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Sunday, 27 July 2014

The MH17 and the Ukrainian – Russian conflict: the sad and bitter end of the Malaysian Airlines plane put this brooding conflict definitely in the spotlights.

Just like everybody else in The Netherlands, I was sad, shocked and overcome when I learned about the terrible fate of Malaysian Airways plane MH17: (almost certainly) being shot by a SAM-missile in mid-air, leaving 298 passengers and air personnel dead on the spot.

The outrageous loss of life and the heartbreaking sadness of the people left behind, could be felt all over The Netherlands and far, far beyond. And to make things even worse – as if that were possible – there is the severe loss of life among some of the smartest scientists, participating in the worldwide battle against AIDS. This terrible loss of so many briljant scientists will undoubtedly have a large impact on the battle against this fierce – and outside the Western World still deadly – disease.

For me, this attack on MH17 had also a slightly more personal component, although I did not know any of the victims involved.

We – as a family – have strings attached with both Russia and the Ukraine, as we have family, dear friends and acquaintances, who are either living or working in both countries. Besides that,  I am of course a proud Dutch: proud of my society and proud of the values that it represents, without closing my eyes for the few dark sides of it. Therefore the whole situation with the MH17 made me more sad and worried than I can tell you, my dear readers.

And above all, we (i.e. I and my loved ones) want to know the truth about what exactly happened during these terrible events in the Ukrainian Donbass region: not the pre-fabricated bitesize chunks of facts, fiction, false accusations and propaganda that all parties in this battle seem to propagate as undeniable facts, but the whole – open and harsh – truth.  

If there is one thing that is emphasized by this tragedy – and as a matter of fact by all the other terrible wars in the Middle East (Gaza, Syria, Iraq,…) – it is that the combination of the economic crisis, the surge in aggressive, dangerous nationalism, the ubiquitous religious outbursts and the economic inequality within regions, countries and societies, has delivered an explosive cocktail that only needs the smallest spark to create havoc in countries and regions.

And now – as a consequence of the irreversible incident with the MH17 – Ukraine, Russia and the West itself are in a very dangerous and increasingly uncontrollable stalemate: the governments of both Russia and the Ukraine, as well as the Russian separatists, have all the reasons to stick with their side of the story and accuse the other party – justifiably or not – for all the warcrimes and damage done, while totally downplaying their own role in the conflict: IT. WAS. NOT. OUR. FAULT. PERIOD!

Putin wants to remain the tough, well-respected and feared leader in his own country –notwithstanding the untolerable stench of corruption and nepotism surrounding him and in spite of all the economic countermeasures taken against his government – and therefore bangs the nationalist drum on an unprecedented scale, while making a total joke of the truth. Seemingly, Crimea was only the beginning of his dangerous Grand-Russia concept. Although it is extremely improbable that the button of the deadly missile against the MH17 has been pushed under his authority, his role in the prelude to this event has been undeniable.

The Ukrainian leadership want to move their country (i.e. the whole country) towards NATO and EU membership as soon as possible, in order to definitely wave the times of communism goodbye and build a line of defence against ‘Mother’ Russia. However, they are confronted with an all out civil war in the Eastern territory of the country, where the Russian separatists are fighting for independents republics, which would or would not (re)connect with the Russian republic.

The Western leadership itself is dazed and confused: where the Anglosaxon countries United Kingdom and the United States scream for more and tougher economic and politicial measures against Russia, the continental countries in Europe count their blessings, in spite of their heartfelt anger and shockedness, and follow a cautious political approach against the country.

Losing a large country as Russia as a customer or supplier would simply be too much for France, Germany, The Netherlands and other continental European countries. These countries maintain their large web of economic interests in Russia and are dependent on it: for instance for their energy supply and large amounts of exports.

It is not easy to stand tough and call for a boycott, when you just finished a €1.5 billion battle ship for the Russians (France), when some of the largest car manufacturers in the world are breathing in your neck (Germany) or when you are very dependent on Russian gas for heating and energy (Italy).

Still, among all unavoidable questions about who pushed the button of the devastating missile (probably: the Russian separatists in Ukraine) and who delivered this very missile (probably: the Russians), there is the ultimate need to contain the situation. Irrespective of how weak and cowardous this perhaps might sound: this Ukrainian – Russian conflict must be contained and solved, without letting it get out of hand.  

Both the First and Second World War have proven beyond reasonable doubt how dangerous it is to let a conflict get out of hand in Europe: either by looking the other way (WW II) or by overreacting to it (WW I).

The European Union has the obligation to find the truth with respect to this terrible accident, with its devastating consequences. However, it also has the obligation to contain the extremely dangerous Eastern / Western conflict that is brooding here. A conflict that has been put on the map definitely, by the devastating strike upon the MH17.

This means a cautious and elaborate choice between the British / American gung ho approach against Russia and the somewhat cowardous ‘trade before everything’ approach of especially French président François Hollande and Bundezkanzler Angela Merkel.

When this extremely dangerous conflict is not contained soon, with an acceptable solution for all parties involved, it could easily grow into a World War. Especially, when an ‘all out war’ seems “the only way out” for (for instance) the intelligent and learned, but extremely vain and egoistical streetfighter Vladimir Putin, who might not stop at sacrificing thousands (millions(?)) of Russians to keep his ‘organization’ afloat. 

Creating the next World War on European soil could become the end for the whole humanity: that is something upon which there should be little doubt.

Tuesday, 15 July 2014

Ernst's “Investments in the future” pt 1: Pharmacy

This is the start of a new series of articles on Ernst’s Economy for You. 

Next to my ‘regular’ articles regarding the Dutch and European economies and politics in the broadest sense of the word, I wanted to increasingly focus on handing out possible investment opportunities for companies and private persons.

I want to answer questions like:
  • What will be the winning industries of the future?
  • What will be the winning business and earnings’ models?
  • Which changes should companies make in order to survive?!
  • How can we earn money from these imminent developments? 

The first issue of this series is about pharmacy.

Why pharmacy?

