“Black Book” criticizes waste: one bank debacle and one groundbreaking too many

Tuesday, November 9th, 2021

“Black Book” criticizes waste
One bank debacle and one groundbreaking too many

By Markus Lippold

Cost explosion in construction, useless infrastructure or incorrectly calculated subsidies: this is particularly annoying with public money. In its “Black Book”, the taxpayers’ association has its sights set on breakdowns worth millions in Corona aid. And a bankrupt bank.

Tax money and how it is used is a hot topic. What is the citizens’ money used for – does it make sense or not, is it perhaps a waste or is it even a bad investment by the administration? Excitement is quickly generated when it comes to alleged or actual tax waste. This excitement is also hoping for the taxpayers’ association, which collects relevant cases in a “black book”.

The non-profit association takes a particularly careful look, as its declared goal is not only to avoid errors in the financial planning of the federal, state and local governments, but also in general: tax cuts. In many cases, the taxpayers’ association is fully justified in pointing out errors, some of which cost the citizens millions of euros.

An example: Compensation payments for hospitals in Bremerhaven if they keep capacities free for corona patients and do without predictable operations. Because of inadequate provisions, there were apparently questionable payments in the millions, according to the “Black Book”. The problem in this specific case was that the payments are based on the occupancy figures from 2019. If fewer patients were treated in the 2020 Corona crisis, the clinics received compensation. A private clinic company was also paid out based on the 2019 figures. The catch: According to the taxpayers’ association, at the turn of the year 2019/20 it had given its pediatric department to a local city clinic. Nevertheless, the private provider asserted the missing occupancies in 2020 when calculating the compensation payments.

“Almost EUR 2.9 million of the federal government fl owed to the old institution, although the compensated beds had not belonged to it since January 2020 – and thus when the pandemic broke out -“, it says in the “Black Book”. The city hospital, on the other hand, had no claim, after all, the corresponding beds did not even belong to it in 2019 – the Bremen health department nevertheless paid 1.6 million euros from federal funds to the clinic, at least until Berlin complained about the payments. Nevertheless, two clinics received money for the same beds for five months.

Digitization, motorway app, hourglasses

Later, another 311,000 euros flowed to the private clinic and 540,000 euros to the municipal operator via a state-owned compensation program; after all, 2019 was the reference year here too. “The bottom line is that in the period from March 2020 to the end of January 2021, due to the obviously inadequate calculation bases in Bremerhaven, at least 3.2 million euros flowed to the former and therefore ‘wrong’ clinic operator, while the city clinic, as the new operator of the children’s clinic, made additional payments A total of 2.1 million euros was voted mildly, “says the” Black Book “.

The “Black Book” lists a number of other examples of tax waste. For example, digitization of the federal administration, which is becoming more and more expensive, but still barely making any progress. “The ‘IT consolidation federal government’ is more like an IT chaos federal government. The mega-project was clearly underestimated and inadequately coordinated and promoted,” states the taxpayers’ association. The Autobahn GmbH app also met with sharp criticism: the development cost 1.2 million euros, despite the low added value compared to private providers, falling user numbers and negative reviews. A complete overhaul of the app was only announced at the end of October – so additional costs.

Fizzled subsidies for electric cars, a new building for the Chancellor’s Office, “permanent construction site in the government district” – the “Black Book” lists many examples. However, some points of criticism seem excessive. “In public construction, more energy has to be used to finish buildings on schedule,” it says at one point. But large private construction sites are also struggling with delays or cost increases due to delivery bottlenecks. Even if it is of course more annoying when it comes to public funds.

The taxpayers’ association has repeatedly criticized the fact that not all of the examples listed in the “Black Book” are suitable as evidence of tax wastage. Because sometimes it is a matter of interpretation whether a street could have been cheaper and a swimming pool smaller. The fact that two celebrations with the first groundbreaking ceremony were held – and paid for by the taxpayer – for the 20-kilometer-long expansion of federal highway 5 between Husum and Tönning is more a provincial farce than a scandal. When purchasing faulty parking hourglasses in Wittenberg, the association does not criticize the costs, but the administrative effort. The call for a more efficient bureaucracy may be justified, but it will never be fully met – precisely because it is about public funds.

Municipalities lose money at Greensill Bank

However, these unconvincing examples should not hide the fact that there are extremely annoying cases of tax wastage, especially when specific misconduct leads to losses of millions. The “Black Book” deals in detail with the insolvency of the private Greensill Bank, the consequences of which for the public finances cannot yet be assessed. The taxpayers’ association writes of a “debacle”. Because here “the taxpayers are threatened with high losses through risky financial transactions of the municipalities”, as it is called. As a reminder: The Federal Financial Supervisory Authority (Bafin) imposed a forced closure on the bank at the beginning of March due to the threat of bankruptcy. At that time, according to the Taxpayers Association, around 40 regional authorities, mainly municipalities, had deposits of around 350 million euros in the money house. And these were not protected by the statutory deposit insurance.

The “Black Book” not only lists the municipalities whose deposits could now be gone. Above all, it points out that there may be cases in which the administrations have not adhered to their own investment guidelines. “This is currently being examined in the town halls concerned, because the municipalities are required by budgetary law to ensure that there is sufficient security when investing,” the authors write, referring to possible claims for damages.

Using the example of Schwalbach in Hesse, the “Black Book” shows in detail that own specifications were not observed. “With the plant at the Greensill Bank, the city has also violated its own rules,” it says. In December 2020, the magistrate adopted an investment guideline based on the requirements of the Hessian Ministry of the Interior and the model statutes of the City Council. As early as February 2019, the magistrate had stipulated “that fixed-term deposits must be invested with institutes of the savings bank group, with cooperative banks or the Bundesbank”. The newly elected mayor, however, had no knowledge of what it was said afterwards. Now the public prosecutor’s office is investigating him.

In summary, the taxpayers’ association is basically: “As with previous loss-making investments by the public sector, the taxpayers’ association reminds us of the principle: Anyone who manages taxpayers’ money in trust must ensure security over returns!” Consequences must be drawn from the “Greensill debacle”.