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Archive for the tag “Gold”

Opinion: Hon. Kipoi is in a land of trouble, but is the charges justified?

Today Tony Kipoi, the former Member of Parliament in the 9th Parliament in the constituency of Bubulo West. In 2014 he had issues that he had no excuse for not taking part of 15 sittings in the row. Therefore, the Parliament threw him out and had a By-Election to chase him out of his seat. Well, just a year into his term (2012) as MP he was arrested for his connection with rebels in the Democratic Republic of Congo, however, that didn’t stop him from serving a few more years, before he was kicked out. Therefore, in retrospect, the issue wasn’t really there, but somehow it became one.

Other than this, there are a Press Release from 24th December 2012, where the Police Force states this: “Yesterday, Sunday, 23 December 2012, the Police with its sister security agencies, arrested Hon. Kipoi Tony Nsubuga of Bubulo East constituency at 10:30 in Matimuku Guest House, Njala Village, Fort Portal, Kabarole district, while he was holding a meeting with some Ugandan security officers and Congolese rebel officers. The Ugandan Officers and Congolese rebels were also arrested. For, some time, now, the Police with its sister security agencies have been closely monitoring subversive activities of Hon. Kipoi Tony in and out of the country. In particular, he has been recruiting personnel from our security services as well as Congolese rebels belong to a Congolese rebel group called COGAI, based in areas around Bunia, Ituri, Democratic Republic of Congo. He had promised to support the rebel groups with fire arms.We also have information, that Hon. Kipoi Tonny has foreign sponsors who at this point it would not be wise to disclose” (Ugadna Police Force, 24.12.2012).

In April 2014, President Yoweri Kaguta Museveni expressed this about Kipoti:

You elected a mad man Kipoi and when he got there, he wanted to overthrow the NRM government with guns. We threw him in. But because of the courts which are confused, they released him on bond and he fled to Congo. You have been here for long without any representation” (State House, 14.04.2014). T

What is striking with this, if this fellow Member of Parliament was already monitored and already had an issue with the and had to be arrested one year after becoming MP. Why wouldn’t the Electoral Commission disqualify him and his candidacy in Bubulo West? Since he was already known for his foreign support of the COGAI in Ituri, Democratic Republic of Congo?

The strangest thing, is that there is no direct connection with COGAI or FPRI. Which the state tries to put forward, and when it comes to making such accusation the state has usually delivered easily against detractors. Therefore, I had to look into possible sources and finds very little proof behind the accusation and the actual connection. Other than police in 2012, but nothing else connecting Tony to any warlord in the DRC.

The pure evidence of a Ugandan connection to FPRI or COGAI is this one from the UN Security Council in 2012: “FRPI also sells gold directly to Ugandan armed forces officers posted along the Congolese border. A regular client, cited by Congolese armed forces, militia members and a Lendu community leader, is a former Ugandan armed forces officer, Alex Mugisha. In exchange for gold, he has delivered arms and munitions to FRPI at the Semliki border crossing” (UNSC, P: 25, 15.12.2012).

With this evidence, there are clear indication that the group of rebels connected to Kipoi has traded their conflict minerals or gold with Ugandan counterparts. Therefore, to have middlemen in Uganda seems natural at this point. That is why the Presidents family is involved in this business as well.

But going back in time, the Observer had an article in 2nd November 2014 written by Sadab Kiatta Kaaya which stated: “In November last year, he was arrested by the DRC authorities but was later accorded a guest-of-the-state status, accommodated and protected by the DRC government. “You know he is a crafty man. I think when he got arrested, he told them that he has a rebel group and given the problems we have with them [DRC], they felt he would be of value to their interests,” Ambassador Kinobe said, when asked about Kipoi’s whereabouts” (The Observer – ‘DR Congo refuses to hand over ex-MP Kipoi’ 02.11.2014).

So after the troubles with law, even as a lawmaker and MP. He still had issues, which followed him from 2012 and also with the refusal to show-up in the Parliament. Tony has been one whose been in the spotlight of the President and the NRM. He has been one of many who has been alleged connected with militias and charged with treason. Kipoi isn’t the first one. He won’t be the last. What I wonder is who is connected to Alex Mugisha and does the business with the Congolese Rebels from Ituri. That would answer a lot of open questions.

