the politicians used the loans—whether they had invested the money in equipment or services for the city, or used the cash to lower taxes for their constituents, or both. It turned out that for the most part, they had used the short-term savings from the loans to lower taxes. "This action is consistent with politicians seeking reelection by catering to taxpayers' preference for low taxes, which represents a likely channel for the previous result on the effects on reelection," the researchers write.

The strategy apparently worked. Controlling for potential selection effects, the researchers found that using structured loans led to an increase in the likelihood that a politician was reelected.

[...]

"These financial innovative products appear, therefore, to have aligned banks' incentives, as the transactions were highly profitable, with local politicians [who] had an interest in getting reelected," Vallée says. "However, this happened at a large cost to the taxpayer, as the positive effects of the loans were short-lived, and interest on toxic loans ballooned when the crisis hit."

In the wake of the financial crisis, many local politicians filed suits against their banks, claiming that they had not comprehended the risky nature of the loans they undertook.

[...]

That said, the researchers did assess the role of financial sophistication on the use of structured loans. They considered the size of each municipality, understanding that larger governments were more likely to employ specialized financial advisors. And they obtained the mayors' current or former occupations, educational backgrounds, and age at the time of election.

The data suggested that mayors with the most-educated backgrounds were actually more likely to take out structured loans than those with less education. Those who took out the most structured (or toxic) loans had worked previously as corporate executives or senior-level civil servants. Former blue-collar workers, farmers, and artists, on the other hand, largely stayed away from these products.

The likelihood to use structured and toxic loans increased with local government size, indicating that bad loan decisions couldn't be blamed on a lack of staff expertise. Meanwhile, the use of structured loans decreased with the mayors' ages. "This was not a senility effect," Vallée says.

[...]

Recent Techrights' Posts

Windows is an Unnatural Disaster, It is Also Avoidable
there's a wide window of opportunity opening
Killing the News With Spam and Slop Benefits Those Whose Desire is an Uninformed Population
adoption of Free software depends indirectly on political activities/activism
Open Source Initiative (OSI) Privacy Fiasco in Detail: An Introduction
Perhaps tomorrow or perhaps next week we'll share more information about what happened and what was reported to the California Privacy Protection Agency
IBM's BS (Bait, Switch) Regarding Ways to Stay Onboard
PIPs, RTOs, and forced relocations are just an illusion of choice (or ability to recover)
Banned evidence: Ars Technica forums censored email predicting DebConf23 death, Abraham Raji & Debian cover-up
Reprinted with permission from Daniel Pocock
Intimidation, Threats, and Bullying Not Tolerated by Techrights
When it comes to our reporting, safety always comes first
 
