The Endesa case
Chile is presented as model country in the execution of the free market policies. During the dictatorship of Pinochet was put to the order of the day the privatization of a large number of public companies. The privatizations absorbed CAP ( Steels Company of the Pacific), the CTC ( Telephones Company of Chile), Entel, Endesa, portions of LAN, etc. In the years of the Conciliation, the private practice followed, stimulating the accumulation in conglomerates that already they had found their moment of takeoff in the previous years. Apparently, this ultraliberal policy was one of the conditions that the regime of Pinochet imposed to the opposition to carry out the called "transition".
The success of this process is expressed in the fact that today seven persons may have the control of the 70% of the values of the country. The private process has found its instrument in a series of "holdings" that, once consolidated in the Chilean market, they extended their action radio being located in other countries of the continent, whether it be alone, associated between them or with transnational companies. Currently they remain very few companies, above all mining, in hands of the Chilean State. It is possible that they preserve that situation because of strategic reasons ( they feed the bureaucracy and the military appliance). But throughout the years they have been tested many formulations to induce their privatization.
The character of these privatizations constitutes an expropriation act of the state patrimony. The grants were made under favorable political conditions to the entrepreneurs, (that frequently they were the own officials of the dictatorship, at the same time entrepreneurs, that is to say, intellectual organic of the middle class, commissioned with accomplishing the biddings) that many timesthey were awarded these goods by lowest sums or putting as guarantees their own obligations.
The history of Endesa Spain in Chile began when this company arrived to a financial agreement with a Chilean group that represents the most turbid interest of the state bureaucracy under the military dictatorship of Pinochet, implementing all the techniques of the financial engineering to rob the Chilean state patrimony. The strategy was reached of direct and sure manner, replacing the entrepreneurial risk by the absolute discretionality of the state power for the allotment of the public property between the same bureaucrats in charge of the government or collected to him.
First they created the pension funds for the workers (authentic swindle of the little stamped picture accomplished by the State). As second step they were named managing fiduciary of these funds; as third step, they converted those liquid funds in capital proceed to buy public companies to transform them into private that they quote in stock market. The consequence was that the State alienated the public patrimony and that these agents of the Pinochet state bureaucratic appliance were appearing as their only beneficiary in multiple societies where they were taken charge of all management of that patrimony, and at the same time they were acquiring small action packages of instrumental character (with clauses of control over the decisions), only way of power to participate legally in the boards of shareholders.
The last stage of this financial engineering operation was completed with the entry of the capital foreign (in this case ENDESA -SPAIN) in what we could call the second privatization. This time, the companies already privatized in hands of these new industry captains to their step by the pinochet state appliance ,they were offering to sell the societies with orthodox methods type OPA or with worthy methods of Meyer Lanski one of the financial teachers of the Chilean soldiers in their good eras.
The decision of Endesa - Spain of entering Enersis, it is fully justified from an economic point of view -strategic. Buying Enersis not only it is acquired the first electrical of Chile (that it masters also the generator that is called as the Spanish company: Endesa), but furthermore it is procured the control (upon adding its participations of Endesa - Spain to those of the Chilean company) of other generating companies and distributers of electricity in Argentina, Peru, Colombia and Brazil.
The strategic importance of the battle released by Endesa - Spain to achieve the control of Enersis, it has been revealed after the creation of the BBVA, where it is opened again the discussion on whether the energetic companies have the sufficient size to be defended of a possible adverse operation in a sector that gravitates toward the centralization. The trend toward the fusions between the large European electrical companies are a symptom more than this reality and their echoes already are listened between the Spanish companies. The threat of public offers of unsolicited acquisition is evident.
The experts vaticinate that, in some years, the European electrical sector will be reduced to five or six groups. Companies as the French Edf or the German Vega-Riag and RWE have the sufficient size as to absorb of a plumazo to anyone of the Spanish. The only one exception is Endesa - Spain, that it caught muscle with the acquisition of the Chilean Enersis and, furthermore, it is protected by a gold action, for which - in this case the Spanish State - it is legally empowered to authorize or not the contingent acquisition of given percentage of capital of the Company.