Pharmacy is an industry in which large and extremely wealthy, Western companies, like Pfizer, Novartis, Sanofi, Roche, Merck & Co and a dozen others rule. In the pharmaceutical industry, a few bestseller drugs can pay for the research and development costs of dozens of other, less successful drugs and still reward the shareholders with healthy dividends. 

Due to the circumstance that people need drugs every day, this can be considered a non-cyclical and crisis-resistant industry, in contrary to many other industries. During the last six years, since the crisis started, the stock rates of these companies have all shown steep inclines, turning them into the love interests of many investors.

The sales potential of successful drugs – for instance anti-cholesterol drugs, antacids, anti thrombosis agents or anti-diabetes drugs – is simply overwhelming. 

In many western countries and in countries like Russia, Japan and China, there are four important factors which spur the usage of the aforementioned – and other – drug types:
  • An aging population, as a consequence of both a longer life expectancy and a diminishing birth rate;
  • Improved medicine and surgery, which turned formerly terminal diseases and illnesses into chronical, but yet survivable affections;
  • Computer-aided, desk-bound labour, which forces many people to spend hours and hours on working behind their desks, in a static position. This has undoubtedly a bad influence on people's health
  • A growing global population, which becomes more and more chronically unhealthy (without really being ill), as a  consequence of adopting the western lifestyle, with its overdose of salt, sugar, carbon hydrates and fat in pre-cooked food products.

These factors, as well as the globalization of the pharmacy production, made that a diminishing number of multinational pharma giants services and ‘controls’ a soaring number of potential patients / customers.  

In other words: an ever growing pie needs to be divided among an ever smaller number of eaters: this makes the pharma industry an extremely lucrative one, in theory.

There are, however, a few dark clouds at the horizon:
  • The pharma giants are increasingly trying to grow through mergers and acquisitions, instead of aiming at autonomous growth via the development of own new and innovative drugs;
  • The tunnel-vision of the pharma giants regarding medicine for lifestyle diseases, at the expense of vaccines, drugs against mass-killers and antibiotics is worrisome. 

Paradigm shift: from lifestyle drugs to vaccines and drugs against mass killer diseases?

Most large pharmaceutical companies have shareholders and they are quoted at the international stock exchanges. 

This fact puts pressure on the margins and general profitability of these companies, as well as on their long-term vision and planning: every quarter brings a new confrontation with the ADHD-laden shareholders and the various analysts. 

It is simple: too little profit and too many bleeders and you are out, as a CEO, under pressure of vigilant shareholders and/or private equity companies.

And unfortunately, it is less lucrative to cure somebody from aids, hemorrhagic fever and malaria or from an aggressive inflamation, than to help somebody with chronical diseases, like cardiac diseases, gastric acid problems, diabetes or elevated cholesterol levels.

Why would you create a drug that helps one person to cure within a few days or weeks, while you can also ‘help’ somebody else with expensive prescription drugs, which he must use during the full remainder of his life?! 

This behaviour of the pharma giants was reinforced by the circumstance that deadly diseases (i.e. mass killers), like malaria, aids, aggressive inflamations, dangerous influenzas and hemorrhagic fevers were mainly Third World diseases. 

The Third World was traditionally the place, where people lived with less purchase power, fewer lifestyle diseases and generally a shorter life expectancy than their western counterparts. The general idea was:

[The generally short prescription periods of medicine for one-off usage + lower occurrence of chronical lifestyle diseases +  unwealthy people in the Third World = poor profits for drugs]

I think, however, that this paradigm might shift in the coming years.

The business model of drugs for (former) Third World countries

Three of the four BRIC-countries – Brazil, India and China – as well as other former Third World countries, like Vietnam, Cambodia, Indonesia and some African countries, have (partially) a tropical climate. 

Such a climate, in combination with the often more traditional lifestyle in these countries, offers a strongly elevated risk for malaria and outbreaks of inflammatory diseases and influenzas.

All these countries also have a soaring economic growth in common, as well as soaring wealth and increasing purchase power among their population. 

And the most important factor: India and China alone count for over one third of the world population, while these countries are rapidly developing a relatively wealthy middle class, consisting of hundreds of millions of potential customers for prescription drugs.

It could very well be that these ‘formerly poor’ Third World countries will soon pay top-dollar for improved prescription drugs, against tropical diseases and the other affections mentioned earlier.

While the life-style drugs might remain important cash cows for the Western pharma giants, there could be an immense shift towards the development of ‘third world medicine’, in order to not leap behind the pharmaceutical companies in India and China itself.

This could mean new growth for the Western pharmaceutical industry, albeit in formerly unexpected territory.


There is no denying that the excessive global usage of antibiotics – not only for human recovery, but for intensive cattle breeding and fish farmery as well – is an accident waiting to happen. And this accident will happen rather sooner than later.

The scientific evidence is overwhelming that we are in the middle of an uprising of new generations of ‘superbugs’, which are resistant against almost all kinds of antibiotics and even formerly successful combinations of it.

Fortunately, most incidental outbreaks of these superbugs take place in relatively well-contained environments (like hospitals) and mostly among people, who often already suffered from a low level of resilience. 

The improved hygiene, as well as the natural resilience  coming from the immune system  of healthy people has fortunately stopped massive outbreaks of such superbugs. This is the reason that large accidents, concerning multi-resistant bacteria, hardly occured yet.

Nevertheless, there is a more than average chance that a dangerous, multi-resistant bacteria will cause a massive outbreak of disease in the not so distant future. An outbreak, which – in a worst case scenario – might perhaps be compared with the medieval plague in lethality and possible number of casualties.

Yet, the silence surrounding the development of new, vitally important antibiotics is really deafening. 

The reason for this? The same circumstances which caused the poor interest of the pharma giants in the development of anti-malaria agents and new vaccines against tropical killers. 

Development of new antibiotics did not fit in the current paradigm of the Western pharmaceutical giants, as these will probably not supply the elevated influx of money that other prescription drugs can bring. For this reason, the industry chose until now to fully use up its current portfolio of antibiotics, instead of developing new ones.