Judges Would Never Rule for Men Who Strangle Women or Against Women Who Merely Wrote Articles About Abuse They Had Received From Men
We don't intend to do "trial by media", so we won't be disclosing claims and defences until it's over
Gemini Links 29/03/2025: Less YouTube and More Station
Links for the day
In Some Countries, Such as Thailand, Firefox is Already Measured at Less Than 2% (One Day Firefox Will Get Blocked, Not Only Lack Support)
Web consolidation around Chrom-isms will doom the Web as we know it
Links 29/03/2025: Trademarks Battles, Fires Destroy More Than 3,000 South Korean Homes
Links for the day
Links 29/03/2025: More Crackdowns on Science, "Hey Hi" Slopping is Flopping
Links for the day
Costa Rica Almost Bankrupt Because of Microsoft
the incidents in Costa Rica are Windows incidents
Gemini Links 29/03/2025: Art of Looking, Wireguard, EMacs
Links for the day
Links 29/03/2025: Attacks on Social Security and War Updates
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Friday, March 28, 2025
IRC logs for Friday, March 28, 2025
A World Without Rules
We're long insisted on better laws and actual enforcement of them (applicable to all, not selectively applied)
statCounter Sees Microsoft Windows Falling to New, Unprecedented Lows in Palau
Taking Android into account, Windows is now down to an all-time low of 14%
Google News Lost the Fight to LLM Slop (While Google Itself Sells Slop, Nowadays Under the Name "Gemini")
Many people say that "Google is getting worse"; that's almost an understatement
Links 28/03/2025: AirAsia Trouble Again, UMich Culls All DEI Programs
Links for the day
Gemini Links 28/03/2025: Alexa is for Gullible People, Rant About Feature Overload
Links for the day
The SLAPPs From the Microsoft Strangler (and Sidekick) No Better Than Patent Trolling
one must never settle with trolls
Something to Celebrate in Gemini Protocol
More capsules and users join in
Links 28/03/2025: Last Reminder "to Delete Your 23andMe Data", "UK's First Permanent Facial Recognition Cameras Installed"
Links for the day
Microsoft Canonical Continues Its FUD (Fear, Uncertainty, Doubt) Campaign, Reveals Google Too Sponsored It
They're paid-for lies from a Chinese company that takes GAFAM money to write puff pieces about them
Android Rises Above 76% in Mozambique, Leaving Windows in the Dust
Windows may soon be measured as smaller than Apple's iOS
IBM, Red Hat and Microsoft Probably Also Manipulate Metrics (It Helps Con the Shareholders)
Wall Street's credibility will depend on enforcement of "checks and balances"
Slopwatch: trendhunter.com and Other Pure Junk From "Google News"
The need to vet sources is hardly new; anyone can spew out anything, anywhere. There's a need for vetting.
Gemini Links 28/03/2025: Rewatching The X-Files, Slop Concerns, and NOSTR Censorship
Links for the day
Links 28/03/2025: Australia at Risk, EPO Grants Illegal Patents With Illegal Effect
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Thursday, March 27, 2025
IRC logs for Thursday, March 27, 2025
Links 27/03/2025: Obituary to a Shop, Russia Trying to Buy Time
Links for the day
Links 27/03/2025: Slop, Autosuggestions, and Nostr
Links for the day
Apparently Confirmed: IBM Layoffs in Canada Today, Hundreds Affected
Impacting "177 people", says one person, "in Ottawa"
When Windows Was Dominant (1990s) Browser Monopoly Meant MSIE, But Now Google Android is Dominant and the Web in a 'Webapps' Era Works With (or Is Designed for) Chrome-isms
We've been there before
Slopwatch: BetaNews, LinuxSecurity.com, and the Attack on Web Search Using Fake and Likely Plagiarised Pages
Changing a few words here and there won't change the fact that it's not properly authored
Links 27/03/2025: U.S. Honeybee Deaths Reach Record High, Legal Occupation Next in Line After War on Science
Links for the day
Using Courts for 'Revenge' is Always a Losing Strategy
Trying to cause someone you dislike to spend a lot of money
IBM CFO James Kavanaugh Refers to Firing of Almost 10,000 Americans as "Workforce Rebalancing" (Shifting IBM's Centre of Balance to Low-salary Contracts/Countries)
The scale of IBM layoffs is getting too large to evade WARN Notices
[Video] Dr. Richard Stallman's Keynote Speech in Kerala Finally Uploaded
In non-free format and proprietary YouTube, but perhaps that's better than nothing
Islands Are Leaving Microsoft Behind, According to statCounter
Android has had a very strong year
EPO Management Fails to Deny That the Office is Discriminating Against Women
Europe's second-largest institution isn't just exceedingly corrupt but also immoral
In Some Countries the Market Share of Vista 11 is Going Down, Not Up
despite being released in 2021
Rumour: Mass Layoffs in IBM Canada Today
Maybe later today some people from Canada will say something firmer and maybe some media will even talk about that
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Wednesday, March 26, 2025
IRC logs for Wednesday, March 26, 2025
Gemini Links 27/03/2025: X-Files' "Kill Switch", Orlando, and ASN (Autonomous System Number) 'Hack'
Links for the day