Ivan Cicconi uses historic references and specific technical details to explain the scam of the so-called project financing whereby the costs of Major Public Works regularly land up being lumbered on the State, costs that are hidden away in the accounts of privately held companies. In essence, all Major Works are paid for by the public, via their taxes, in order to create works that are basically useless in themselves but are indeed extremely useful to the political parties and lobby groups. What is the extent of this hidden debt as it stands today? Well, perhaps 10% of our current public debt, equivalent to some 180 billion Euro. When it all comes out (and believe me it will come out sooner or later) the whole Country will go down the tubes. Beppe Grillo The Passaparola of Ivan Cicconi, head of Itaca, the National Institute for transparency in the tender process and environmental compatibility Private debts within the public debt Hello to all the friends of Beppe Grillo’s Blog. I am Ivan Cicconi. I’m an expert in the field of tenders, infrastructure and public works and I currently head up Itaca, which is the National Institute for transparency in the tender process and environmental compatibility that has numerous partners in all the Italian Regions. I have been involved in high-speed train projects for many years, since way back in 1993 when, on the 17th February 1993 I received a letter from Luigi Preti, a stalwart of the First Republic, who was honorary President of the Italian Social Democratic Party at that time. It was a very brief letter, only around 4 or 5 lines long, in which he wrote: “Dear Engineer, I have read a number of your statements regarding the high-speed train service and I must say that I am entirely in agreement with you. For your information, I hereby attach two confidential personal letters that I have sent off in the past few days”. When I examined these letters, what I saw were two letters of around 4 or 5 pages each, closely typed, the one addressed to the then Financial Manager of the Christian Democrats, Beniamino Andreatta, and the second addressed to the then Finance Minister, Franco Reviglio. I began to read these letters and I was left absolutely flabbergasted that I had received a letter from a social democrat, a group of people that I had always been taught were the enemy of the people, yet here he was, stating that the whole high-speed train project was a scam, one that Lorenzo Necci was dishing out money from Susanna Agnelli to various important people named in the letter, all of whom were taking it, and he was launching an appeal directly to Beniamino Andreatta, asking that he: “Stop this major public work because it is merely a scam on which we will land up spending tens of thousands of billions of Italian Lire and that will land on the shoulders of our children and our grandchildren”. So my examination began here and I firmly believe that I am one of this country’s foremost experts in the field of contract and financing architecture for this major public work because I have examined every aspect of it in detail. I have to say that it is a scam that has unfortunately essentially been ratified and acclaimed by the European Union and the Court of Auditors in a 2008 Report, twenty years later because, in addition to sending yours truly copies of those two letters, which I eventually decided to include in my latest book entitled Il Libro nero dell’alta velocità” (literally “The black book of the High –speed train”), which you can download from the Il Fatto Quotidiano website, Luigi Preti also sent these letters to hundreds of well known politicians. Amongst those who received these letters were Prodi, D’Alema, Berlusconi, all the ministers of successive governments that occupied those armchairs from 90’s until today, including successive Transport Ministers that have headed up that Ministry as well as dozens and dozens of Deputies and Senators, all of whom have unfortunately studiously ignored the letters. Except that only now, back in 2008 to be precise, when the Court of Auditors reviewed the 2007 expenditure, they finally confirmed that it was all a scam whereby so-called private funding for the high-speed train service in 2007 had been totally dumped into the public debt. As a matter of fact, in the 2007 Budget there is a clause in the only article of this law that states that all the cumulative debt accrued by Infrastrutture Spa and Tab Spa for the creation of the Turin-Naples high-speed line up to 31 December 2005 was to be reclassified as public debt. This was that so-called private funding that was actually a series of loans from privately held companies, such as Tab Spa and Infrastrutture Spa, but that were effectively public companies, in other words loans entirely guaranteed by the state and that were kept out of the public accounts thanks to clause 966, but that due to pressure from the European Union (which had initiated an infraction procedure in 2005 for excessive deficit), landed up in the public debt and are now part of the 120% of GDP that we are all now having to shoulder. This line item amounted to precisely 12,950,000,000 Euro or some 26-thousand billion of the old Italian Lire. In that Budget, in the Parliamentary discussions and in the confrontation between the Prodi Government and the centre-right opposition, they spoke almost exclusively about National Healthcare Scheme co-payments, and that’s all that the newspapers mentioned. In that Budget, the Healthcare Scheme co-payment issue was worth exactly 850 million Euro while, thanks to clause 966, this other debt, masterfully hidden in the books of private companies and eventually transferred to the public debt, was worth 26-thousand billion old Italian Lire, or 12,950,000,000 Euro, a figure that no one whatsoever, across the board, ever said a single word. The reason why they wanted the TAV in the Val di Susa is very simple indeed, namely because it is the kind of project that can only be handled by large modern companies. These modern companies, or so-called “post-Fordist” companies, have one common feature, namely they have no direct links whatsoever to the job itself or to the area in which the works are being done. They are essentially virtual companies with a veritable spider web at the top that merely sub-contracts all the work out to smaller spiders, which in turn sub-contract parts of the works out to yet smaller spiders, thus forcing the competition down the line. These large companies only operate in markets where there are major public works on offer with very specific features, in other words new works, decidedly new works with few links with the area and that lend themselves to this specific type of business model. Just by way of example, the biggest Italian enterprise, which is in 40th place in the European listings, has a direct labour to turnover ratio of 3.2%. As regards actual work, this enterprise does absolutely nothing, so they need works that are in keeping with this business model, this virtual business model that relies on being able to sub-contract all the work out to others. The future does not exist The main characteristic of these types of works is that they must have no links to the area and, above all, they are inevitably detached from the past and, above all, from the future because if anyone were ever to stop and consider their usefulness, it would become very apparent that they are of no use whatsoever to anyone, they are totally useless. They are unquestionably exceptionally useful to the politicians and the ruling class of the Western