In my humble opinion, this dangerous shortsightedness of the pharmaceutical industry – in combination with the blatant ostrich policy of the western governments, to leave the development of new antibiotics to the pharma giants themselves – could lead to a frantic race against the clock, in order to remain the superbugs one step ahead.

The final outcome of this race is anybody’s guess, as new medicine is notoriously hard to develop and takes a very long time to be deployed on the international markets.  

Buying the competition to avoid taxes?

The most significant news from the pharmaceutical industry, recently, has been Pfizer’s plan to take over Swedish/British pharma giant AstraZeneca and subsequently move its headoffice to London, obviously for fiscal reasons:

Many people know by heart that such mega-mergers seldomly yield the economies-of-scale, which were promised in advance and often rather bring the total opposite: billions in lost money on company and ICT restructuring and structurally worse results for both companies than before.

No, the reason is simply that Pfizer doesn’t know what else to do with the money stashed away, as ‘bringing it home’ is impossible in their narrow-minded thought process. Pfizer won't use their money to invent new antibiotics that the world so desperately needs nowadays, or to invent a new drug against malaria which could save millions of lives. These drugs will not be cash cows and therefore they are not worth investing in.

I would urge Pfizer, Novartis and their likes to stop this cash-consuming and utterly improductive moving and spending of their stockpiles of cash money for fiscal reasons, as well as their ‘battles to become the biggest’.

The world needs new and better prescription drugs against mass-killer diseases and especially antibiotics, and it needs those fast, in order to prevent lethal future pandemics from occurring sooner or later!!!

Does real innovation have a chance?

Of course, real innovation has a chance in the future. Without this real innovation in the past, the current pharmaceutical giants would not have existed in the first place.

However, the hyperactive shareholders, as well as the bonus-hungry, short-term focused executive management of these pharma giants, are hardly willing to ‘travel the high road’ at this moment.

This means in practice that, during the next few years, the focus of the Western pharma giants will remain on their bestselling, high yield prescription drugs for western lifestyle diseases. Suffice it to say that this will not lead to mindboggling innovation soon, but only to anti-cholesterol drug no. 22 and anti-diabetes agent no. 15!

Nevertheless, the race for new medicine against mass-killing diseases, like aids and malaria, will be on within a few years: influenced by growing masses of wealthy Chinese and Indian middle class people and by the fast-growing pharmaceutical industries in these countries.

And so will be the hunt for new antibiotics: perhaps at the own initiative of the Western pharma giants or perhaps at gunpoint from anxious governments, which want to avoid cataclysmic outbreaks of infectious diseases in the future. 

Fortunately, I am quite optimistic, as far as mid-term developments are concerned.

How can we earn money on these developments?

As I stated before, the top 5 pharmaceutical companies all showed a steep rise of the stock quotations during the last five years (check out Bloomberg), which means that their stocks are highly (or even over) valued today. This makes these particular companies a less promising investment, when buy-and-hold is your strategy.

My take would therefore be, to only invest in companies that either clearly focus on the development of genuinely new medicine (antibiotics, vaccines or drugs against dangerous influenzas, malaria and aids) or on new innovative techniques for medicine development. 

These focal points will be where the future growth lies, in my humble opinion.

Such companies could be:
  • Small and innovative start-ups in both the West and the Far East, which develop new and innovative techniques for medicine development and / or drugs;
  • Even one or more of the aforementioned top 5 (or 10) Western pharma giants, whenever they show the guts to withstand shareholder pressure and return to genuine innovation, instead of taking over their competitors with tax-money, stashed out of sight of the American Internal Revenue Service.
  • And last, but not least: don’t forget the Chinese and Indian developers of generic prescription drugs, like for instance Zhejiang Huahai Pharmaceutical Company or Ranbaxy Laboratories.

At this moment, most of these companies are still focusing on copying generic Western drugs and some of them yet suffer from serious quality issues. This situation, however, will not last forever.

As the American car industry can already fully confirm, the West should not count on having and maintaining the lead forever in the pharmaceutical industry. Investing in those Far Eastern pharma companies could turn out into an educated gamble, which could end being very much worth your while.

From either side, the pharmaceutical industry will remain a growing industry in years and years to come.

Disclaimer: This analysis is solely written with the purpose of information supply.

I don’t have any financial or business strings attached to this industry. As I am not an investor myself, I don’t have any financial purposes with this advice, except for supplying people with free and interesting information. 

People are free to follow up my advices or not. However, I can’t accept any responsibility for the investment decisions that people make, based upon the advices mentioned in this article.

Parcelatoria Gonzalo Chacón versus Procom Desarrollos Urbanos s.a., Pt V: upcoming lawsuits of Jaafar Jalabi against PDU and the Dutch stateowned company Propertize BV

A few months ago, I have written a series of articles (starting with this and this one) regarding  the legal battle of a Spanish entrepreneur in the construction industry, against Spanish and Dutch subsidiaries of SNS Reaal.

Jaafar Jalabi, and his company Parcelatoria Gonzalo Chacón, have been involved in an enduring battle against Procom Desarrollos Urbanos – a full subsidiary of formerly SNS Property Finance (hence: of SNS Reaal) and currently of Propertize BV, the stateowned, legal successor of SNS Property Finance – about the development and exploitation of a shopping mall in Valencia, which included a large snowdome.

During this process, which stretched for more than five years, PDU had filed four legal and one criminal lawsuit against PGC and Jaafar Jalabi personally. PDU deployed blatantly improper information during all these lawsuits and made statements, which could be considered as perjury. The involved Spanish judges shipwrecked all accusations by PDU/SNS PF and did so in about the strongest words possible.

Mr. Jaafar Jalabi of Parcelatoria Gonzalo Chacón
Picture by: Ernst Labruyère
Click to enlarge
Nevertheless, in spite of the favourable outcome of all legal cases, Jaafar Jalabi had suffered damages north of €7.5 million. Not only had the outstanding bill of €6.46 million not been paid by PDU for a number of years, but – as a consequence of this non-payment – a bank guarantee of PGC had been revoked. This revocation forced Jalabi to sell some of his property at about the most unfavourable time possible, in order to meet his bank covenants, which cost him additional money.