It is hard to believe the information directly from the state, especially considering how they are not transparent about their looting of Congolese gold to through the Ugandan businesses. These are kept low-key and used to earn vast fortunes on others misfortunes. While supporting militias and insurgency inside the DRC. That is not news, but a fact that has been stated through international investigations and through the system of the United Nations Experts.

I’m just also wondering why Museveni turned on Kipoi and as he made him MP before taking him down. Now he is supposed detained and jailed in Uganda after a being in exile in Botswana. Why is suddenly back in the spotlight and getting into issues. What did he really do, pee on the lawn outside of the State House? Did he offend the buttocks of the Janet Museveni? What did he really do?

Would be nice to get some proper representation of the possible crimes he did, if he did any, since the evidence and the investigations of UPF isn’t representative and the criminal investigations can be turned in favor of the will of the President.

Why I can also question the government, is because the National Equality and Democracy, a liberation party from the diaspora wrote this on the 3rd December 2016: “The red notice meant that the Bubulo county West parliamentary representative Hon Kipoi Tonny Nsubuga would be arrested if found in any of the Interpol member countries. Interpol found that the organisation was being used wrongfully by the regime to pursue its political opponents. The winning of this case is historically a wakeup call and is a sign of injustice that all Ugandans are going through. Innocent Ugandans have been victims of circumstances for years under Museveni Rule. Since 2012 kipoi’s legal team has been battling political cases with Uganda government for an equal society. He emphasized much on Mr [ Museveni ] to do whatever he could in order to assist in restoring democracy, and stop unnecessary constitutional meddling which has lead to political instability in the country. The regime after falling out with him over political differences, he was accused of trying to overthrow the government, Kipoi left to exile in neighbouring DRC. The government continued to pursue him and even sued him under CRB No 1034/2013and secured a red notice 2014/11357 in Lyon France” (NED, 03.12.2016).

So we have the right to question the state, as the facts will not come from this regime, they will play it in their favor, just like they have done with other dissidents. Kipoi is just one of many in line of fire. Museveni isn’t graceful when coming to opponents. Peace.

UPDF Press Statement on Boda Boda 2010 (29.01.2018)

UPDF: “Arrest of Murder Suspects” (21.01.2018)

Opinion: Should we be worried about the power-struggle between IGP Kayihura and CMI’s Gen. Tumukunde?

We can think of the recent days as a visible power struggle between two loyalist to the Ugandan President Yoweri Kaguta Museveni. This weekend has filled with stories and captures of the men and woman behind the Boda Boda 2010 syndicate. A Syndicate and organization who has followed orders of the Inspector General of Police Edward Kale Kayihura. He has supported them and used their services. That is why the leadership of Abdallah Kitatta felt safe, not only as a NRM Chairman of the Lubaga (Rubaga) Division in Kampala. So he had connections to power.

Still that power was not enough the visible actions, the violence it followed has been questioned and people have struggled to believe the reason for having outlaws running the law. That was sanctioned from the IGP. Now, this weekend its enough for some reason. Chief of Military Intelligence and General Henry Tumukunde have now gone in and settled the case with the Boda Boda 2010. Kiatta has even been interviewed after the arrest by Intelligence Security Organization (ISO), therefore, the organization supported by Kayihura is now publicly dismantled.

If this is sanctioned by the State House, then Kayihura should really worry. As well as all the men and woman who is Crime Preventers too. They might be the next group that the state is dismantling through arrests and investigations. Because, this has all been useful tools of the Police Force to quell demonstrations and rallies. Both, has been used for that and the NRM could need to save the costs of having them. Instead of using political means, they could use CMI and ISO to silence them.

Gen. Tumukunde are now using his power to silence the extra organizations of Kayihura. This is happening in broad daylight and Kayihura cannot do anything about it. The men and woman of Boda Boda 2010 that has been used to enforce orders from Kayihura is now going away. We can just wonder if the CMI or the Police Force who knows who really killed Andrew Kaweesi or the one behind the murders of innocent woman in Entebbe last year. Since none of the murders has been solved, they are just a left stain on the Security Forces.

We know now that Boda Boda 2010 has killed for cars and equipment by the released information during this week. Who know what else crimes that has been sanctioned by this criminal syndicate. It is far from criminals to police officers, that is maybe a reason why the courts are extra botched. They cannot see the difference between criminals and the police. That isn’t a sign of hope or of peaceful society. That is destroyed security organization, that has to use military enforcement to stop criminals.

