Was it true competence? Draghi’s role in privatizations under the lens of the Court of Auditors
It is emerging, under all the propaganda that we denounce from the first day, that Mario Draghi is more functional to certain circles of international power than truly "competent". The slip committed the other day, at a press conference, on the "35-year-old psychologist who gets vaccinated by skipping the line" is a Biden-style gaffe, to clumsily justify the delays in the vaccination campaign. Saying such nonsense immediately after imposing the vaccination obligation on all health professionals, including psychologists, is a symptom of the lack of clarity of the most excellent Italian in the world. And then it will be the case to go and check Draghi's great competence.
We begin to do so by examining one of the operations for which he is best known: the privatizations of large Italian public enterprises that began in the 1990s. At that time, Draghi was general manager of the Ministry of the Treasury and from that position he directed the entire privatization process of Autostrade per l'Italia , Enel , Telecom and many others. To be precise, he was the head of the Privatization Advisory and Guarantee Committee, that is a technical body that had the task of supervising and directing the work of the many consulting firms and large commercial banks, such as Goldman Sachs and Morgan Stanley , who performed the role of advisor . In essence, the current prime minister was called upon to coordinate the work of consultants and to ensure that companies were adequately valued, so that the Italian state could derive the maximum possible from the market from the sale of these giants. In 2012, the Court of Auditors – the country's highest accounting jurisdiction, therefore authoritative and anything but conspiratorial – drafted a weighty report (158 pages) on the role played by the Advisory and Guarantee Committee chaired by Draghi in the privatization process.
Well, the Governance Committee does not come out so well from the examination of the Court of Auditors. Among the many flaws listed there, I will limit myself to pointing out two macroscopic ones. The first concerns the judgment that the Court expresses on page 68 and which I reproduce verbatim:
“In particular, in some of the cases examined ( Telecom , Enel ) there was confirmation – already emerged in the report approved by the Court with resolution no. 3 of February 12, 2010 – of a tendency of the Committee to confirm the opinion already expressed by the administration consultants, ending up by assuming an almost formal role, without always carrying out that incisive function of direction that the regulatory framework attributes to it ".
Clear? The super competent Draghi limited himself to adhering uncritically to what the banks decided.
Second macro question, regarding the privatization of Telecom , which the Court of Auditors notes in that report (page 39):
“It follows that Telecom's advisors , within the scope of the functions assigned to them, should have prepared a proper due diligence consisting of a multidisciplinary activity prior to the privatization. In summary, an in-depth preventive evaluation activity could have fully highlighted the actual economic, financial and patrimonial situation of the assets , the organizational efficiency and the quality of the real estate resources, allowing to provide the data necessary for an optimal enhancement of the public share package. . "
You got it right? Here the Court of Auditors gives us sensational information: adequate due diligence was not carried out to privatize Telecom . Due diligence (literal English: due diligence) means precisely studying all the strengths and weaknesses of a company in order to make the most of it. It is always rightly done, even for infinitely less important operations: if we ask for a loan from a bank, it will carry out a due diligence on us and on the property that we will bring as collateral, before disbursing the money. Incredibly, this has not been done for Telecom . So how was the right value of this strategic company established before putting it on the market? Is this competence?
We could go on with other examples but I think the question is now sufficiently clear. One last thing: visit the Italian site of the large investment bank Goldman Sachs . Here you will find this statement:
“In the early 1990s Goldman Sachs was among the leading financial institutions to participate in the country's first privatization program. This program included quotations and M&A transactions (mergers and acquisitions) involving the main financial institutions, utilities , oil companies and companies operating in the telecommunications and defense sectors then owned by the Italian State ”.
Rightly, in introducing itself to the Italian public, Goldman Sachs offers as a credential that of being among the main banks that have taken part in Italian privatizations. We have just seen how these privatizations were conducted. Mario Draghi chaired the Governance Committee of the same (ie he also oversaw the work of Goldman Sachs ) from 30 June 1993 to 20 April 2002. The same year 2002, to be precise on January 28, he was hired by Goldman Sachs with the role of Vice Chairman and Managing Director to lead the institute's European strategies from the London office from 2004 to 2005 he was a member of the group's Executive Committee. No one has ever detected a conflict of interest in this passage. But you know, competence wins over everything.
The post Was it true competence? Draghi's role in privatizations under the lens of the Court of Auditors appeared first on Atlantico Quotidiano .
This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/fu-vera-competenza-il-ruolo-di-draghi-nelle-privatizzazioni-sotto-la-lente-della-corte-dei-conti/ on Mon, 12 Apr 2021 04:01:00 +0000.