As initially SNS Reaal – as ‘parent company in chief’ – and later Propertize BV – owned by the holding company of all Dutch stateowned financials, NLFI BV – refused to revoke the lawsuits against him and compensate his damages, Jaafar Jalabi has now started a series of lawsuits against PDU and its legal representatives (i.e. Propertize BV, ultimately owned by the Dutch state).

Until yesterday, I had not heard from Jaafar for a few months, due to – in hindsight – the effects of a nasty accident. Fortunately, he responded to me with an email this Monday, of which I print the following snippets:

As for my lawsuits, I will here below describe what is going on.

[First ] I filed a criminal lawsuit against Mr Carlos Monreal, the Spanish ex managing director of PDU, for lying in his witness statement in both civil and criminal courts. He lied in order to benefit the present management of PDU when he testified that he did not know anything about the second agreement between PDU and PGC.

In the criminal case that PDU filed against me, the judge declared that Mr Monreal knew about the existence of the second agreement, as evidenced by the testimonies of several senior ex employees of PDU when the deal happened in March 2007. You might recall that the judgment of the criminal judge was in my favour and against PDU and PDU did not appeal that judgment so it is final. My lawsuit is already in trial.

In this trial Mr Monreal could take one of only 2 positions, the first is to continue lying where he would be in further trouble, or he could say that he lied because he was instructed by the present management of PDU, which is effectively dominated by Propertize B.V. (Previously SNS Property Finance), as part of a deal that they made with him to which we have some evidence.

[Second] I have filed a criminal lawsuit against PDU and against its legal representatives and that includes members of the board of PDU, two of which are representatives of Properties B.V.

The lawsuit specifies that PDU falsely raised a criminal lawsuit against me in order to delay the civil lawsuit, knowing before hand that the PDU criminal lawsuit against me was false. You might recall that the criminal judge dismissed the criminal case against me and gave me recourse to go against them, and PDU never appealed that judgment. I assume that the trial would start soon.

[ Third] Once the above mentioned 2 criminal lawsuits are underway, and I estimate that after the summer break, I will file a civil lawsuit for damages. I am now working with my financial analysts to fine tune the figures and I believe that it would be approximately what we talked about. Of course the party that has to eventually pay for it would be Propertize B.V.

Once I recover, I would visit you in Amsterdam.

I urge all interested readers to read all the previous episodes of this series and especially take a look at the Spanish process records and other evidence, which I enclosed in these earlier episodes. In spite of the involuntary radio silence, maintained by Jaafar Jalabi during the last three months, this case is far from over.

As PDU has been a full subsidiary of SNS Property Finance, as well as of SNS Reaal and its legal successors (Propertize B.V. and ultimately NLFI), during the timeframe in which these (legal) events took place, this is a legal case in which ultimately the Dutch government is involved.

Although the sheer amount of the suffered damages is quite small, for one of the largest financial conglomerates in The Netherlands, this case sheds an unfavourable light on the peculiar ways of doing business, that the subsidiaries of SNS Reaal maintained against their business partners in a.o. Spain. 

This makes it very important that this particular case remains on everybody’s retina.

Friday, 11 July 2014

About bankruptcy filings, silent receivership and lightning-fast second beginnings: in recent Dutch, high-profile bankruptcy cases some things and situations had “a funny smell and flavour”

Since about a year, it has become more common legal practice in The Netherlands to appoint a silent receiver at the time when a bankruptcy seems imminent for a company, but is not yet reality. This happens instead of the old situation, in which a receiver was only appointed when the bankruptcy case had already been filed.

The advantages of silent receivership before the actual bankruptcy seem enormous: 
  • A bankruptcy is traditionally a public relations nightmare for companies in dire straits, as customers, money-lenders and suppliers immediately lose their faith in the company and try to recollect as much from their assets as possible;
  • Candidate customers and common people are shied away by the uncertain ending of a bankruptcy filing, without a clear Plan B;
  • The silent receiver can start the preparations for a second beginning in relative silence, while keeping a low profile: nobody is aware yet of the possible bankruptcy in the first place;
  • Possible takeover candidates can be approached without the public eye watching, which makes the negotiations easier for all involved parties;
  • The second beginning can start very quickly and with the least amount of damage done for all involved parties. Especially suppliers can maintain hope of getting most of their money back, in this situation: possibly without being subordinated to the Dutch Internal Revenue Services and the banks first;
  • Theoretically, the personnel has a better chance to keep their job, when the bankruptcy runs swiftly and follow-up possibilities are ‘just around the corner’. 

To the naked eye, such a silent receivership looks like the proverbial win-win situation: many winners and hardly any losers. During the last few weeks, however, there have been a number of high profile bankruptcy cases and lightning-fast second beginnings, which might shed not such a favourable light at the silent receivership.

The following story comes from Het Financieele Dagblad (

The bankruptcy filing of day nursery company Estro, in which a silent receiver has been used who enabled a swift second beginning, seems the result of a cautiously planned operation.

Well over a month before the bankruptcy filing on July 5, the executive management of Estro moved the headoffice from Amersfoort (in the middle of The Netherlands) to Amsterdam: at least on paper. This was disclosed by FD research.

Due to this ‘paper relocation’, the day nursery company circumvented the jurisdiction of ‘hostile’ court Midden-Nederland, to which the organization earlier belonged.

The company moved to Amsterdam, where the court had showed a positive stance against the appointment of a silent receiver in recent years. The organization preferred a ‘controlled’ bankruptcy, according to two insiders, who speak on basis of anonymity. A silent receiver speaks with all stakeholders about a possible second beginning of a company, before the actual bankruptcy has taken place.

From the data, which have been deposited at the Chamber of Commerce, it becomes clear that – on 3 June 2014 –  the day nursery company changed the regulations of the company at a public notary. The statutory seat became Amsterdam, instead of Amersfoort.

