Expresso Demistifies Government Debt Denial

The Secretary of Finances had denied this week that the Madeira Debt had reached 8 billion Euros. According to the Expresso, the contested 2 billion disparity relates to the Public-Private enterprises, for the companies exploring the regional roads.

Of the 2 billion total accorded with the concessions, 600 million had been paid up until 2010. Although there is an annual fee for the Government to pay, this is only considered a debt (according to EU Comission criteria) if the Government defaults. According to the Secretary of Finances, the default in December 2011 only amounted to 170 million Euro.

The Via Expresso and Via Litoral partnerships were established in 1999 and 2004 and will oblige the Government to pay them a further 1.3 billion between 2012 and 2029.

In short, the Government has contracted debts of over 8 billion Euros, but only consideres 6 billion to be in debt.

The Via Litoral, set up in 1999, has as its main shareholder AFA, owned by Avelino Farinha Agrela (and unidentified offshore shareholders).

Via Expresso, formed in 2004, has Tamega as a main shareholder. The most important regional construction companies are sharehodlers in both.

(The main companies are also shareholders along with the PSD leader, Jaime Ramos, in Cimentos Europa, the company that supplies most of the cement to the public works in Madeira)

Jaime Ramos, Secretary General of the PSD and PSD Parliamentary leader, is also President of the Construtors Association - ASSICOM; Avelino Farinha Agrela (AFA) is the chariman of the ASSICOM General Assembly.

The Institute of Fianacial Administration, in its September 2011 report, alerted that these contracts were highly profitable for the private entities with no risk involved.

Operation 'Cuba Livre'

The Public Prosecutor's Office carried out a search operation on the Madeira Government Building in charge of public construction works on Monday. The building was sealed off by Police all day while the search ensued. The raid is part of an investigation into Madeira's debt.

Lisbon papers reported that a further 2 billion Euro hole was found in unreported debt, including works that had already been carried out, but had simply never been billed as the government had requested builders not issue the bills until given the OK. The Regional Secretary of Finance has denied all  reports of unreported debt - he also denied the 6 billion Euro debt in the first half of 2010, which he was later unable to hide. 

Reacting to the news, Bertie's Party Youth leader, José Pedro Pereira MP, better know as Mijinhas (for having pissed on a Police car) , called for Madeirans to revolt and declare independence: 

'Along the years we have seen successive national governments, of all [political] colors, launch constant attacks on the Autonomous Region of Madeira. They are filled with envy and hatred due to the development we have attained! I think the next revolution will be the revolt of the Madeirans, to tell the Portuguese Republic that if they carry on along this path of constantly attacking Madeira, it will be better for us to fight for independence! ' - now who does that remind one of?

The evolution of the Mafia in Jardim-Thought

'In short, the Mafia is based on a few interconnected families, who organize themselves to simultaneously control the political and economic power, first on the island and then outside it.
It is not possible to characterise precisely whether the mafia is a phenomenon of the 'right' or of the left'. This because, its objective being power, it does not wear a political costume for the sake of ideology - which everyday life would easily demistify - but only according to what is strategically appropriate to the given historical moment.' 
Jardim's description of the Mafia in the Jornal da Madeira in 1984

'We should be a Mafia in the good sense and help each other out'.
Jardim speaking to his party militants in 2007

Expropriation protest in Cabo Girão

Severino Aguiar parked his car to block access to expropriated land, dissatified with the prices the Government is paying for it. Bruno Aguiar accused the Government of abuse of power and presecution. 'What the Government is doing to us is not an expropriation, but an exploitation, a theft, and a hijacking of our rights.' 'I ask all Madeirans to be alert for situations like ours, to struggle and not give up, because this is the only way we can change things on our island, this island which belongs to all of us and not just to a handfull.'
Source: DN 19.4.1012

Situations like this are a dime a dozen on Madeira. I think many such cases are a deliberate way for the Government to 1) persecute people 2) use the example to intimidate others 3) fatten up government chrony lawyers who spend years raking it in by continually contesting those expropriated.

