The Court of Audit writes this in a letter to the House of Representatives on the day that KLM has been definitively rescued by the government.
According to the independent advisory body, the cabinet and parliament should learn lessons from the past when it comes to state aid.
“Least bad solution”
For example, not intervening for the public interest would in some cases be ‘the least bad solution’, especially when there is no good rescue plan, for example.
However, the past shows that sometimes this was not even looked at. An example is the shipbuilder Rijn-Schelde-Verolme (RSV), which despite bankruptcy support for many years went bankrupt in 1983 because there was no check on the effectiveness of that aid or its use.
More recently, the parliamentary committee of inquiry that looked at the many failed government ICT projects in 2014 concluded that the so-called ‘zero option’ (do nothing) is usually missing when things go wrong.
–
–
Smart alternatives
The Court of Auditors states that the public interest, the future prospects of a company and smart alternatives must always be considered first. An example is a ‘bail-in’ in which the shareholders, creditors and other financiers of a company also contribute. Only when that willingness is there can the state step in.
Another example is the emergency law for ING, which was drafted in March 2009. Should market parties not sufficiently cooperate with the bank’s support operation during the credit crisis, ING would be nationalized – which ultimately proved unnecessary.
–
–
Illegal support
Already in May, President Arno Visser of the Netherlands Court of Audit pointed out in an interview with NRC that government aid decisions should be ‘not rushed’.
In this way, illegal trading can be prevented, such as when buying 14 percent of Air France-KLM’s shares last year. There was no permission from the House of Representatives at all.
–
–
The Cabinet has to learn from these kinds of mistakes, the Court of Auditors advises. “It is often said that the situation is exceptional and unique and that time is pressing. On the other hand, speed sometimes comes at the expense of care,” write Visser and secretary. Cornelis van der Werf Friday in the letter to parliament.
The Court is currently investigating the state aid given this year to KLM and shipbuilder Royal IHC. A report will follow after the summer.
–
–