Estro made a swift second beginning eventually, in which the British Smallsteps company maintained 250 of 350 day nurseries. The last owner was the famous American venture capital company KKR. The followed procedure has not been undisputed. At least two major day nursery companies, Partou and SWK Group, had been interested in an integral or partial takeover of Estro. They feel being put offside during the process.

To the naked eye, this looks at least like a second beginning under less-than-optimal circumstances, as seemingly not all possibilities to save / sell (jobs at) the day nursery branches have been tried.

Besides that, the website Das Kapital – where one of my appreciated twitter buddies Joost van Kuppeveld does his magic – came with a story, containing additional information about this bankruptcy:

In the press release we read that HIG Europe is ‘the largest investor in Smallsteps’. And indeed, on July 1st, H.I.G. Capital made a request at the [Dutch]  Authority Financial Markets (AFM) to take over Estro, through its subsidiary European Capital Partners LLP.


And there is something more: Estro was for 75% owned by the private equity funds Bayside Capital and KKR. Remarkable is that Bayside Capital and HIG Capital Europe belong to the same parent company: HIG Capital, a private equity company with $15 billion 'capital under management'. When we combine this with the statements of Partou and SWK that both companies ‘were willing to pay more for the takeover of Estro’, we get a feeling that this operation was only a means to get rid of personnel and poorly operating branches, but maintain the company within HIG Capital.

This does not sound good indeed…

While this was a relative bread-and-butter case of a bankruptcy, in which the majority of personnel members fortunately kept their job [which absolutely does not mean that I try to downplay the situation for everybody who lost his / her job at Estro – EL], there has been a seemingly even ‘nastier’ bankruptcy a few weeks ago.

The Dutch/Belgian online shop [not acquainted to the equally named traveling organization, part of Thomas Cook International - EL] made a ‘flash crash’ on June 24th 2014, only to restart one-and-a-half hour later.

When the smoke lifted, 237 people in Belgium and The Netherlands had lost their job, while the whole executive management – most of them being also key personnel members of private equity company ‘Axivate’, which took over the Dutch/Belgian ‘’ online store in 2012  kept theirs.

Their story was that Axivate couldn’t keep ‘’ afloat, in spite of the ‘millions and millions of Euros’ that it allegedly invested in the online shop. 

This was the reason that they had to fire the vast majority of the fixed personnel of and subsequently restart the company with 15 hands personnel only and services, that would be rendered by external suppliers from the online business.

A Belgian labour union representative, Bart Leybaert of labour union ‘BBTK’, did not buy this story of at all and approached the Dutch media. The following news item came from BNR News Radio, a few weeks ago:

The executive management of intentionally bankrupted the company and prepared this bankruptcy maticulously. This is stated by the Belgian labour union BBTK.

According to Bart Leybaert of the Belgian BBTK labour union, there is circumstantial evidence for this statement. “Very visible to the objective eye and – as a matter of fact – a smack in the face for the dismissed personnel: hardly one day after the bankruptcy filing at the Court of Justice in Breda, the new website has been put online. We all know that the creation of a professional website takes more than one day”.

Other reasons for distrust, according to Leybaert, were the separation (in advance) of good and poor credit, the handover of trustworthy customers to a subsidiary of Neckermann and the fact that the whole executive management has remained in position after the bankruptcy.

Leybaert is handling the interests of the Belgian employees, who have been fired. The onlineshop has been declared bankrupt on Tuesday. Only a few hours after the bankruptcy, an agreement was reached about a second beginning for the company, in a drastically reduced format. The labour union wants the curator of the bankruptcy to start an investigation into possible fraud.

Andreas Ezinga, the managing director of and one of the partners in private equity company Axivate, which owned (and still owns) at the time of the bankruptcy, frantically denied the accusations of Bart Leybaert:

‘This is of course a scandalous remark and not based on any fact whatsoever. Of course it is very sad for all the people involved. A large share of the employment disappears, so I can actually imagine that there is sadness, anger and annoyance.

And with respect to the quick deployment of the new website: we had a so-called pre-pack, which means that one has a few days to look with the silent receiver at the possibilities [ for a second beginning – EL]. This means that the website has not been built within 24 hours. And we are very experienced with internet companies, which means that we have the expertise to deploy such a website very quickly’.

That same day I have made personal contact with Bart Leybaert of Belgian labour union BBTK, out of curiosity. Although Bart did not present a real ‘smoking gun’ of bankruptcy fraud yet, he gave me some additional information about the case. He collected this information at his Belgian union members among the 237 personnel members of

In bullets, his findings were:
  • The same people that formed the management before the bankruptcy, form the new management after the event;
  • Good credits have been transferred to Vesting Finance, in the weeks before the bankruptcy (a Dutch factoring company);
  • Bad credits remained at Neofin, a Dutch/Belgian subsidiary operating under Belgian law;
  • The customer database, which generally yields most money for an online shop, has been transferred to private equity company Axivate. This was disclosed by the privacy disclaimer of the old website (which is not visible anymore);
  • Hardly one day after the official bankruptcy, the new website was ready;
  • The stock of Neckermann has been sold – presumably to Axivate – at a ‘token’ price;
  • The acquiring party of has been founded on 19 May 2014, which means that this Nemo webshop itself does not have any provable experience in online sales;
  • Axivate is planning to maintain the website with only 15 people and a few commercial service suppliers, where earlier 237 people had been involved.

I checked the statements of Bart Leybaert as thoroughly as I could and I found that is held by a host of private limited companies: all at the same address of a small company building in Amsterdam (where also Axivate itself is established) and all part of either Axivate itself or the holdings behind Axivate.

Some of these private limiteds – especially the online store ‘Nemo Webshop’, which ‘took over’ – have indeed been founded only weeks before the bankruptcy of took place: in case of Nemo webshop, this was the earlier mentioned 19 May 2014. I cannot say that this is unusual or even suspicious, but it is at least remarkable.

What is also remarkable – in my humble opinion – is trying to run a large online store with only 15 personel members, where earlier almost 240 personnel members had been involved. One of my past jobs was at an logistical company, in which I cooperated with people from the departments Purchases, Sales, Warehouse and Bookkeeping. 

