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Goldman Sachs in Denmark


Broody Danish politicians have been hitting the screens for some time now, becoming the subject of celluloid chic. From more familiar territory in crime novels and series, Scandinavians are now moving into parliaments as drama. Scripts are being produced looking at gridlock politics and tense negotiations. Actors like Sidse Babett Knudsen are becoming European household names, and even finding a presence in the US, UK and Australia.

The drama series Borgen has anticipated two things in Danish politics. The election of its first female prime minister, Helle Thorning-Schmidt, was the first one. (Moderate Party leader Birgitte Nyborg is Borgen’s equivalent, a woman whose character claims she has “the balls to admit her mistakes”.)

The second analysis vital in Borgen is the nature of how fragile coalitions can be. If the arithmetic doesn’t add up, governments can collapse. Electoral blackmail becomes attractive. Last week, Denmark revealed how exciting, even degenerate, its politics could actually become. The spoiler here was a certain Wall Street giant.

It all stems over the troubling involvement of Goldman Sachs and other investors in Danish politics. Last Thursday, Thorning-Schmidt found the votes to partially privatise the state-owned energy company Dong Energy. In so doing, the neo-liberal fantasy of putting state services into private hands got a solid kick along in a state which has found such measures suspect. The late Margaret Thatcher might have just been interested to take a peek to see what all the fuss was about. Were those socialists up for turning?

The deal forged by Thorning-Schmidt will let Goldman and other investors buy up to an 18 percent stake in the energy provider for $1.5 billion. (Other accounts suggest 19 percent.) The aim of the arrangements is ostensibly to cut utility costs, reduce overall debt and increase investments in oil, gas exploration and wind farms. Goldman Sachs will acquire its stake through its European merchant banking unit in News Energy Investment S.a.r.l, partnering with ATP and PFA, both of which are Denmark’s two largest pension funds (Bloomberg, Feb 1).

The negotiators are talking sweetly about the arrangement. “It’s a good contract,” claimed ATP Chief Executive Officer Carsten Stendevad. “It’s good for all parties. We hope for the sake of Dong that soon our focus can return to the very difficult investment case” (Bloomberg, Feb 1).

But the restructuring arrangement does not stop at that. A provision in the deal will allow Goldman Sachs veto powers in such matters as management changes in exchange for its investment. Wall Street, effectively, will be incorporated into the fabric of Danish energy politics, bringing it into the energy grid. This measure has proven deeply unpopular in Denmark. Thousands of protestors gathered outside Parliament on Wednesday expressing their disapproval of the measure. A poll done for Denmark’s TV2 station found a 68 percent disapproval rating for the plan.

The Danish Socialist People’s party has shown the most aggressive disapproval for the antics of the government, pulling out of Thorning-Schmidt’s coalition. Party leader Annette Vilhelmsen suggested that, “We do not wish to be part of a government at all costs.”

Frank Aaen, a legislator of the Red-Green Alliance, questioned Finance Minister Bjarne Corydon on January 28 over a period of 4 hours wondering what exactly Goldman were up to. After all, claimed Aaen, the Goldman stake in Dong would be held in structured units across Luxembourg, Delaware and the Cayman Islands. This could only suggest one primary motivation: tax avoidance.

Sophie Ramsay, spokesperson for Goldman in London, answered such claims without actually answering them at all. In an email exchange with Bloomberg, Ramsay claimed that, “The Cayman and Delaware shareholders of the Luxembourg company are partnerships that broadly represent two buckets of investment capital: the first primarily for non-US investment capital, the second primarily for US investment capital.” Tax, she argues, is reportable according to tax law in the specific home country. Goldman, in short, will behave in accordance with what it is allowed to do.

Goldman’s conduct in the past has been spectacularly unethical. Lloyd Blankfein of GS had to answer charges of such conduct when fronting up before the US Senate in April, 2010. After all, even as other banking giants were falling, Goldman was raking it in. He defended the behaviour of GS in light of selling securities that its traders thought were bad to begin with while still betting against those very same securities. “In the context of market-making, that is not a conflict. What the clients are buying, or customers are buying, is – they are buying exposure.”

That is what the Dane’s will be getting into – “exposure”. As Denmark’s Politiken Magasinet (Jan 29) observed, Blankfein had severe problems in clarifying, let alone justifying, such speculating conduct. Former Prime Minister Rasmussen has flagged the warning signals – the sale is a “disaster” which involves dealings with a company with a “tarnished” reputation. That’s putting it mildly.

Thorning-Schmidt’s government, by deciding to move the socialist welfare model from its base, has stirred up the voters. Since coming to power in 2011, her government has introduced measures of means testing child care benefits and study grants. Services previously regarded as the sacred realm of state obligation and service, are now becoming qualified and restricted. The measures have also extended Denmark’s retirement age. Pay taxes, yes, but don’t assume you will necessarily get the service you want.

Having corporate interests muscling in on state enterprises is hardly unusual. It has been done with disastrous consequences to the quality of service and prices in such countries as Britain. When it comes to creatures of the banking and finance world as Goldman, eyebrows are entitled to rise in concerned wonder. As University of Copenhagen academic Peter Kurrild-Klitgaard suggests, the idea of having “someone from the outside control energy distribution” will be regarded as “very strange” by Danes. Yet only 20 years ago, Denmark’s socialists were insisting on broad nationalisation of production resources. How things do change.

Dr. Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge.  He lectures at RMIT University, Melbourne. Email:

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email:

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