The financial basket case Globalgarve may continue to be propped up by the Algarve councils if management pleas are acted on.
Under the expert tutelage of former Faro mayor Macario Correia, Globalgarve ‘invested’ in a 200 kilometre fiber optic network across the Algarve to link councils together. This cost €10 million to no discernable benefit to the community.
Globalgarve was owned by the Algarve's Councils and dozens of incomprehensible regional bodies and it has been allowed to trade at a loss way beyond the three years allowable by law. The biggest customer group is of course the councils themselves which have failed for years to pay their invoices.
Jorge Botelho who heads the AMAL mayors association said today that the "vast majority" of the Algarve’s councils are in favor of continuing to be customers of Globalgarve despite the company being declared insolvent in January 2014 with debts of €790,000, up yet another €100,000 from last May.
Botelho has a wild idea that Globalgarve will suddenly be the best company to take over as “facilitator of strategic projects for the region” as if the region needs another body to soak up, or in this case, waste funds. Botelho wants to “allow negotiations with creditors and create a plan for viability” when he should be calling for the company to be closed down to limit any further financial damage.
Botelho’s surprising support is in response to an appeal, at a recent meeting of AMAL, by the president of Globalgarve Vítor Guerrero who also runs the Association of Commerce and Services of the Algarve Region (ACRAL) which hopefully is in a better financial state. Guerreiro called on the Algarve’s 16 mayors to continue to be customers of Globalgarve despite the fact that it is the councils’ refusal to pay their bills to Globalgarve that has helped drive the company into the ground.
Vítor Guerreiro claimed that ten councils responded positively to his appeal and he is convinced that they will all fall into line to save Globalgarve and his salary. This is unlikely to happen.
Last year Macario Correia tried the same thing and reported that the councils were supporting his efforts to clear their debts - they didn’t.
The staff at Globalgarve of course have not been paid and took their employer to court in January. The Judicial Court of Faro declared Globalgarve insolvent but Guerreiro reckons he can carry on regardless and said today that fact that the company was declared insolvent does not mean it all has to end.
Guerreiro seemed delighted to report that Globalgarve has already spent €20 million, €10 million of which was on a fibre optics network for the Algarve Digital project which few have heard of and fewer benefit from.
Globalgarve was kicked off with a whopping EC grant in 1995 and by 2009 had 56 shareholders from the Algarve municipalities and dozens of the Algarve’s money pit associations.
Globalgarve is said to have developed ‘international projects’ and in the past ten years has focused on the Algarve Digital project.
In a dream-like state Victor Guerreiro still thinks that Globalgarve "is viable" and assured that the costs are being reduced, "we are doing a survey that allows us to say that we will reduce costs by €150,000 a year" i.e. about 40% per year of Globalgarve’s expenditure.
The Algarve municipalities have been obliged by law to divest their stake in Globalgarve, to continue to fund it to the tune of €400,000 a year would seem not to be the best use of their ratepayers’ money but Globalgarve’s Guerreiro will only carry on if the councils pay up and sign a contract to say they will fund this dead duck enterprise.
One of the previous 'good ideas' to dig the company out of the mire was to ‘monetise’ the fiber optic network that had been installed across the Algarve’s 16 councils by installing an electronic invoicing system. The project started with a €500,000 budget but was halted as it ripped through this money and needed more. The company contracted to develop the payment system ended up being owed €104,000.
It seems not to have crossed Guerreiro’s mind that if Globalgarve is owed money then as a director he should take these debtors to court whether they are shareholders or not.
The problem is that everyone knows everyone else in local government and in the ‘entities’ that have spread like an expensive rash across the region – the old boys network is in play.
