Victor Ponta just gave one of the world’s richest and most profitable companies your money

In a stunning new victory for Romania’s beloved prime minister Victor ‘Copy Paste’ Ponta in his neverending quest to find new ways of wasting the taxpayer’s money, we read with not a little outrage yesterday that he had handed a whopping €8.19 million to those needy people over at, ahem, Vodafone. (Yes, the same Vodafone which made a post-tax profit of €74.6 billion last year and whose CEO took a salary of €11.8 million).

Isn’t it nice to know that our money is going to such worthy causes? After all, schools and hospitals in Romania have all the money they need, so why not hand a few million over to a foreign-owned company like Vodafone?

The details of the government’s hand-out came during the opening of a new Vodafone ‘Service Centre’ (call centre) in Bucharest to serve various markets, including the UK.

Ponta, present at the opening along with Vodafone Romania’s new boss Ravinder Takkar, said that the state aid had been awarded ‘in order to create jobs’: up to 600 people already work at the call centre, with vague promises that as many as 2000 will eventually be employed there. While Takkar added that Vodafone’s decision to open the call centre in Romania had not been based on Ponta’s €8.19 million sweetener, we are inclined to think that the cash couldn’t have hurt, especially as the total investment in the call centre was just €6.52 million.

Now, leaving aside the subject of state aid and whether or not the €8.19 million is money well spent, what we find most telling about this affair is the total lack of interest shown in it by the local press, who have in the main simply reproduced the Vodafone press release word for word. Usually, any excuse to bash the government is gratefully accepted by the television stations, newspapers, websites and blogs opposed to Ponta. He has been hauled over the coals for far less.

What’s different of course is the subject. Vodafone is one of the biggest (if not the biggest) buyers of advertising space in Romania, across all platforms. It also finances much of the so-called Romanian blogosphere via a number of events it sponsors (at which the country’s high-profile bloggers appear in order to boost their profiles). As such, Vodafone is more or less bulletproof. The same goes for Orange, Petrom and a handful of other huge companies: given that they pay the bills they are immune from criticism. It’s a shame.

A couple of other bits of news have caught of eye over the past few days, as we catch up with events in Romania following our return from holiday.

Firstly, the noose appears to finally be tightening around the neck of Dan Voiculescu, the former Securitate informer and boss of Intact Media which owns the Antena 1 and Antena 3 TV stations, alongside numerous over holdings. Voiculescu was sentenced to five years in prison in September 2013 for corruption, but remained free pending an appeal. That appeal has been continually delayed by Voiculescu’s lawyers in the hope of dragging the case beyond its six year statute of limitations in December (the case has been ongoing since 2008).

A hearing on Tuesday however rejected all of Voiculescu’s new requests for a delay, and the appeal will now finally be heard on July 8th: next Tuesday. Voiculescu’s assets have in the meantime been frozen.

Secondly, we had to laugh when we read that Romanian football fans will have to pay 10 lei per month to watch Liga 1 football this season. What’s more, only one cable operator – UPC – is offering the package. The others have simply dropped the channel which will show games (Look TV). We predict a take-up rate of almost zero: who will pay to watch the nonsense that passes as first division football in Romania?

19 thoughts on “Victor Ponta just gave one of the world’s richest and most profitable companies your money

  1. Are Vodafone massive tax evaders in Romania as they are in the UK (6 Billion dodged).
    Romania already has one of the lowest corp. tax rates in Europe and yet Vodafone are literally paid to be there?

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    1. I have no idea how much tax Vodafone pay or do not pay in Romania. Also, best not to use the word ‘evasion’ as there is a difference between evasion (which is illegal) and avoidance (which is not – even if it is immoral).

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      1. Tax avoidance is just tax evasion that’s yet to be dragged through the courts. The 6 billion bill that Vodafone dodged did end up going through the courts as far as I’m aware, then dropped after they did a sweetheart deal with HMRC. They even employed a senior HMRC official as their new head of tax…

        Doing a bit more looking, it seems that’s a drop in the ocean compared to this…
        http://www.independent.co.uk/news/business/news/vodafones-84bn-tax-avoidance-bonanza-nothing-for-taxpayers-in-verizon-deal-while-bankers-share-500m-in-fees-8794169.html

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      1. @anon

        Don’t be so defeatist anon.

        I’m sure one day somebody, somwhere will listen to your anger filled rants, maybe Ponta is that man!

        On the other hand, you could look at it as a form of therapy.

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  2. We struggle with this exact same thing in the US. State and local governments will give major tax incentives for businesses to relocate and expand. Taxes get rebated or deferred for years.

    The argument is always that even though the company won’t be paying taxes for a while, if ever, they will be paying wages and there will be complementary businesses that will take root to support the new operation. It’s strong argument that people tend to accept at face value.

    HOWEVER

    1. There’s something that just doesn’t sit well with the taxing the employee but not the employer.

    2. Other established local businesses have every right to ask why they don’t get the same tax break. It’s clearly unfair to them.

    3. Businesses that benefit from such schemes are sometimes campaign donors which is an obvious ethical problem.

    4. Large corporations or businesses that offer needed services can pit governments against each other in weird bidding wars.

    I’d be interested to know if any of the incentives to Vodafone are results based. In other words, if the incentives are incrementally awarded as Vodafone builds out their operation and hires people.

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  3. Lets ALL be honest about it, corruption at the highest level in politics exists, always has, always will.

    Is Romanian politics MORE corrupt than say its EU counterparts ?

    I don’t know the answer to that,maybe someone does, or has a opinion?

    All I can say is that many of the Romanian people I know, feel like corruption affects the ability to get a career, or buy property …….. How much of this is typical and true, again, I don’t know.

    It’s not what you know, BUT who you know ………… Must be a standard phrase for MOST countries worldwide?

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  4. This serves as a little consolation for vodafone after they had to pay many million euros to renew their 10 year license for the radio frequency spectrum not too long ago. Whenever elections are getting close, lots of money starts flowing, first from the government to some companies and then part of it finds its way to the budgets of the political parties. Anyway, vodafone has strong ties to the government which uses their infrastructure for critical services given their large coverage. Hardly anyone can win such contracts without getting on the government’s good side. And they need a good relationship for the government to constantly leak phone call transcripts to the press as part of the crusade against corruption.

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