Gen. Tumukunde might win support over this and also shows his strength towards a man he despises. That is known and there been criticism of each other in public, with spats in the papers and even on TV between the men. It is well-known. These men has disputed and also questioned each others methods. Tumukunde is using his good standing with Sarah Kagingo, the NRM spokesperson of some sort, who owns the Soft Power Communications LLC and the Softpower.ug, to spread the positive message of the arrests and actions of Tumukunde. Just check the track-record, the friendliness of Softpower to it all is staggering.

We can know that these sort of stories will make the actions of Tumukunde sound like masterpieces of intelligence, even if the CMI and ISO are doing this as retribution for something Kayihura has either said or done. Because the Boda Boda 2010 was not an for Tumukunde in 2016 or 2017. But suddenly became so in 2018. We know that this is a sign of power-struggle between the two leaders under Museveni.

We will follow this and we should worry if this escalates, if Kayihura will try to take allies and leaders close to Tumukunde for something criminal. Even establish sort of monitoring over his men like he did to Besigye. We never know. Kayihura is surely blocked and under fire. As his supportive group has been taken down by the military and their operatives. Peace.

Issa Arinaitwe Furaha letter to President Museveni – “Re: Threats on My Life by Gen. Kale Kayihura and Rwanda’s President Paul Kagame through Rwanda Inteligence Operatives and their Embassy in Uganda because of my Exposure of their Deadly Actions against You, Ugandans and Rwandan Refugees (04.01.2018)

Tanzania: Acacia – Receipt of Tax Assessments – This Announcement contains Inside Information (24.07.2017)

Congolese rebel Tshibangu and Meru Aspirant Governor Mwenda connected by looted gold!

The rebel and former Lieutenant General John Tshibangu who has left the during “Africa’s World War”. He has been reported and rumored to been a part of the M23, but that was never official, neither was any of his other enterprises since. He has been reported for violence in Kasai-Oriental in 2012 and trying to create a revolt in the Congolese Army. He has started and together with close members running a rebel group, who even recruits fellow rebels in Central African Republic as well as in the Democratic Republic of Congo. Here is some of the brief news from the rebel. Before the questionable transaction in Kenya, by the outlaw and the conflict minerals in the hands of Kenyan businesses. They should know better!

Therefore, this has been recent reports of the man:

For John Tshibangu, his two collaborators were in Bangui visit because they have family on site. “Two of my men were arrested four days ago in Bangui: Colonel Freddy Libeba, my deputy in charge of operations, and Alexandre Mithsiabu, the intelligence director of our movement. They have their hands handcuffed since Friday, “also confirmed for his part, the colonel deserter of the Congolese army to the head of the FPCCD. He accuses Joseph Kabila of organizing the tracking of opponents inside and outside the DRC and said they fear for their lives if they were to be extradited. No demand for extradition has been formally sent by Kinshasa for the moment, but the will has been expressed, said one in Bangui. “We rose up because Joseph Kabila did not win the elections in 2011, and everyone knows. But we have been observing for a while the negotiations led by the bishops and we realize that Mr. Kabila does not respect the signed agreement. We can not let it happen because article 64 of the Constitution allows us to block the road by all means. That’s why we were raised, “said the FPCCD leader” (MediaCongo, 2017).

Friday, June 9, 2017, at least 3 relatives of Colonel rd Congolese John Tshibangu, were arrested in Bangui Central African Republic. They are Freddy Libeba and Alexander Mitshiabu, according to the confession of Colonel Tshibangu, who confided to the press because he fears that their extradition in the DR Congo. “I confirm that the two men were arrested. They are involved in activities of destabilization of the regime in the Central African Republic, but also in the DRC, “the Central African security and interior minister, Jean Serge Bokassa, quoted by Voice of America as saying on the telephone. The Central African statesman assured that an investigation is under way and further arrests may follow. “There are other acolytes who could be arrested. And there are many here. For now, we are leaving the case in the hands of the judiciary and we can later decide to extradite them to the DRC, “added Minister Bokassa. In the Central African Republic, the authorities are actively investigating the alleged members of the CTCCF, John Tshibangu, a Congolese political-military movement close to the former M23 rebellion suspected of links with Central African armed groups from the former Seleka. Investigations obviously triggered after the arrival of the Congolese Minister of Foreign Affairs, Leonard She Okitundu, three weeks ago. Freddy Libeba is a DR Congo subject who appears in the UN expert report of December 2016. He would have arrived in Bangui in July of last year. According to a source close to the investigation, he lived in the CAR under a false identity and was charged by the leader of the FCCPD, Colonel John Tshibangu, to recruit men from the Congolese diaspora rd and to conclude an agreement with an elder Leader of the former Seleka, Joseph Zoundeko, for possible operations in the DR Congo as in the Central African Republic. Since Zoundeko was killed, but Bangui suspects the CSCFP also to participate in the operations of the Coalition in eastern CAR” (J.N., 2017).

