Privatisation isn’t always pretty

A majority of parliament has decided to bolster the energy giant DONG with a partial privatisation by inviting the US banking giant Goldman Sachs to buy 19 percent of its shares for eight billion kroner – money the state says will go towards future investments in off-shore wind energy.

This comes after a proposed public listing of DONG failed, and after costly debt reduction efforts that followed unsuccessful adventures in the international gas business. In short, the move follows other attempts to privatise – not liberalise – infrastructure in Denmark.

The Danish Postal service is now Nordic and partly private; Copenhagen Airport is privately owned by Australians with a government minority holding.

The public may have lost its sense of proportion in the DONG deal – it is after all only a 19 percent share – but there is a palpable dislike and distrust of Goldman Sachs and its use of investment vehicles in tax havens like Luxembourg and the Cayman Islands.

Much of the protest against the sale seems to be an instinctive response to any involvement with a bank that is bigger than life and widely seen as being a key player in the global financial crisis. 

A petition against the sale has become the largest online protest manifestation in the nation’s history. This is a common sense reaction and even if it proves to be economically unwise, the government should listen to it. The people have sent a clear message that the government should not privatise unless it liberalises first, lest it hand over monopolies to capitalists – especially to one in such bad public standing as Goldman Sachs.

In the financial crisis, we learned that bankers’ greed could compromise welfare worldwide. To get into bed with the greediest of the lot gives the Danish government a serious global image problem.

One has to wonder what has happened to DONG’s board of directors in all of this. In Denmark the two-tier command exclusively reserves the right to hire and fire management for an external board of directors. Now it seems that DONG’s board has meekly accepted that Goldman Sachs will be given the right to veto changes in top level management. How can a mostly independent (they are appointed by the government) professional group of board members accept being castrated? It's no surprise that we will now see a new chairman

While DONG’s board seems to have lost control of its own company, the public seems to have lost sight of the upside of the deal. But Danes are right to be sceptical. If recent history has taught us anything, it’s that large financial institutions are inclined to take and keep taking. Especially one with a track record like Goldman Sachs. (ES)