The better way of avoiding that a group is strained by the window it is to increase of size, something that is procured through fusions. " Some Electrical already they begin to envisage the possibility of a union with other company of the sector», it indicated a source of the stock exchange market, who vaticinated important centralization movements.
Around the end of 1997, when it was negotiated the new association between Endesa - Spain and Enersis, the president of the Spanish company, Rodolfo Martín - Villa, declared that his purpose was "to make of Enersis the capital of our presence in the region". "Our obligation and right – he emphasized – it is to defend that investment" in oblique reference to the thousand five hundred million of dollars spent on an operation that does not assure them - still – indisputable control of Enersis and less than Endesa - Chile. These statements give a clear idea of the magnitude of the strategic interest of the Spanish imperialistic capital in all this matter.
In August of 1997, Endesa - Spain bought 29,06% of the capital of Enersis after disbursing 1.5 billion of dollars (some 250 billion of pesetas). With directing three - Rodolfo Martin Villa, Alfredo Llorente and Héctor López Vilaseco - of a total of seven, Endesa - Spain did not had the control of Enersis neither great presence in the administration. Only a Spanish executive, Emilio García, that it is advising of the controllership. To have invested what they invested to have a minority participation it was not business. They bet on making to prevail in Chile the dialectical economic of converting the quantity into quality, bidding by buying the control of something that could not be put to the sale. They had gone to that country to order and they were not ordering.
The knot of the problem was in which after the privatization process begun in the era of Pinochet, the Chilean companies have a stock market configuration peculiar. The maximum participation on the part of an alone shareholder was limited by statutes to the 32% of the capital of the company, and in all of them the Administratixes of Pension Funds (AFP), that handle in its joint 50 billion of dollars, they were occupying a relevant position, that in the case of Enersis it was reaching 29,2% of the capital of the company.
It was tried, since, to breaking for the first time the political shielding from the times of the dictatorship, that it was guaranteeing to the AFP the monopolist control on the privatized companies. This only was possible modifying the statues and eliminating the clause by the one which an alone shareholder could not preempt more than a 32% of the social capital. And for that, it there was that to obtain the support of the two-thirds of the issued actions, or to negotiate directly with the managing fiduciary to backs of the stock bulk.
The managing fiduciary commanded by the engineer Yuraszeck and thirteen or executive fourteen of their/its/your/his confidence, built a @@holding almost of the nothing. They were taken advantage of the opportunities that them offered the dictatorship upon privatizing Chilectra. Organized the Sparks, investment societies with two types of actions. Of the A were issued 75 million, of the B only 250 thousand that remained in the hands of Yuraszeck and the his. The actions B did not gave dividends, but yes somewhat more important: the control. The friendships and the dictatorship made the rest. The Bank of the State, presided by Alvaro Bardón,it lent them 65 million of dollars to acquire 20% of Chilectra. Thus it began Enersis, that then it was converted in a holding that it controls Endesa, Sinapsis, the Real-estate Manso of Velasco, Aguas Cordillera and other companies.
The last year it was estimated the value of Enersis in five billion of dollars. To mid of the last year, needy of fictitious additional capital in search of productive application, the controllers of Enersis decided to make new alliances to leave profitable in huge businesses that it was opened with the electrical privatizations in Mexico and Brazil. With such purpose they sought covertly a strategic alliance with Endesa - Spain - by then still state company though in process of privatization - in which this would open buyer power for the actions of the Chispas.
According to the terms of the agreement, Endesa - Spain would destine for that Public Actions Offer (OPA) - that it is not regulated in the Chilean legislation - thousand five hundred million of dollars. Other billion of dollars would be capital contribution for Enersis. Both companies would form a third - Endesis, participated by Endesa - Spain in a 65% and by Enersis in a 45%- to operate in Latin America. Yuraszeck and its executive fourteen would follow occupying key posts in the new plan. The OPA operated with stumbles. There was shareholders of the class to the fact that refused to sell, especially in one of the Chispas - Light -, that demanded substantial improvement in the negotiation. It was not for less: They were destining 500 million of dollars to buy the actions A, that were representing 99,9%, and billion for the purchase of the 0,06% of the actions that they were of the type B.