How else can you explain it when the Government offers one set of people a sixth of the market value for their land, while others get paid the market value or more.

Nacional President victim of Assault

The nacional Football Club President, Eng Rui Alves was beaten up by a hooded attacker in the basement parking lot of his apartment block. Alves had recently dismissed his minder, an ex-convict who was recruited by the PSD Youth during the last elections to intimidate opposition members at public functions.

Bertie plays for time

‘Whoever crosses my path will have to confront me’, warned Bertie John (Alberto João), flanked by his dummy candidate, Manuel António Correia, at an inauguration ceremony in the mountains yesterday. 

At stake are the dates for the local party congress where his leadership is to be challenged by the Funchal Mayor, Albuquerque.  Bertie does not want the congress to be held next year, prior to the municipal elections in the Fall. Waiting until 2014 means his only rival, Albuquerque, will be weakened (he cannot run for a further term as Mayor) and therefore presents less of a threat to Bertie’s leadership - There is no limit of mandates for the President, which means Bertie can cling to power indefinitely.

‘Whoever does not toe the line will be defeated and removed’ promised Bertie, as he praised those who had always shown ‘unequivocal loyalty to the party’ (i.e. to himself). ‘The friends of my enemies are my enemies and the enemies of my enemies are my friends!’

Bertie indicated that he would not candidate himself again for Party leadership if the congress is to be held in 2014, as he wishes, but that he would stand to defeat Albuquerque if the congress is held earlier, in 2013.  Aside from Albuquerque, the only challengers for the leadership are Jardim’s own dummy candidates, who only agree to run if Bertie withdraws.  

Those who know Bertie know they must take his indication that he will not run for the leadership in 2014 with a pinch of salt. The only plausible reason to delay the congress is to buy time and weaken his only rival.

The Sunday Telegraph on Madeira

 Billions of euros of European Union money have been spent in Madeira, yet the island is swimming in debt.

By Colin Freeman

Tucked beneath towering cliffs on Madeira's storm-battered west Atlantic coast, the €50 million Marina do Lugar de Baixo aimed to provide the perfect welcome for super-luxury yachts. Unfortunately, thanks to the huge waves that have fractured the harbour wall three times since it was built in 2005, not even the more adventurous yachtsmen have often been tempted, never mind passing billionaires in floating palaces. Today it lies abandoned, a chain blocking the road where an Oleg Deripaska or Roman Abramovic might have strode ashore, the white clubhouse empty as the Marie Celeste.

Just as spectacular as the ocean breakers off Lugar de Baixo, however, are the waves of European Union cash that have been splashed around Madeira, a Portuguese-owned island better known for sweet wine and winter sun.

While the marina was financed mainly by the semi-independent Madeiran local government, €3.5 million came from Brussels, which, like the other backers, did not heed warnings that a stretch of coast popular with hard-core surfers might be less ideal for yachters.

 Similarly, at the nearby promenade and restaurant complex at Frente Mar Madalena, where a rusting plaque marks a €1.2 million EU grant, developers overlooked the risk of rockfalls from the cliffs. Until, that is, a boulder tore a hole through the restaurant's roof two years ago, since when it too has been empty.

The real big hole though, is the one that such rampant, publicly-backed development has torn in the island's finances, as it has transformed itself into a resort similar to the Canary Islands further south. For Madeira is now swimming in debt as deep as the Atlantic waters around it, thanks to a government-backed building spree fuelled in part, critics say, by over-generous Brussels grants. Today, despite a population of just 250,000, the local administration owes some €6 billion, nearly double the per capita public debt of mainland Portugal.

 The financial crisis, which only came to light last autumn, is hugely embarrassing for Lisbon's leaders, who have already had to negotiate an €78 billion bail-out themselves from Brussels and the IMF. The island is now seen as Portugal's own little answer to Greece, widely considered the most feckless of the southern European debtor club.

