Whitestar and Gesphone, two companies acquired by Arrow Global in 2015, received benefits from the Portuguese taxpayer of €381,700 between 2012 and 2014.
'Tax allowances funded by the public' is but one of the issues that left wing parties’ MPs want clarifying in relation to the former Finance Minister, Maria Luis Albuquerque and her new job at Arrow Global.
Albuquerque, still a serving MP on a full taxpayer-funded salary with associated benefits, already was under fire for taking the lucrative, €5,000 a month non-executive directorship with the British company that manages much of the debt in the collapsed bank, Banif when it was bought for a song by Santander at the very end of last year.
In 2010 Arrow already had sucked up €800 million in debts from collapsing Portuguese banks and other companies, with €300 million bought from Banif.
The former Finance Minister deliberately delayed dealing with the Banif problem while she was in charge of the Finance Ministry. The bank was in dire straits despite having had an earlier injection of over €1 billion of taxpayers’ money, but Albuquerque left the crippled bank for the Socialist Party government to deal with.
Companies that receive tax benefits are listed by the Tax Authority. Whitestar Asset Solutions S.A benefited by €198,000 for 'job creation schemes' in 2013 and 2014.
The listing on the Statute of Tax Benefits shows Whitestar was involved a scheme for the hiring of young workers or long-term unemployed, among others.
The remaining tax benefit of €163,700 for Whitestar resulted from a tax credit on a 2013 investment.
Gesphone, Services for the Treatment and Acquisition of Debt SA, received benefits of €19,200 in 2013, almost all from an investment tax credit.
The Communist Party and the Left Bloc are keen to blow this up into a scandal if they can, such is Portuguese politics, and have requested the parliamentary subcommittee on ethics to supply information about the tax support and the benefits paid during the coalition government’s term of office to Arrow Global and its two subsidiaries as well as a comprehensive list of assets the company acquired at the time of the controversial Banif sale agreed by the Bank of Portugal.
The left-of-centre MPs' plan centres on the rule that nobody from the Finance Ministry can take up a job for three years, if the potential employer has been the recipient of state aid or tax benefits.
A complication, one which Maria Luís Albuquerque no doubt will use to her full advantage as she tried to distance herself from accusations of favours given, is that Arrow Global did not own the companies in question at the time of the tax benefits.
Albuquerque will be in deep trouble if any of these tax credits have anything to do with the government’s refinancing of Banif when €1.1 billion of taxpayers’ cash was used to support the ailing bank in January 2013. Banif finally went under owing the taxpayer around €3 billion.
Arrow Global’s management later denied these tax credits, stating it "did not receive any tax exemption or tax benefits in Portugal."
In a statement released on Thursday, Arrow stated that it only acquired Whitestar in April 2015 and that the function of this company is to manage credit portfolios and the property of others, and not owning the assets directly. Arrow's mangement are saying that the two companies they bought carried the tax credits, not Arrow itself.
In Portugal, the company manages a loan portfolio of €5.5 billion for Banif bank, Millennium BCP, Montepio, Santander, Banco Popular, among others.
The company statement further explained the hiring of Maria Luís Albuquerque, noting her "vast experience and knowledge of international financial markets" and that the company "had no contact or connection" to the minister in the last PSD/CDS-PP government until December 2015.”
The British company said that "did not work with Whitestar in the sales contest Banif credit portfolio in 2014, but with a competitor and that "Arrow Global never worked with Whitestar before its acquisition in 2015."
As for the wages that the Arrow will pay to the minister, it is said that the €58,000 is aligned with the "market practices" and that is "equal to the remuneration of all non-executive directors of the company."
The company also stated that there will be no bonus related to performance.
Arrow Global
In 2015 Arrow Global’s profit increased by 73.8% to £31.7 million with net income rising 19.6% to £35.4 million, a return on equity of an impressive 26.5%.
In Portugal, Arrow Global has over 650,000 owned customer accounts for which it is engaged in ‘transforming the customer journey’ to deliver ‘great customer outcomes.’
The ‘Credit Today Debt Collection Awards 2015’ names Arrow the Debt Purchase & Collection Provider of the Year - UK/Europe and its 2014 expansion into Portugal is covered in the noted to the 2015 annual report: ‘in Portugal, in 2014, we were the first to purchase NPL loan portfolios from a leading domestic Portuguese bank, post credit crisis. Then, in 2015, in partnership with one of our fund partners, we became the first to be involved in the purchase and outsourcing of a major bank's collections operations.’
As Portugal’s banks call in business loans to bolster their own cash position, on instruction from the Bank of Portugal, these debt collection agencies move in with their marketing clap-trap to sweep up the pieces.
Banks, in the knowledge that they always can sell on their bad debt to companies such as Arrow Global, have made slack credit decisions based on a national euphoria that Portugal led the world, especially in property development before the financial world came crashing down.
Arrow Global's 2015 Preliminary Results document perceptively notes that ‘Negative attention and news regarding the debt collection industry and/or the Group's collections activity may impact our reputation and therefore the Group's ability to acquire portfolios and customers' willingness to repay the debt that the Group acquires.’
For the Preliminary Results 2015 report, see:
