Citizens Complained That Plus Ultra Was Bailed Out Through A Simulated Panamanian Loan

2021-05-25   |   by CusiGO

Luis garicano, a member of the European Parliament, explained on Tuesday that the 53 million euro public aid plus ultra is illegal because the airline is not recognized for its strategic position due to its small scale and operating routes, so it can not benefit from the solvency support fund of strategic companies, And the failure to meet the financial difficulties as of December 31, 2019, which made it impossible to make up through abnormal loans to Panamanian companies, was confirmed in his charges filed in Brussels.

“There is a high risk that the $53 million will not be returned and will disappear into an account in Panama,” Gallicano warned As a result, he called on the government to “prevent company owners from using the bail-out to repay their debts to the companies they control: if panacorp’s loan can be regarded as capital, it should not be repaid until the money is returned to Spanish taxpayers.”.

Members of the European Parliament formally complained to the European Commission on April 6 about the assistance provided to ultra airlines, Therefore, Brussels decided whether the legitimacy of the rescue company should be comprehensively reviewed, because it is a case of abuse of public funds in violation of competition rules. On 27 April, the government responded, and on Thursday, 20 May, members of the European Parliament made his charges.

The main innovation offered by garicano in its claim is that plus ultra has submitted its health balance sheet as of December 31, 2019, using a EUR 6.3 million “mock” loan from panacorp, a Panamanian company, Avoid the conditions set by the European Commission that only strategic enterprises that were not in crisis before the pandemic could receive assistance.

As the accumulated loss of the airline at the end of 2019 is 13.42 million euro, the registered capital is 19.27 million euro, and its net assets is 5.8 million euro, less than half of the equity of the company which is considered to be in trouble. However, the financial adviser of plus ultra capitalized the loan of 6.3 million panacorp, bringing its net assets to 12.1 million euros.

However, Gallicano pointed out at a press conference that the loan was “simulated” because EUR 4 million of it was “unavailable” and that plus ultra was obliged to deposit two-thirds of the loan into panacorp’s account. Therefore, if it is necessary to use the money to pay other creditors of the company, the Spanish judge will not be able to detain them because they are in the accounts of tax havens. ” The company is thought to have enough money to get help, but in fact, the owners didn’t gamble because they insured the money in an account in Panama, “the congressman said.

“There is a high risk that the $53 million will not be returned and will disappear into an account in Panama,” Gallicano warned As a result, he called on the government to “prevent company owners from using the bail-out to repay their debts to the companies they control: if panacorp’s loan can be regarded as capital, it should not be repaid until the money is returned to Spanish taxpayers.”.

The head of the Brussels citizen delegation complained in the allegation that after the government’s reply, “the suspicion was not only removed, but also deepened, because the data provided showed that the company was neither strategic nor systematic, and that the loans that proved that they were not in crisis were simulated.”. In addition, it believes that the airline received three times as much money as it was allowed, as it should receive only 16 million euros in relief, which is the level of loss expected by the epidemic, rather than 53 million euros.

On March 9, the government, through the state owned industrial holding company (SEPI), provided plus ultra with 53 million euros from the strategic enterprise support fund (34 million euros through participatory loans and the rest through general credit). The rescue plan has been questioned because the airline has been at a loss since it was founded in 2011, although it will start operation in 2016, and because its market share in the industry is insignificant (less than 0.1%, which makes it 166 of the airlines operating in Spain). Whether the airline’s largest shareholder could be linked to Nicolas Maduro’s Venezuelan regime has also been questioned.

All of this was included in the citizen’s submission to Brussels, which also highlighted the infeasibility of plus ultra under the company’s plan to SEPI itself. SEPI’s EUR 19 million ordinary loan to plus ultra matures in 2024 and EUR 34 million equity loan matures in 2026. In 2019, prior to the pandemic, the company lost EUR 2.78 million, with an expected loss of EUR 34.6 million from 2020 to 2022 according to its own feasibility plan.