 "Madeira is like Greece in the Atlantic," said Gil Canha, a councillor in Madeira's opposition New Democracy Party, which blames years of unhealthily cosy relations between island politicians, developers and Brussels grant-makers. "The European Union has given money too easily, and the government has borrowed far too much from banks. We are a tiny island, you can hardly see us on any map. To have a debt with so many zeros is crazy." Sipping coffee in a square in Funchal, Madeira's balmy capital, Mr Canha looks as relaxed as the elderly British and German tourists wandering past, who like the island's quiet, yob-free reputation.

Yet in his pocket he has a can of pepper-spray, and when out at night, he takes a Browning 0.25 pistol, both of which he is licensed to carry for personal protection. For within Madeira's small community of long-term residents, being politically outspoken can have consequences. Mr Cana has been beaten up twice, had his own bar burned down, and had his family's cars vandalised.

"As a councillor I've complained about corruption in building projects, and got a few stopped," he said. "So they use terror against me." He points the finger at supporters of the island's president, Alberto João Jardim, 69, who has ruled here ever since 1978, making him one of Europe's longest-serving elected leaders.

 A firebrand throwback to the days of Portugal's Salazar dictatorship, for which he once wrote propaganda, his popularity has been cemented - quite literally - by the billions he has spent developing the island, which, prior to the end of Portugal's dictatorship in 1974, was a poverty-stricken backwater.

 Today, a 120-mile road and tunnel network links Madeira's previously isolated mountain communities, cutting journeys around its steep volcanic contours from four hours to just one. But much of the money came from the €2bn in EU grants handed out over the last 25 years, and when that started to dry up a decade ago, Mr Jardim began borrowing on the open market instead, via publicly-backed development firms. Thus did construction continue, to the point where today, even small villages boast lavish civic centres, swimming pools, and football pitches.

As the government-owned newspaper, the Jornal, dutifully reports, the president cuts the ribbons at up to 450 opening ceremonies a year, using them for political rallies where he denounces his enemies in lengthy speeches. Spain's El Mundo newspaper calls him "El Maestro del Insulto" - the master of insults.

"He has accused me of being a Communist, a Marxist, and a member of Opus Dei, among other things," sighed Michael Blandy, chair of the Blandy Group, part of a powerful English business community that settled on the island 200 years ago, when Madeira's position on the trade winds routes made it a pitstop for both the Old and New Worlds. Today, as well as making Madeira wine, Mr Blandy owns the island's main independent newspaper, drawing further barbs from Mr Jardim that he is a "colonialist".  "President Jardim is quite a reasonable character in person, and did a lot of good development work in the old days," added Mr Blandy, who complains that the Jornal - which gets €3 million a year in public funds - is unfair competition. "Unfortunately, there has been too much chasing of EU subsidies, which have been dished out like no tomorrow, and to which the island got addicted like a drug. "Then, around 2000, when money from Brussels become more restricted, we saw the start of more creative accounting, when Mr Jardim set up firms borrowing money to build yet more roads and golf courses. The whole thing is out of control.

Indeed, many claim that Madeira has lurched from underdevelopment to overdevelopment. In some areas, the expressways, tunnels and flyovers look more like a suburb of Los Angeles. And white elephant projects abound. Industrial parks accessible only by steep mountain roads stand largely empty. A helicopter landing terminal has never been used. In Machico village, population 10,000, the seafront is dominated by a vast municipal hall more suited to a large London borough, its theatre and twin cinema screens open only a few nights a year, its two restaurants unused. "It was built using calculations done on a napkin," said Joseph Freitas, a local hotel waiter. "Jardim is good at standing up for Madeirans' rights, but he could use his resources better."

 While much of the public cash for such projects has come from the Portuguese government, Lisbon claims the EU's past willingness to offer matching funding encouraged over-building. "The whole country has too much construction, not just Madeira," insists the prime minister Passos Coelho, whose centrist Social Democratic Party Mr Jardim also belongs to. However, while a spokesman for the European Commission insisted that there were "many good projects co-financed by the EU in Madeira," the German chancellor, Angela Merkel, recently singled the island as an example of how not to spend EU regional development funds. "There are many beautiful tunnels and highways," she said in February. "But this did not contribute to competitiveness." Mr Jardim has responded in typically combative style to criticisms of his financial management, describing Mrs Merkel as "ignorant", and the island's debts as a mere "drop in the ocean". When the credit agency Moody's downgraded Madeira's debt last summer, he even declared that Moody's inspectors were banned from the island.

