Finance minister stands by Goldman Sachs deal

Government confident in selling DONG shares to highest bidder Goldman Sachs despite tax haven concerns

Jan 23, 2014

Finance Minister Bjarne Corydon (S) remains confident that Goldman Sachs will pay taxes according to international tax regulations despite the US investment bank's plans to establish its DONG Energy partial ownership in global tax havens.

In an interview with DR Nyheder this morning, Corydon shot down claims that DONG was a way for Sachs to make "fast money".

"Goldman Sachs is not involved in a transaction that is in any way fast," he told DR Nyheder. "It is in on a clear deal to put DONG pro-active and green business plan into operation."

The investment bank is buying a 19 percent part-ownership of the state-owned energy company DONG for eight billion kroner. The Danish state ownership stake in DONG will go down to 60 percent if the Goldman Sachs deal goes through.

Sale closely scrutinised
The DONG and Sachs sale came under the microscope after it was revealed that the investment bank will administrate its ownership from shell corporations in Luxembourg, the US state of Delaware and the Cayman Islands, all well-known tax havens.

But Corydon said he's confident that international tax regulations will secure that Goldman Sachs will pay taxes in Denmark, even if it bases its part-ownership in the infamous tax havens.

"That is regulated by tax rules, and is not a part of our deal. We just have to trust that the tax rules will work," Corydon said. "Simply put, [Goldman Sachs] has to pay taxes in Denmark, an EU nation or in a country that Denmark has a deal with.”

18,000 businesses in five-story building
In less than a week, Goldman Sachs established a wide range of companies to control the DONG shares.

One of the addresses at Ugland House outside Georgetown in the Cayman Islands is a five-story building registered as the address for 18,857 different companies.

According to the BBC, US President Barack Obama referred to Ugland House in 2008 when he said: "That's either the biggest building in the world or the biggest tax scam in the world."

Goldman Sachs gave best offer
Corydon also reminded critics of the deal that there has long been broad political agreement in parliament to sell DONG shares.

"Selling DONG has been on the table for ten years," he told DR Nyheder. "It was settled that we could sell half of DONG to anyone and Goldman Sachs came with the best offer."

The claim that DONG was the highest bidder came into question earlier this week when sources told Information newspaper that the Finance Ministry was offered a bid from the pension firm PensionDanmark that was more lucrative than the one from Goldman Sachs.

But DONG head Henrik Poulsen today tried to put an end to that speculation.

“It has been a quite thorough process with different possible investors and the overall best offer we’ve seen has been the Goldman Sachs deal via pension firm PFA.”

Internal dissent
Corydon has also met criticism from his own support base in Socialdemokraterne (S). Former PM Poul Nyrup Rasmussen (S) called the deal "a catastrophe" and urged the government to abandon Goldman Sachs.

"Denmark risks losing its leading green position in the world. It almost physically hurts on me to see what's going on," Rasmussen told Politiken.