When you would know that the rebel who are using all sort of funds to ignite violence and oppress people, even use it buy arms and ammunition to fight government and other militias, the Kenyan enterprises should sway away from the 1000 kilograms of gold worth USD 37 Million. This happen in April 2017, months before the news of violent and arrests of people surrounding his movement in Central African Republic, but it still shows the capacity of the former General in the Congolese Army. That he can cross borders and use his position to gain and train more rebels. This could only be done with the money to buy needed equipment and pay his ‘soldiers’.

Because, Eye on Security Company received 1000 kilogram of unrefined gold. The monies of this gold and the value of USD 37 Million. This was put in Diamond Trust Bank. And put under the company of Sea Land Destiny Limited. This shows that illegitimate funds and conflict minerals are entering the Kenyan financial system and banks.

The ones make sure of this transaction is:

Eye on Security is a firm being supervised by an inside and out luxuriously experienced CEO. Mr. Mbijiwe Mwenda is a previous missile administrator in Kenya Air power. Aside from working air and ground rockets, this squadron additionally handles uncommon operations in counter terrorism and salvage operations. His administration as a marine has completely prepared Mr. Mbijiwe with sufficient learning of each point in security. Mr. Mbijiwe served in the power so passionately and he conveys even an uplifted level of passion to this firm. He is dead set to work with determination in making this nation and the whole world a superior spot to live” (Eye on Security – link: https://www.eyeonsecurity.co.ke/team/).

The rich Security Analyst and CEO and founder of Eye on Security, has even been thought of as a Jubilee Candidate for Governor in Meru on the Jubilee Ticket. This was reported on KTN News earlier this year. He even had a statement of certainty of others, while the truth of his company isn’t that swell.

Like this one from 22nd January 2017:

As a Meru leader, am ashamed that campaign materials of an aspirant or opposing party can be pulled down in a move clearly aimed at weakening them. This is undemocratic and cheap. Political victory is not gained by physically harming or maiming your opponent! Real men go to political battle democratically. They fight it out in the field and the best wins. No one goes high by bringing others down! We expect leaders to observe political decency! Only cowards do that kind of shameful thing! The youth is the strength of every rising community and they shouldn’t be misused. The role of the youth in politics is not to create an environment of despondency and violence but engage in constructive politics. Meru is greater than any individual, political formation or political movement. A people united can never be defeated” (Mbijiwe Mwenda, 22.01.2017).  

What is amazing on the claim of the corporation of the aspiring governor of Meru, Mr Mwenda stated: “We, Eye On Security, further confirm that the goods in our custody are legally earned and cleared of non-criminal origin, free on any liens or encumbrance and freely transferable upon the instructions only of the authoritized signatory (depositor)” (Eye On Security, Mr. Mustafa – placed on 12th April 2017). Certainly the company of the aspiring governor should know and look into the history of Lt. Gen. Tshibangu who is well-known rebel and recent history isn’t peaceful. Certainly, the company has no trouble with the way the gold came into their possession and how they transferred funds from Diamond Trust Bank.

This story is clearly not been told and not been touched, how a Meru Governor Aspirant Mwenda are involved with Congolese Rebel and his looted gold. This is like novel, a fiction, but the paper that has been released proves the story. The other was just quick research on the fellows involved in the transaction. The rest is up to you and to see if someone differs on the story. Because the details are there and the others, are actual reported by various sources. Peace.