Such populist rhetoric goes down well with the Madeiran public, which voted him back in for another four year term last October, albeit with just 48 per cent of the vote, his worst result in 33 years. However, Eduardo Welsh, whose blog is Madeira's answer to Private Eye, argues that Portugal's national leaders should have reined him in years ago. "Jardim is a real dictator," he said. "But nothing has been done at national level to stop him, because they are scared of him agitating for Madeira to become independent."

 Like other government critics, Mr Welsh has suffered for his beliefs. The government has brought dozens of libel lawsuits against him, including an ongoing one for a cartoon comparing Mr Jardim to Hitler, in which Mr Walsh was acquitted. The president has now appealed. Mr Welsh and fellow activists also claim to have been roughed up by Mr Jardim's bodyguards and supporters while heckling at public openings, which they attend in a hearse with the slogan "bury the corrupt". The one benefit of the debt crisis, he says, is that it brings international scrutiny to Madeira's problems.

Perhaps with that in mind, the president's office has been declined recent interview requests from foreign journalists. However, a man who attends as many public functions as Mr Jardim is not hard to track down, and The Sunday Telegraph caught up with him as he sat down to an anniversary dinner for a local carnival group. Far from summoning his minders, he proved charming - if defiant. "Madeira was very poor before, and the only way forward was increasing the public debt," he said. "If I hadn't done that, we'd still be saddled with the rest of Portugal's debts today anyway." What about the claims of intimidation? Nonsense, he smiled, the work of "fascists" in the opposition and "cowardly bloggers" like Mr Welsh. And the white elephants, such as the wave-damaged Marina do Lugar?  "I am not like your British empire, I cannot rule the waves. There has been some structural damage, yes, but we are repairing it." With that, he turned back to entertaining his dining companions - but just how much longer he will be the toast of Madeira's grand opening nights is another matter.

Like his mainland counterparts, Mr Jardim has had no choice but to sign up to unpopular austerity measures that will involve slashing public spending by a third and raising local taxes, heralding tough years ahead for residents.

Last Thursday, in a sign of unprecedented dissent in the local party, the mayor of Funchal, Miguel Albuquerque, also declared he would run against Mr Jardim for the SDP leadership. "Jardim could have been a great national politician, but he just wanted to be Mr Big here," said Mr Welsh. "Now even that is coming to an end."

The 'Dummy' Candidate

Over the weekend, the Jornal brought forth a rival to run against Albuquerque: Jardim's 'Dummy candidate'.

Every four years Jardim goes through a ritual of abandoning power. Promising this is his last legislature, he promotes a Dummy candidate, usually some uninspiring character, preferably incompetent, and who nobody particularly likes. He calls for Party unity and, since nobody is enamored with his chosen successor, he concludes that he must carry on in power himself - for the good of the Party and of Madeira.

This has been the ritual for the last three decades ...and no one has dared challenge it.

Jardim's Dummy candidate this year was Manuel Antonio Correia, Secretary of Agriculture - a singularly uncharismatic bore whose insipid speeches last an eternity. As Secretary of Agriculture he is in charge of organizing all the agricultural festivals round the island - chestnut festival, onion festival, cherry festival, custard apple festival, lemon festival and so on -  useful opportunities for Jardim to use his official status to take to the stage to praise himself and rant against the opposition.

Unlike Albuquerque's candidature, which was given no prominence, Correia's candidature was given a huge front page splash, with large photos of Jardim and the Dummy candidate side by side (think Kim Il-Sung - Kim Jong-Il) - even his CV was printed.

One of the first to show his support was the youth wing leader, Mijinhas, who had mistakenly called for the previous Dummy candidate to run against Albuquerque. Only a handful of the nomenklatura, however, have joined him in support...  the Dummy candidature is only being mooted 'provided that Jardim does not run himself'!