Who are the advisers to Troika who rule over our austerity-hit lives? In Greece, in Portugal, in Ireland, in Cyprus and Spain? How do they get the jobs and the contracts? How much are they being paid to ruin the lives of citizens in the European South? What are their internal connections, the cronyism and the conflicts of interest of this web of lives exterminators? Are they links bewteen these financial consultancies and investment funds? Is corruption that unites these companies and the members of the EU/IMF/ECB-Troika? EUobserver reveals a scandal worth at least 80 million euro, a scandal that has been exposed on the occasion of the Cyprus bailout.
Troika consultancies: A multi-million euro business beyond scrutiny
Berlin – Alvarez and Marsal, BlackRock, Oliver Wyman, Pimco: The names mean nothing to the average European.
But the financial consultancies have played a central role in all the eurozone bailouts and have so far invoiced taxpayers in Cyprus, Greece, Ireland, Portugal and Spain over €80 million.
Their “independent” expertise is used by the “troika” of international lenders – the European Central Bank (ECB), the European Commission and the International Monetary Fund (IMF) – to decide how much countries or banks need to prevent a default.
They are often hired without a public tender, posing questions on transparency and accountability.They are sometimes hired despite potential conflicts of interest, which arise from links to investment funds and other financial service providers.
The consultancies also hire subcontractors, posing extra questions on who has access to inside information and how they use it.
Aside from local law firms, the subcontractors almost always include one or more of the “Big Four” accountancy companies – Deloitte, Ernst&Young, KPMG and PriceWaterhouseCoopers (PwC).
The end result is a “golden circle” of a dozen or so large firms with a de facto monopoly on handling EU bailouts.
Take Alvarez and Marsal.
The New York-based consultancy earned €2 million for setting up and managing Spain’s “bad bank” in 2012.
In a typical model, it brought in a Spanish law firm called Cuatrecasas, a Japanese financial services company called Nomura and PwC to help do the job.
It has also earned €6.6 million for its work on the Cypriot bailout.
But its work in Cyprus caused a scandal which brought the questions to light.
According to an internal audit by the Cyprus central bank board, it got the money despite being ineligible for part of the work.
The audit document – seen by EUobserver – shows it got €1.1 million plus VAT for evaluating Bank of Cyprus, the island’s main lender, up to December 2012. It also got a service extension fee of €250,000 for continuing the work in 2013.
In December 2012, with Cyprus struggling to secure a bailout from fellow eurozone states, the central bank chief, Panicos Demetriades, shortlisted Alvarez and Marsal for several new contracts. (READ FULL ARTICLE HERE)
PS If I am not mistaken all these Pimco, Mimco and Dinco, are they those who publish these Cassandras-reports about collapsing national economies?