Reference:

J.N. – ‘FPCCD : John Tshibangu, Freddy Libeba et Alexandre Mitshiabu, ses proches, arrêtés en RCA’ (16.06.2017) link:

https://lemaximum.cd/fpccd-john-tshibangu-freddy-libeba-et-alexandre-mitshiabu-ses-proches-arretes-en-rca/

MediaCongo – ‘RCA: des rebelles du colonel John Tshibangu soupçonnés de lien avec l’ex. Seleka’ (16.06.2017) link: http://www.mediacongo.net/article-actualite-27546.html

Tanzania: Further Response to the First Presidential Committee’s findings on the Export of Gold/Copper Concentrates (26.05.2017)

What do Mobutu and Museveni have in common after thirty years in power? Massive looting of their state reserves!

Museveni: My critics always forget to mention that I was democratically elected, the others were not. Everyone in Uganda can challenge me, everyone can vote, the elections are free. Not many countries have achieved what we did. One third of the seats in parliament are reserved for women, five seats for youth, five for workers, five for the disabled and 10 for the army. How many democracies with such a record do you know?” (Koelbl & Puhl, 2016).

Just as the knowledge of the all the state businesses and properties of President Museveni that he has amassed over the 31 years in power in Uganda. It reminds more and more of the state of affairs under President Mobutu. Mobutu Sese Seko was a dictator that President Museveni was proud to ouster and reinstate President Laurent Kabila in the Democratic Republic of Congo (DRC). So that President Yoweri Kaguta Museveni knows about Mobutu’s fatal fall, is certainly known.

President Museveni has gotten rid of other dictators before the fall of Mobutu, he even knew or had knowledge of the death of the plane of Juvenal Habyarimana, the plane who got shot down in April 1994, as his fellow comrade General Paul Kagame of Rwandan Patriotic Front was on the way to overthrow the current regime there. Also that the President Museveni together with President Milton Obote overthrew President Idi Amin in the late 1970s. So the current President Museveni has been involved in lots of armed change of power, he is even rumored and not verified if he had knowledge of the death of John Garang of SPLA and the South Sudan.

Still, the man who has used force and taken weapons to change history and his own fate, again and again, also to get puppets in states around. Have certainly thought of the demise of the men he got rid off. So when the stories of the last year of Mobutu sounds like this:

Mobutu’s Wealth:

For 32 years President Mobutu has treated Zaire like a toy and used its rich mineral reserves like his own private bank account. He plundered its mines, insisting their entire annual profits be transferred to personal accounts overseas” (…) ““We had to be close to the regime to do business,” admitted Mohammed Abdul, a Lebanese businessman yesterday as he fortified his shop for an expected pre-Kabila pillage by Zaire’s ruthless and brutal army. The Lebanese are hated by Zaireans who believe they colluded with President Mobutu to plunder the country’s diamonds” (Kinshasa, 1997).

Swiss assets:

The decision by the Swiss Federal Council came a day after judicial and police authorities seized his luxurious villa at Savigny near the lakeside resort of Lausanne. The 30-room mansion is estimated to have a market value of more than $5 million” (…) “After three decades of plundering the mineral wealth of his country, Mobutu is believed to have accumulated an enormous fortune. There have been persistent reports that he has stashed as much as $4 billion in Switzerland, but a government review of the country’s 400 banks last week said that none reported having accounts in his name” (Drozdiak, 1997).

Just as you think the dictator of Democratic Republic of Congo would be different than the current one in Uganda, your terribly wrong and President Museveni tries to keep it hidden, the way he is using the state reserves on himself and build his wealth. Just like President Mobutu was trying to move the money to the Swiss accounts, President Museveni has his own way.

A look into Museveni:

The way the Museveni family is paid royalties, or rent, by escrow accounts for their ownership of the title deeds of the Stanbic Bank business name in Uganda (what was once the Uganda Commercial Bank, Uganda’s largest banking group) is the way it is paid for their ownership of other apparently South African or foreign-owned businesses in Uganda” (…) “These sources say that it is Stanbic Bank that is used to finance businesses like Roofings Ltd, Speke Resort Munyonyo, the J&M Hotel along the Kampala-Entebbe highway, businessman Hassan Basajjabalaba’s hotel and Kampala International University, all of which actually belong to the Museveni family” (The London Evening Post, 2012).

This is just the business side of it, it could be worse by now and they could own more pieces of all the businesses that are bailed out or even getting tax breaks by the government, because who knows the true deeds or royalties going to accounts owned by the royal Ugandan Museveni family. So the next says more about the value of the Museveni family and their estates.