This job learned me that it is impossible to host a large online shop with 15 man, unless you outsource everything to third parties and just maintain the ‘façade’ of the shop, as an empty shell. This is more or less confirmed in the story by Sprout (see the aforementioned hyperlink).

And there is more: as some of my readers might know, I am a professional software tester with more than 16 years of working experience. So what I can say something about with even more authority, is the corporate website of, which was deployed one day after the bankruptcy.

I checked out this website on the 26th of June and I agreed with Bart Leybaert that it is nearly impossible to develop such a website in a day (see first red and bold text). Even in a week – assuming that the management of Axivate/Neckermann had a little more leeway, due to the silent receiver working within the company –  it would be quite a challenge to develop it (see second red and bold text).

However, what is even bothering me more is that the fact that now – more than two weeks after the bankruptcy declaration on 24 June 2014 and my initial check of the website on June 26th – the website of still looks clumsy and unattractive: not the website of a commercial juggernaut, but rather of a ‘mom-and-pop store’ going online for the first time.

More items are now on display at the website, but for instance the ‘shipping information’ is still under construction, as-of today.  

To me this:
  • a. proves that it is indeed impossible to build / finish such a website within one week as Bart Leybaert already stated in his interview with BNR and – especially bothering to me –
  • b. I have a sneaky suspicision that is treated as ‘an old soldier’, who does not die, but silently fades away.

The Dutch expression for this situation  is ‘sterfhuisconstructie’: the healthy parts of a company are sold or traded and the unhealthy parts are left ‘in the company’ to die in silence. Of course, I can be mistaken, but it surely looks like that.

This brings me to the conclusion of this article: a silent receivership can be a blessing indeed for companies, which are intrinsically healthy, but went through a considerable amount of tough breaks. 

Due to the relative silence in the weeks before the bankruptcy, the company can make a quick and swift restart and find the path to success again, without having to be split up, sold or terminated.

However, the silent receivership – and bankruptcy in general – may not be used as a cheap means for:
  • ditching personnel without: 
    • a social plan; 
    • receiving any damage fees; 
    • having any rights and prospects;
  • sending the suppliers and money-lenders on the road-to-nowhere with their bills, claims and possessions.

Therefore the Dutch government and the Public Prosecution should be much more focused on abuse of the loose Dutch bankruptcy laws ( as in ‘often loose for the limited companies filing for bankruptcy’) and especially the silent receivership, which can make it even easier to sweep abuse of bankruptcy laws under the carpet. 

Tuesday, 8 July 2014

Will the possible (voluntary) dissociation from the European Union of ‘bad boy’ United Kingdom make team ‘EU’ stronger or weaker?! About a Europe with or without the handbrake on…

"Fog in Channel; Continent Cut Off"

A few months ago, the Mrs and I made a weekend trip to the London city, which we enjoyed to the fullest. Our respective acquaintance (she) and reunion with London reminded us that - until today - we neglected the United Kingdom as a beautiful and inspiring place to spend our summer holidays.

We really couldn’t think of a good reason – except for the climate, the landscape, the sea and the delicious food and drinks – why we always visited the Southern European countries and not our western neighbour, with its many monuments, its traditions and its rugged and beautiful landscape.

Nevertheless, I couldn’t help but rediscover that time seemed to have stood still since 1992 – the year of the deployment of the Schengen agreement – when we stood in line for the British customs service in Calais, France.

Where the 340 km drive from Utrecht (The Netherlands) to Calais happened without any interference from governmental bodies, in spite of passing two borders, we discovered that things went a little different, while we entered England.

Of course, one can argue that a country must always have an undisputed choice of its own,  between keeping its customs and its own currency or abolishing it. Nevertheless, it is hard to overlook that the rest of continental Europe has moved far beyond this choice, since 1992 and especially 2002, when the beloved / hated euro was introduced.

These and many other small, but unmistakable differences between the United Kingdom and the large majority of continental Europe, Ireland and Malta, emphasize this: the (tiny amount of) enthusiasm in the United Kingdom for the European project, is merely based on a corporate-driven ‘marriage of convencience’, instead of a passionate ‘love at first sight’.

The British people generally think:
  • Yes, the UK profits from the EU’s open markets and open borders, for its imports and exports and for its employment – from Brittons in continental Europe, as well as from continental workers in the UK itself; 
  • Yes, the EU offers access to over 500 million potential customers for British goods and especially (commercial / financial ) services;
  • But no, please don’t ask us to love Europe and the European project, because we – the common Britton in the street – simply don’t do that.

And the continental Europeans? They usually respect the British ‘desire-to-be-different’ and even envy the British for their style, humour and creativity.

Still, they cannot help to laugh or curse sometimes at those stubborn Brittons with their radical different world views and (occasionally) their bloated self-confidence, emerging from times when ‘Brittania ruled the waves’. Jeremy Clarkson, the utterly British presenter of Top Gear, must be the epitomy of everything that we adore AND hate about the British.

It is an understatement, when I state that PM David Cameron – although personally a moderate endorser of the institute EU – did not do much to rejuvenate the love and understanding between the United Kingdom and the rest of the EU during the past years – at least from a continental European point-of-view.

First, he started in 2011 – apparently on behalf of the London City – with his alleviation (you could also call it obstruction) of the process to rescue the Eurozone from falling apart and in 2013, Cameron hit the spotlights with his doomed plan for a referendum on the future of (the British participation in) the European Union.

The latest source for mounting animosity, between the United Kingdom and the other members of the European Union, has been the election of Jean Claude Juncker as Chairman of the European Commission.

The vast majority of the EU member states wanted to honour the selection of the European Parliament’s leading candidate Jean Claude Juncker, in spite of the fact that he was perhaps not the most charismatic candidate and (worse for some parties) an avid sponsor of further European integration. However, this was clearly one bridge too far for David Cameron, who went to great lenghts to avoid Juncker from being chosen as the successor of José Manual Barroso.

