Bonum Certa Men Certa

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

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.

Recent Techrights' Posts

The Free Software Foundation (FSF) Has Un-cancelled the Best People, Just in Time for the Big 4-0
Mr. Oliva should have been there all along (since 2019)
Most "Modern" Technology Makes You Slower and Dumber
Because proprietary software makes you worse off
"What Comes After Free Software?" Wrongly Insinuates We've Reached the Goal (Prison is Not the Goal)
The oil tycoons use similar tactics against environmentalists, giving them fake "wins"
Making More Work Space
I learned the hard way that less is more in circumstances where more means distraction
MAHA is a Lie, Public Officials Never Valued Citizens' Health (They Still Value Private Businesses, Their Sponsors)
Reject demagogues
New Techrights Turns 2
Today starts the third year of the SSG-based Techrights
What Scares Them the Most is Independent News Sites That They Cannot Control and Censor
Wikileaks was a good example of this
If You Don't Control Your Online Platform, Then Someone Else is Controlling You
be (or become) independent
 
Links 23/09/2025: Japan Limits Uses of Skinnerboxes ('Smartphones') With Toxic "Apps", Fentanylware (TikTok) Tapped by "MAGAts"
Links for the day
Brett Wilson LLP Has Just Been Sued (by Their Own Clients!)
Vladimir and Alla Yanpolsky sued Brett Wilson LLP in BL-2025-001167 at the end of last week
The Complaint About Brett Wilson LLP - Part II - UK SLAPPs for Americans, SLAPPs for Profit
Brett Wilson LLP has a track record of this kind
Mayday: Optus emergency calling crisis
Reprinted with permission from Daniel Pocock
Links 23/09/2025: Massive Data Breach, Slop Versus Productivity, and Vista 11 Update Breaks Things Again
Links for the day
Code of Censorship
Extortion is peace
Free Software Foundation (FSF) Has a New Press Kit for the Weekend After Next Weekend (40th Anniversary)
miles better than social [sic] media [sic] quips, moderated by narcissists and oil tycoons.
Microsoft Had Two Waves of Mass Layoffs This Month (That We Know of) and It'll Get Worse for Microsoft Soon
Will the axe fall again by month's end?
Gemini Links 23/09/2025: Happy Equinox, Photronic Arts, and Perception Cognition
Links for the day
Lessons We've Learned After 17 Years of American Hosting
GAFAM is "all-in" with the "Trump agenda"
Back to Normal Now, We Plan to Do More In-Depth Series (or Multi-part Stories)
Articles (or series thereof) that contain philosophy are important to us
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Monday, September 22, 2025
IRC logs for Monday, September 22, 2025
Microsoft Media is Panicking Amid Mass Layoffs Every Month, H-1B Fees, and "Seattle’s Tech Scene in Trouble"
In "late stage Microsoft", copyleft becomes proprietary
The Next Wave of IBM/Red Hat Layoffs Being Discussed Already
Red Hat is sort of disappearing the way Tivoli did
Oracle Started This Year With Slop. Then It Stopped.
Passing fads are like this
Distros That Run on PCs Made 20 Years Ago and Don't Use Systemd
Betas for now
The Solicitors Regulation Authority (SRA) Has a Policy on Racism and Sexism
In then future we'll show the misogyny and racial slurs
The Complaint About Brett Wilson LLP - Part I - Abusing British Women on Behalf of American Men Who Abuse American Women
Transparency is important to us, so we've decided to make this series
Slopwatch: Google News and the Evident Slopfarm Infestation
This is what people get about Linux when they query Google for Linux
Links 22/09/2025: Murdochs Might Join Fentanylware (TikTok) 'Investors' (Masters), United Kingdom Recognises Palestinian Statehood
Links for the day
Gemini Links 22/09/2025: Esperanto Music History and Apps For Android
Links for the day
Links 22/09/2025: More American 'Censorship' (Retaliation for Journalism), Cheeto "Might Be Losing His Race Against Time"
Links for the day
The Blob Slop
Give me more words, give me some text
The 50-Pound Note Experiment and the "War on Cash"
Britain is actually seeing a rebound in cash payments, and it's not a temporary phenomenon
Slopwatch: Blaming the Victims for Microsoft's Failures and Plagiarising Phoronix
That's what Google has been reduced to: slop and slopfarms
Links 22/09/2025: Breaches, Windows TCO, and Arrests
Links for the day
Gemini Links 22/09/2025: Rabbit Hole and DeGoogling Fairphone
Links for the day
Links 22/09/2025: Russian War Planes Invade NATO Airspace While Dihydroxyacetone Man Escalates Attack on Free Speech Because of Critics
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Sunday, September 21, 2025
IRC logs for Sunday, September 21, 2025
Links 21/09/2025: "Hey Hi" (Hype) Under Fire, Fakes Identified; Tesla Burns Family
Links for the day
Google's Software is Malware and Malware in Mobile Devices
Originally posted by Rob Musial
Links 20/09/2025: Hegemony Coming to a Close, Luigi Mangione Ruled Not Terrorist
Links for the day
Gemini Links 21/09/2025: "Charlie Kirk Was a Hateful Piece of Shit" and Slop Code Attempted by Microsofter
Links for the day
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Saturday, September 20, 2025
IRC logs for Saturday, September 20, 2025