Museveni’s wealth includes ranches in Rwakitura and Kisozi Uganda which accommodates over 2,000 healthy cows which produce thousands of liters of milk daily. The Uganda president makes at least Ush 100 million per month from his farm” (…) “Apart from livestock farming, Museveni has interests in real estate, hotel industry as well as transport industry. He has also invested heavily in the banking industry” (…) “The longest serving president of Uganda is estimated to be worth $ 700 million” (Venasnews, 2016).

So when you see how the Museveni family has become as wealth and rich as President Mobutu did. Mobutu had after his 30 years of dictatorship stashed away US$ 4 Billion into Swiss Bank Accounts, what is more uncertain is the total value of the 30 years President Museveni rule in Uganda. What is right now and known is the businesses that the President is involved in or having ownership in. Secondly is the knowledge of estates, as well as ranches in Uganda with livestock that the President owns. Therefore, the extended wealth of secret bank accounts and not revealed businesses could show the true value of the Museveni family.

With the knowledge of this and the sudden departure that President Museveni together with President Kagame, as they forced the dictator away in the Democratic Republic of Congo (DRC). I don’t think there will be an intervention on President Museveni from one of the neighbors. Still, the world can see the dictator protocol is kept by Museveni as he himself have crafted ways of emptying the state coffers. Therefore, that the riches, the estates and the value of Museveni have risen over the three decades in power isn’t strange. What is more worrying is how he has been able to keep is wealth and ownership.

That President Museveni wishes to look like a hardworking rancher and that he works for his fortune. The yields are coming from hard-work and dedication. At the same time the ownership in banking industry and in other parts of the economy shows how much control the family and the President does have. The private industries and companies are run or ordered directly from the State House.

So that President Museveni said this in 1997 as he overthrew Mobutu is now insane:

Mr. Museveni’s ideology is simple. For too long, he says, African politicians have hoodwinked the common people, manipulating tribal sentiments to stay in power and steal millions of dollars in foreign aid and taxes. A former Marxist, he sees the true struggle on the continent as one between corrupt leaders and the dirt-poor people they exploit” (McKinley Jr., 1997).

So he said for to long African Politician played the commoners, using the sentiments of tribe on their populations and using this tools to stay in power, while doing so taking an emptying the state reserves and donor funding to themselves. Therefore, 20 years since he stood for this and said these words, he has now done the same.

President Museveni of today would assassinate himself or overthrow himself… since he is now the Mobutu of Uganda, he has the character of the men he overthrew in past. He should be worried, because the ghosts of the past and the reckless leadership will follow him and that is why he trust the guns more than people. Since his own insincere political game might catch up with him.

On some levels now, there aren’t much difference between President Mobutu and President Museveni. Peace.

Reference:

Drozdiak, William – ‘Swiss Freeze Mobutu’s Assets; Reports Put Worth at $4 Billion’ (18.05.1997) link: http://www.washingtonpost.com/wp-srv/inatl/africa/zaire/swiss.htm

McKinley Jr., James – ‘Uganda Leader Stands Tall in New African Order’ (15.06.1997) link:http://www.nytimes.com/1997/06/15/world/uganda-leader-stands-tall-in-new-african-order.html

Kinshasa, Mary Braid – ‘Mobutu takes the money and runs to a safe haven’ (16.05.1997) link: http://www.independent.co.uk/news/world/mobutu-takes-the-money-and-runs-to-a-safe-haven-1261945.html

Koelbl, Susanne & Puhl, Jan – ‘’This Is Our Continent, Not Yours’ (10.06.2016) link: http://www.spiegel.de/international/world/interview-with-ugandan-president-yoweri-museveni-a-1096932.html

The London Evening Post – ‘Revealed: How the Museveni family owns Uganda’ (03.01.2012) link: http://www.thelondoneveningpost.com/comments/revealed-how-the-museveni-family-owns-uganda/2/

Venasnews – ‘Yoweri Museveni Salary and Wealth’ (27.06.2016) link: https://venasnews.com/yoweri-museveni-salary-and-wealth/

Confidential reports stern warnings about the Italian national bank debt ratio and possible damaging scenarios when restructuring it!

italianbank

The Astellon Capital Partners report on the Italian nation debt is troublesome, as the reports are indicating troubled waters ahead for controlling the debt and repayment on the defaulted loans. This will create other higher issues than only the Greek debt and interest-rates from Brussels and Berlin. The Italian and Rome problem will cause monetary effects for all of Europe, as the debt are like his:

“1980 –1995: Debt / GDP increased by 64%, due to high interest rates levied by Bank of Italy to fight inflation and promote exchange rate stability of Lira within European Monetary System, precursor to the Eurozone” (…)”1995 –2015: Debt / GDP increased by 11%, due entirely to debt servicing costs as Italy ran a primary fiscal surplus over this period” (Astellon Capital Partners, P: 2, 2017).