Where in earlier years such an outright ‘veto’ of Juncker would have made his candidacy impossible, this time the European Council stood tall for their main candidate and pushed it through anyway; undoubtedly under pressure from the European Parliament, which would not like to see its main candidate being shipwrecked by ‘them from the European Council’.

The reactions in the Dutch media – after this event - ranged from ‘my God, what have we done’ to ‘That will teach the UK, with their past blockades of necessary legislation and rescue arrangements on behalf of the Euro and their general anti-European stance’.

There is perhaps a good reason for these mixed feelings in The Netherlands and – without a doubt – in the other European countries.

The United Kingdom is definitely a European country with a centuries-long, shared European history AND a future that will be just as interconnected with the European continent, as it has always been.

The whole problem is, however, that the country feels itself more connected with especially the United States and the countries of its commonwealth, than with its direct neighbours France, The Netherlands, Germany and the Scandinavian countries; except for Ireland, of course.

Even more than for instance The Netherlands, the United Kingdom cherishes its special relation and close friendship with the White House and the United States as a whole and their cooperation – in war and peacetime – is much more intense than with any other country in Europe.

The European Union, however, is more or less seen as a mother-in-law; an annoying ‘busybody’, with too much ‘hustle-and-bustle’, that constantly interferes with the British economic, political and legislative processes itself. In the eyes of the British, the EU should accomodate the laws and political/economic ambitions and desires of the United Kingdom, instead of confining those. A European Union, which cannot achieve these desires and ambitions, is worse than useless for the British.

On top of that, the country is so dependent on the London City for its national prosperity, that every new European financial ruling poses a direct threat to the financial wellbeing of the United Kingdom as a whole.

In other words: the European Union has an enormous image-problem in the eyes of the British, as ‘London’ only wants the free trade zone, the whole free trade zone and nothing but the free trade zone.

British expatriate knowledge workers – of which there are thousands and thousands – should be welcomed with open arms all over the European Union, for their knowledge and skills.  Foreign knowledge workers, however, and especially suppliers of cheap, hands-on labour must be allowed to the United Kingdom at the government’s discretion alone.

For the United Kingdom, the EU is seemingly only functional at British terms and conditions.  Consequently, as the EU more and more refuses to listen to these very conditions, it is becoming increasingly useless. This is perhaps a quite hyperbolical statement from me, but it undoubtedly contains some truth.

Still, the million dollar question remains: ‘Would it be a big loss for the European Union, when the United Kingdom would indeed do its Brexit?’ I am almost ashamed to admit that I  really don’t think so!

Also the savvy journalist and macro-economist from Dutch newspaper Het Financieele Dagblad, Marcel de Boer, was not too worried that the events concerning Jean-Claude Juncker could lead to the UK leaving the European Union:

The question is of course, whether a Brexit from the European Union means, that the UK would also leave the European Economic Zone. Probably not. The country would get a similar status as Norway or Switzerland. However? The country will not have any influence anymore on the common regulation of the internal market, and it is not too obvious that the country would play such a marginal role.

Holger Schmieding of Bergenberg Bank thinks this about it: ‘Nobody knows the extent to which the common market would unravel for the UK. But the mere risk that the UK would no longer be a base for free access to more than 500 million European consumers could divert investment and trade away from the UK. History does hold lessons worth heeding.’

In order to answer the question about the economic importance of the United Kingdom for the European Union, I took the statistical data regarding imports and exports of goods and services from the British statistical bureau ONS. The following charts contain the summarized data for 2013:

British exports and imports of goods and services
Chart created by: Ernst's Economy for You
Data courtesy of: British statistical bureau ONS
Click to enlarge
What immediately struck me is the considerable imbalance between imports and exports of goods and services. The United Kingdom is a massive net importer of goods, with a negative balance of almost £65 billion pounds.

At the other hand, Britain is a enormous net exporter of (financial and commercial) services with a staggering positive balance of £81 billion pounds.

This emphasizes not only the enormous importance of the financial and commercial services industry for the UK, but also the importance of especially the London City for the whole country: when London sneezes, the UK has definitely caught a fever.

The fact that the UK can almost be considered as a ‘post-industrial’ country, becomes even more clear when the imports and exports of goods are revealed in relation with the other EU countries:

British exports and imports of goods per EU country
Chart created by: Ernst's Economy for You
Data courtesy of: British statistical bureau ONS
Click to enlarge
From the 26 mentioned countries of the EU (Belgium and Luxembourg are treated as one country in in the ONS stat, which they obviously aren’t), 20 countries export more goods to the United Kingdom, than they import from the UK.

Bluntly speaking, the UK is the country where many other European countries can send their ‘excess’ goods and produce. Especially for Germany, France, Italy, Spain, The Netherlands and Belgium/Luxembourg, the United Kingdom is one of their most important trading partners, to which they all export goods well in excess of £10 billion pounds. Germany is (of course) the European champion of the exporters, with The Netherlands as an honourable second.

For Ireland – on the other hand – the UK is a very important partner for the import of goods; probably because Ireland lacks an automobile industry of its own and the UK builds cars with steering wheels at the right side, which the Irish need.

Do these data identify the United Kingdom as an indispensable EU partner for the other European countries? Hard to say, but I guess not.

In its current form as ‘post-industrial’ country, the UK would still need the imports from the other EU countries, even after it would leave the EU. The country itself cannot become self-supporting overnight and – in my humble opinion - neither the US nor the Far Eastern countries could fill in the void that abolished imports from the other EU countries would leave; especially when it comes to agricultural produce.

Except for Ireland, the role of the UK as a net exporting country of goods seems almost irrelevant in Europe. Although the country itself still exports a substantial amount of goods to the aforementioned seven countries (Germany, France etc.), this amount pales in comparison with the amount of imports from these same countries. I wonder whether these imports from the UK are really indispensable, or being done out of courtesy and import balancing?!

It is a whole different story when it comes to the export of (financial and commercial) services. London is one of the two most important financial centres in the world and plays a pivotal role in the European financial industry. However, it is my guess that leaving the European Union could strike an enormous blow to London’s ambitions as financial centre, as Frankfurt, Paris and even Amsterdam are ready and willing to replace their part.