This operation of fraudulent control had as principal managing by Spanish part to the directing of Endesa - Spain, Rodolfo Martín Villa, advised by the Santander Investment and the attorneys dispatch Marco A.Cariola and Cía Limited Attorneys (Marco Cariola is a Chilean senator known for his affinity with Pinochet). The purchase of the titles of Enersis was carried out through bribe with a minority fraction of the company: the managing fiduciary headed by José Yuraszeck, a nearby man to the life senator and expresident of the Republic. As it has been seen more up,Endesa - Spain paid for 0,6% of the actions of Enersis in the hands of this minority, between 7 and 10 times as much as to the rest of the small accionistas(Magazine "What passes": "The monarch of Endesa").
To those small shareholders that they had bought actions and to 4.000.000 of workers that were participating with their pension funds, they were paid an appraised price that, to simplify, we go to suppose of 100 pesetas the action. These small shareholders were selling their actions. But the "children of Pinochet" that they were possessing derisive quantities of capital but that they were exhibiting the privilege of management through political clauses imposed by the Dictatorship,they were arriving to an agreement with the foreign company of the second privatization and they were selling their actions to 700 or 1000 pesetas, only way of the fact that I had " practical sense" the bribe and fraud operation.
That huge difference in the price of acquisition (only in part justified because the actions of Yuraszeck were incorporating determined rights of control over the company) produced a reaction (of rejection of the small thrifty against the Spanish company). Were presented quarrels against the agents of Enersis and the own Defense Council of the State (what in Spain it would be the General district attorney's office of the State) acted of trade against Yuraszeck, that it was also sanctioned by the Values Superintendence of Chile (the similar of the CNMV in Spain). The situation was made so critical that the directorate of Enersis dismissed to the president of the company in October of 1997 2 (Magazine "What passes": "The final rout of Yurasezck and his exit of Enersis").
That first stumble has labeled the path of Endesa in Chile since then until today. The nationalism was used with ability by the economic right to face to the small shareholders and to the AFP against Endesa Spain, to the one which made to appear as the flagship of the new Spanish imperialism. Though it was not directly it imputed in the opened cause, Martín Villa must declare before the Chilean courts. In July of 1998, the president of Endesa was interviewed with the selfsame president of the Republic, Eduardo Frei. In all reality this process it is explained by found particular interest, where the "defense of the national interest" of some and the "defense of the DD.HH." of others does not has more than an instrumental character. Here, what is discussed does not be that Enersis is integrated in Endesa Spain, but the political terms and economic income of that integration. It is not the sale of the national Chilean patrimony but the price to pay for Enedesa Spain and the allotment of that business. And the case is that, with this moved, the pinochetist bureaucracy was reaffirmed in the confidence and the social support of 4.000.000 of Chilean workers, good part of the worker aristocracy of that country.
The fracture, however, it did not originate of these differences, but of the absolute power of Endesa - Spain on the group Enersis. The unknown clauses by the shareholders and directing were establishing a virtual right to veto of Endesa - Spain on Enersis and eventually on Endesa - Chile, to whose directory it was added an attached with decisive powers. When most of the members of the directory knew of the clauses of the secret agreement, they disavowed to José Yurasezck and to the little time forced his expulsion as well as that of his on the up and up executives, proceed to annul the negotiations and to impose a reformulation of the terms of the agreement with Endesa - Spain.
The fall of Yurasezck did not mean break with Endesa - Spain that already it had in its power the actions, converting itself in majority stockholder of Enersis, though without reaching full control. The Values Superintendence and Sure (SVS) that, in a principle authorized the negotiations, then it condemned them applying strongly fines to the excontrollers of Enersis and it requested to the Defense Council of the State (CDE) that it studied a criminal quarrel that, in certain moment it threatened with be extended to the directors of Endesa Spain.