The continued pressure of the Italian debt is showed with the average primary balance since 1995 have been 2, 1% and the average interest costs of the GDP have been 5, 5%. “Italy among the most fiscally sound member states in the Eurozone, yet also among the most burdened by interest costs” (Astellon Capital Partners, P: 3, 2017).

These numbers are not really positive at all, as the high interest rate by the Bank of Italy together with the rise of debt servicing that increased 11% alone in a decade. That the Italian state have the amount of costs of interests amounting to 5,5% says lots of the economic pressure on the budgets and fiscal policies within the government structures. This does not like a prosperous and strong economic situation.

The report continues with more worrying numbers that the Italian labour costs are 11% higher than rest of the EU average. Certainly also that the average productivity of the labour are 12% lower than the Eurozone average. So you got higher paid workers that work less, which also isn’t strengthening the economy.

That the Italians bank’s they have deflated badly loans that has gone from under 5% in 2005 to the running value of close to 15% in 2016. So that the European Central Bank have bought into the government debt issuance: “2014 –2019: At current government debt net issuance rates and announced QE levels, ECB will have been responsible for financing 100% of Italy’s deficits from 2014 –2019”. This is if the debt is: “Assumes €50bn annual run-rate of government net debt issuance” (Astellon Capital Partners, P: 6, 2017). That is a hefty sum when considering all the other fiscal issues that already put forward.

“Substantial increase in non-bank net purchases of Italian debt required ECB and Italian Banks acquired 88% of government debt net issuance since 2008. Over next six years non-banks will need to increase purchase activity to 7x that of past nine years” (Astellon Capital Partners, P: 7, 2017). So a nation that struggles with high paid performance with low productivity are suddenly needed to get the workforce to 7 times higher purchase activity, meaning the production and selling has to increase seven-fold if the state should have ability to sustain the defaulted debt that has increased and the debt the ECB has bought. Together with the Italian Bank gold-reserve which is lower than the stated and needed figures to be sufficient. The bank has gold-reserves by today’s value about €100bn, but by the ECB agreement need to collateralised that needs to be up to €350bn. That the report claims to be only 25%; while the assets are dwindling too and that is also worrying!

The Assets have from 2011 gone from being around 0% or none, to 2016 when the assets of the Italian bank is now in 2016 -20%. Because this have come a German proposal to avoid an new Argentine Bank collapse case. As the Italian Bank are required independent assessments of debt sustainability.

The great risks for Italy and the Italian republic are these scenarios. Like the hedge funds can buy into with high risks and yields through BTP yields during the 2016-2017. Second scenario in 2018 is that the ECB or European Central Bank will be a marginal buyer of the government bonds and buying debts. Third scenario is that the Italian Banks becoming net-sellers and therefore losing their assets with less of profits in the 2016-2017. Last scenario is unilateral re-profiling or re-domination or some form of Greek-Haircuts by 2017-2018, that means trade-offs and cutting taxes to try to revamp the economy (Astellon Capital Partners, P: 21, 2017).

With these numbers and situation, there are certain men in ECB and in Italy that is worried. The strength and sovereign nation of Italy has to find ways of restructuring the debt and assets. What is certain is that the debtors cannot take it easy on this one. The Italian debts and reserves are worrying as the debt has to restructure and the focus on how the Italian republic has to get more productivity and create more production so the taxes and debt per GDP can go down. This will be painful for the Italian state and their government institutions, together with all the debt and bad-debt that the state has to cover, because the banks cannot afford to lose all of these fiscal funds. There have to be a revolution of something if the Italian republic and its workforce are able to 7 times higher purchase activity. That will not come easy and how they will ever achieve that must be by a unicorn arriving and spinning the Fiat wheels of Torino more than ever before; even getting the world more hooked on Milan fashion design or Illy coffee. Peace.

Reference:

Astellon Capital Partners – ‘Q1 2017 Notes No. 24 – Ciao a tutti: An orderly restructuring of Italian debt’

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