world, the capitalists who live exclusively in the present. We also have a ruling class, in which I include not only the politicians but also the bankers and the directors of these companies, these empty boxes that live solely and exclusively in the present. Structurally they are obliged to be so, simply because of what they need to survive, so they are well-connected economically and politically and they live on present day results, totally ignoring future results. It is a ruling class that lives exclusively in the present and so they come across like apprentice witchdoctors without any ability or understanding to comprehend what effects the decisions they are making today may have in the medium to long-term future. All they think about is reducing the spread within a few days or weeks, but as far as the potential effects that their decisions may have in the medium to long-term future and on future generations, they don’t have the foggiest idea of what they are doing. When a supposed technician like the current Prime Minister says, as he did in recent days, that the TAV project must go ahead because it is of strategic importance, without providing any facts and figures to back up his statement and then proceeds to add that in the near future a study will be tabled that shows the cost-benefit ration of this project, he is publically stating that he wants to press ahead with a public works project without a cost-benefit assessment having been done beforehand, but this is obviously a contradiction in terms, but that’s not all. When Minister Passera stated in an interview that this public work is a low-cost project that will enable this country to double the goods transportation potential of the Turin – Lyon line, he is basically saying something that is impossible to back-up technically, which once again proves that their focus is solely and exclusively on the present since the plan involves the construction of a new 57Km-long tunnel that will in any event tie into the existing railway lines both in France and in Italy, and they are passing it off as new infrastructure, even though it will be tied into old infrastructure. As we know from the Principle of communicating vessels, the line’s potential will be limited to the potential carrying capacity of the existing lines so, to try to pass-off the construction of this tunnel as a low-cost project is essentially like admitting that the tunnel is going to be absolutely useless from a technical point of view, even more useless than building a whole new line, because constructing only the new tunnel merely maintains the line’s current potential, in other words the current level of transportation of goods. When I talk about interest in the present only, for example as regards the political ruling class, what I’m really talking about a reality in which the parties that were born in the last century as a merger between Macchiavelli and Moro, in other words intervention in reality, dealing with compromise but also with utopia, political plans, societal change and some sort of perspective, the future ... but today the political parties are exactly the opposite of that. They do surveys and behave accordingly. When I say that they live in the moment, I say it in these terms, namely immediate interests … Obviously the media’s role is fundamental. In recent years we have not seen any technical information and figures that could justify these major works in any way… The public debt mole Information regarding the high-speed railway project has been totally lacking, probably because the interests that lie behind these major works had no interest whatsoever in informing the public. On the other hand we have this extraordinary mobilization and support that the No TAV movement is seeing today, particularly in the Val di Susa … For the past 20 years now this valley’s numerous technical experts have been informing the citizens and the mobilisation that we are seeing now is the fruit of twenty years of effort and of awareness of the technical merits that Valley reflected in the numbers that show the total uselessness of this major public works. In this regard, the fact that the major media have chosen to ignore this issue for the past 20 years and now tend to focus on reporting only on those issues relating to public order and appear to be incapable of evaluating the merits of this issue is proof that interests, probably even in the cultural collapse of this Country, lie only in slogans, in ideologies and the flags that certain works of this nature may represent for the ruling class and that these kinds of works are merely an extension of their total inability to conceive any sort of vision for the future. But I am becoming ever more convinced that this ruling class is structurally bound to worry only about the present because the minute there is any sort of appraisal of the effects that their actions have on the future, they stand to immediately lose all of their privileges. The only interests are the annual budget and short-term results and for the bankers, it is getting their hands on some serious stock options, while for the politicians who live in the here and now, it’s all about next month or next year’s political outcomes and for the entrepreneurs in charge of the virtual companies, it’s all about managing the debt. There will probably be no winners and we are all going to lose out in the end! They are gambling the future of our economy on these major public works, particularly here in Italy, because the financial architecture that is built on these major works are mechanisms designed to dig out hidden public debt from the accounts of privately held companies, this so-called project financing that has many politicians talking since public resources have become more scarce. However, this is precisely the mechanism that brought about the 2009 crash. In that case the debt was built on private funding while in this case the debt is being dumped into the public debt. That’s what project financing is all about, a mole that causes future public debt that has to and will inevitably surface at some point in the future. This mole has been digging away for many years already, since way back in the 90’s, since the post-Tangentopoli era and it is going to surface sooner or later because it is a hidden debt. The project financing debts or the debts of privately owned public companies may not be reflected in the 120% of GDP, but they are nevertheless public debt that is concealed in the accounts of private companies and will have to surface sooner or later. It is difficult to say when this will happen, however, it is not going to be in the long-term and when it does happen, any of these major works that have already begun will go to the wall and this debt will explode and reverberate on us all and on the economy as a whole! There is a lot to be done and they must be stopped sooner rather than later because these apprentice witchdoctors that make a living off these useless public works, on the financing that makes us all poor and these provisions that cut up and sell off communal assets and worsen the situation and the lives of the weakest members of our society must be stopped as soon as possible because these guys are nothing other than apprentice witchdoctors that live on the privileges of the here and now but they have no idea whatsoever of what our future will be. If we don’t stop them now they are just going to carry on dragging us right to the brink! Spread the word!
Posted on: Sat, 26 Oct 2013 08:04:45 +0000
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