José Yurasezck and the others executive now complained did not remain in the ruin. In total, according to was informed, they perceived 376,2 million of dollars, of those which to the ex general manager corresponded to him 84 million. Some estimate that the figures were very superior. Buried the "business of the century", continued the blows. The entrepreneur and then senator, Sebastián Piñera, that had headed the struggle against Yurasezck and the agreement with Endesa - Spain, negotiated directly with the Spanish and earned he alone between three and four million of dollars. Other shareholders were organized to obtain improvements from part from Endesa - Spain.
In last resort the blood has not arrived to the river. The CDE acted to help better operation of the privatization model designed by the Dictatorship, without affecting the same base of the negotiation Enersis-Endesa, sustained in the originating obscure appropriation of a state company on the part of Yurasezck and their/its collaborative. Essential base of the model is the foreign investment and in this case the performance of Endesa -Spain that it can not happen inadvertent but that finally it has not been object neither of judicial quarrel nor of parliamentary investigation in Chile (less yet in Spain, obviously). it has not been made so as not to to affect the foreign investment and specifically the relationships of businesses with Spanish entrepreneurs that they have acquired special importance during the governments of the Conciliation. But the feints of implying judicial and parliamentaryly to the Spanish directors of Endesa, without doubt formed part of the pressure by Chilean part to capitalize the political shieldings of the Dictatorship, in the same way that with the current process underway of extradition to Pinochet, the Spanish imperialistic middle class struggle by breaking them on behalf of the great international middle class.
Thus, "The Mercury" of the 16 of August of 1997 gave one of lime making his the argumentations that used the Spanish defense, upon saying that the judgement "does not contribute to the indispensable on the up and up climate to attract capital large country and to permit their/its companies to reach able associations to compete in the international in all economy ". at the same time, more subtly, the president Frei gave other of sand delimiting all responsibility of the Chilean Executive, upon indicating that the quarrel was thing of the autonomous CDE. Some recalled that that autonomy not prevented to him/her/you to invoke " State reasons" to impose to him/her/you to the Council the paralization of actions in the scandal of the calls "pinocheks" in the amount of 971 million of weights, quantity that the first-born son from Pinochet received in 1990, by the supposed sale Army from the company "Valmoval" his/her/your/their property, warlike material manufacturer 3 (Magazine "What passes": "The day that the general captain was going to resign ").
In circles of the same Spanish State appliance, it was weighing also in those moments the threat of a judicial and parliamentary investigation in Chile, since Endesa - Spain is still a state company. The own José María Aznar made negotiations before the president of the DC, Enrique Krauss, when it was in Europe, in July, so that the president Frei received Rodolfo Martín - Villa. After some reticences of the government, the interview took place in the particular domicile of Frei in the street Baztán, with a Martín - Villa that traveled especially to Chile, after have requested intermediation Andrés Zaldívar and Ricardo Lagos. The executive maximum of Endesa - Spain was received by the Estate minister, Eduardo Aninat. Seem have obtained safeties of the fact that the Spanish interest would not be seen committed in the quarrel of the CDE. For the doubts, Rodolfo Martín - Villa came again to Chile in those days to reinforce the judicial defenses, political and advertising of Endesa-España.
The matter did not easy had resolution and remained emberss. In the first place, because the substitute of Yurasezck in the presidency of Endesa was José Antonio Guzmán, a known pinochet fans that it has been bragged of visiting dictator in the London mansion where this stopped, and that, continuing their/its executive, it has acted with subtlety against the Spanish interest. According to was known, already in the beginning of the March last month Guzmán negotiated secretly with executive of the American company Duke Energy, the possibility of the fact that this is made with the control of Endesa - Chile, the electrical generation society in the one which Enersis controls a 25% of the capital. To remove to him to Enersis the power in Endesa - Chile is as emptying it of its active principal in the región.4 (Magazine "What passes": " Definitive divorce ")
According to the Chilean magazine "What passes", in September of 1997, when was weighing on him the threat of be carried before the accused Chilean courts of bribe with the state bureaucratic entrepreneurial fraction of Yurasezck, Martín Villa...