In my humble opinion, there is no other conclusion possible: leaving the EU would hurt the United Kingdom much more, than it would hurt the countries of the EU itself. Without the UK, the political processes within the EU would be settled easier and with less delay, caused by the hampering influence of PM David Cameron. In other words: the handbrake would be turned off!

The UK, however, would feel itself being even more ‘on an island’ than it already is, as it would lose an underestimated, yet very important ally in the EU. Besides that, I would not be surprised when a Brexit would leave the UK begging for the same favorable conditions for imports and exports, that it now takes for granted. 

These are things that David Cameron, Nigel Farage and the whole British population should consider very well, before they stride on their path to a Brexit.

Monday, 7 July 2014

“The European Union should try to get even with the United States, after its financial colonialism against BNP Paribas”; the integral ‘BNR news radio’ column of bank founder and financial expert Peter Verhaar

Ah, I'll get even with you
Ah, that's what I'm gonna do

Peter Verhaar, a general financial expert and co-founder of ‘Alex’ bank – a Dutch bank for online investors –had an intriguing and provocative radio column on BNR News Radio (, last week.

In this must-hear column (in Dutch), Peter made minced meat out of the massive penalty, which BNP Paribas received from the American government, for having traded with countries that were on the United States blacklist of ‘rogue states’: Iran, Cuba etc.

He argued that the European Union – and The Netherlands to begin with – should get even for the events, which occurred during the prelude to the crisis of 2008 and for the involvement of at least one American bank in the derivative trades, which brought building cooperative Vestia almost to its knees.

Peter Verhaar, Co-founder of Alex Bank
in The Netherlands and general financial expert
Picture of: Ernst Labruyère
Click to Enlarge
Here is the integral, translated column of Peter Verhaar:

“Nobody is fooling with the American Justice Department. The Americans know exactly where they can hurt people and companies, breaking US laws: in their wallets and checkbooks. There are no moralistic talks and no sermons are delivered; you just are going to pay… big time, with amounts that really hurt you.

Today, the news will be announced that the largest bank in Europe, BNP Paribas, will be penalized with a €6.5 billion penalty. BNP Paribas’ Swiss subsidiary did business with countries, which are on the United States blacklist of ‘rogue states’. It is a large penalty, but the bank will not implode from it. It is one time the gross annual profit, and with an equity capital of €90 billion, BNP is more than able to pay it.

It is not the first time that the Americans administer penalties for this offence against their laws. Until now, eight European banks have been penalized: the Dutch banks ABN Amro (penalty €370 million) and ING (penalty €450 million) were among those banks.

Criticism from Europe is soaring against these penalties and in the meantime Danièle Nouy, chairman of bank supervision, and even the French president, François Hollande, have participated in the discussions. The penalties could jeoparidize the financial system in Europe and, besides that, the transactions of the Swiss subsidiary of BNP Paribas were not violating French or Swiss laws.

The basis for the sentence is the fact that BNP has an American banking permit, which it does not want to lose. Not just for the reason that BNP Paribas wants to remain active in the United States, but – even more important – just because the dollar is still the currency in which the large majority of international trade actions is denominated. Dollar clearing transactions must always go via the American subsidiary of BNP Paribas eventually.

I can somehow understand the penalty, but now the American Justice Department also wants to exclude BNP from dollar-clearing transactions for the duration of one year. This is serious, as the United States are now radically interfering in the business model of European banks. This goes much too far, as far as I’m concerned, and it is akin to ‘financial colonialism’, as a former Fortis banker wrote in Het Financieele Dagblad ( recently.

In 2008, the large American merchant and business banks sold totally useless products to European banks and pension funds. How long will the European Union leave these actions unpunished? It is about time to get even with the United States and The Netherlands could be frontrunning, in this respect.

Last week, it became all too clear that also an American bank – JP Morgan - has been involved in ransacking Dutch building cooperative Vestia. Nevertheless, this bank does not have to appear before the ‘Dutch Parliamentary Inquiry Commission for Social Housing and Building Cooperatives’.

I say: ’ Let us withdraw their banking permit for the next five years. As a matter of fact, I don’t have to tell you, which banks – and from which country – will be first in line, when the highly profitable assignments will be offered, to help the Dutch state sell state-owned insurance company Reaal and service the IPO of stateowned insurance company ASR. Would I?!”

Of course, the chance that the Dutch state starts the suggested actions against American banks, is that of a snowball in hell, unfortunately. Although the European Union has a much better trackrecord, as far as such actions are concerned – think for instance about the actions from the European Commission against Microsoft and Google – , the chances for such a counter-action against the American banks are still very dim.

Yet, it is an intriguing thought: the American government is making its legislation applicable worldwide, through American subsidies of European and Asian companies.

This is more or less defensible, in my humble opinion, when it concerns crimes and misdemeanors of which the American government or American citizens are direct victims: for instance, when these crimes or misdemeanors are committed against American citizens or the American state, by the American subsidies of European or Asian banks, or when these subsidies are indirectly involved in such crimes.

Things change, however, when the undeniably biased American government enforces its own boycott-laws on the rest of the world, through American-based subsidies of non-American companies:

  • Why are f.i. Iran and Cuba considered rogue states, while Iraq, Afghanistan and Pakistan are not? Is it because the leaders in the latter countries are ‘buddies’ of the American government?! It definitely seems to help, as the ‘failed nation’ stamp is certainly applicable to all these five countries…
  • When European banks do business on European territory with the first two rogue states on a fully legally approved basis AND by using the Euro as their trade currency, it is none of the Americans’ business, in my humble opinion.
    • The US has its own laws, but so does the European Union. US laws are therefore not universal laws and should not be treated as such!
Besides that, I fully sympathise with Peter Verhaar’s vision that some of the American banks – you can guess which ones – played a more than prominent role in firing up the credit crisis among the European countries and banks as well.

Deeds, for which a severe punishment still seems fair.