Goldman Sale Reignites Conspiracy Theories in Danish Parliament

  • Some Danish lawmakers say process wasn’t in national interest
  • Government says Goldman capital injection helped save Dong

Vapor escapes from chimneys of a gas fired power station, operated by Dong Energy A/S, beyond harbor boats in Copenhagen, Denmark.

Photographer: Freya Ingrid Morales/Bloomberg

When Goldman Sachs bought part of Denmark’s biggest energy utility three years ago, it triggered a political crisis that split the ruling coalition. Now, as the Wall Street bank sells roughly half that stake, some members of the Danish parliament are again crying foul.

Goldman, through a Luxembourg-based vehicle, sold the equivalent of just over 6 percent of Dong Energy A/S for 6.5 billion kroner ($940 million) on Friday. Back in 2014, Goldman paid 8 billion kroner for 18 percent. A stake that size would now fetch about 18.5 billion kroner. (Goldman still owns 7 percent of Dong.)

In an angry statement, Pelle Dragsted, a spokesman for the opposition Left-Green Alliance, described the whole transaction as “hopeless” and the initial sale to Goldman as “scandalous.” Meanwhile, an investigation into Goldman’s investment in Dong by Denmark’s National Audit Office is still under way. The purpose of that probe is to find out whether Dong was sold at too low a price in 2014. The chairman of the parliament’s Public Accounts Committee has described the process as a political gesture that’s unlikely to reveal wrongdoing.

The political attention Goldman’s share sale is attracting shows Danes are still wondering whether they were short-changed three years ago. A former Social Democrat prime minister, Poul Nyrup Rasmussen, has led the camp of critics who say the nation was cheated.

The finance minister at the time, Bjarne Corydon, said Dong was losing so much money that other investors weren’t willing to inject funds into the company on terms that were acceptable to the government. He brought in Denmark’s two biggest pension funds, ATP and PFA, as joint owners and the government kept more than half the shares.

Dong has since stopped hemorrhaging money and on Thursday the company reported 2016 operating profit that almost doubled, with the shares gaining about 7 percent since the company’s June initial public offering. Kristian Jensen, Denmark’s current finance minister, says the company “was strengthened by the capital injection” it got from Goldman.

Michael Bruun, a managing director at Goldman, said in an e-mailed response to a request for comment that Goldman Sachs “is proud to have contributed to Dong Energy’s growth.” The Wall Street firm decided to sell part of its stake “following the company’s strong financial results,” he said.

Rene Christensen, who sits on the parliament’s finance committee as a representative for the Danish People’s Party (the biggest group in the ruling bloc of Prime Minister Lars Lokke Rasmussen), says it’s impossible to know whether Dong would have recovered so well without Goldman.

The Danish People’s Party backed Goldman’s investment in 2014 in part because “the message was that Dong was in trouble, and if we didn’t do anything, it would be a catastrophe,” Christensen said by phone. “But history has shown that Dong would still be here today” even without Goldman’s capital injection.

The question now is whether such a transaction will ever again be allowed in Denmark. Goldman hired another former Danish prime minister, Anders Fogh Rasmussen, to help it navigate its way through the political storm that followed its investment in Dong. Dragsted of the Red-Green Alliance says the process has been a lesson for Danish politicians in how not to handle foreign investment.

“There’s definitely a lot to learn from this case,” Christensen at the Danish People’s Party said. “If I were in the same situation today, I’d definitely ask a lot more questions.”

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