<<...it has not pretended his front nuisance to the president of Enersis, José Antonio Guzmán, to who lashed with hard terms in presence of other directing and executive, by considering that his collaboration had been void to pvlacate the remezones of the "spark">>
From 16 of October of 1998, day in which the English government could not let of executing the extradition request of Garzón, and Pinochet was held in London, the media were come pawning in sensitizing to the public opinion widening it already known on the crimes of the Chilean dictatorship, with profuse information on the political and legal repercussions of the processal situation of the ex Chilean dictator, to the time that the militant defending of the DD.HH. they was rescinded in praises to the Spanish justice
The visit of Guzmán to Pinochet is produced on Sunday 15 of November of 1998. Attended to the front of a large Chilean entrepreneurs delegation, the one which asserted that the dictator spers with good spirit», own of a «good soldier», the «humiliation» emerged by the arrest to which was submitted a month ago in the British capital. « we express him the fondness that we felt by him and the recognition that we have by his Govern», declared Guzmán, ex president of the employer, the Federation of the Production and of the Trade (CPC). The entrepreneurs leadered byWalter Riesco, current president of the CPC, traveled to London to express to Pinochet his affected by the unworthy and unjust» situation that he was living.
Four months after of the extradition warrant of Garzón, and while Pinochet was following held in London, during the board of shareholders of Enersis summoned 24 of February of the past year of 1999, Endesa was remained in 74% of the votes in favor of the statutory change, that is to say, to only a point of his objective. A strange lag in the processing of the votes of the American fund Franklin Templeton, owning of the 1,5% of the capital of Enersis, and favorable to Endesa, near the posture of Guzmán, that added as abstentions (equivalent to votes against the bylaws modification) the actions that delegated in him votes to the board, caused that, finally, the Spanish company is remained without the option of carrying out the announced OPA . Two days before the board of shareholders, the reporter María Eugenia Larraín of the magazine "What passes" was reflecting on the consequences of the failure of the OPA of Endesa - Spain on Enersis.
This new failure and the threats of agreing with the American Duke Energy, compelled to Endesa Spain to increase the price that were prepared to pay for the actions type "B" until 320 weights for title: a level never reached by the company in the Bag. Of that form,it was procured a new summons of the extraordinary board of shareholders. Celebrated 30 of March of 1999 in the Center Diego Porches, this board approved finally by a percentage of the 84,22% of the issued actions, to change the bylaws of Enersis so that the concentration limit is increased of the 32% of the capital to the 65%. Endesa Spain procured thus to save the last obstacle that was preventing to her to control Enersis and be converted into the first electrical Latin America company.
On the following day, the president of Endesa, Rodolfo Martín Villa, arrived to 9.30 hours originating from Madrid to attend a historical meeting of the directory of Enersis: not only it were gone to ratify the victory of the Spanish company, but were gone to proceed to the substitution of José Antonio Guzmán, president of the Chilean company, that it has acted always against the interest of its majority stockholder .
Though the complete renovation of the directory was not made 30 of April of 1999, as of that historical meeting management of Enersis remained thoroughly in Spanish hands. In fact, Martín Villa was nominated few hours afterwards new president of Enersis, and Alfredo Weep you, general director of International Endesa, vice-president.
Nevertheless, yet in May the swords still were continuing in high, and the Chilean authorities not only tapered the fence on Endesa but it extended to Telephonic. For those dates, the district attorney's office paralyzed the OPA of Enersis - already in the hands of Endesa Spain - to be made with most of Endesa Chile. To this initiative was added a group of Chilean parliamentarians, that announced the presentation of a project of law to prevent the concentration and the " vertical integration» in the electrical sector.
The economic national prosecutor, Rodrigo Asenjo, either discarded to begin actions to prevent the monopoly in the sector of the telecommunications, where the Spanish Telephonic controls CTC, the greater company of the country. In a published interview by the newspaper The Mercury, Asenjo recognizes that he committed a mistake when was accepted the vertical integration » in the sector. CTC operates in basic telephony, of long distance and mobile, in Internet, computer services and sale of equipment. Though it is the first company of the sector in Chile, it is the second in long distance telephony, where it is surpassed by Entel, of the Italian group Stet and of the Chilean Chilquinta.
Furthermore, Asenjo indicated that the district attorney's office is "attentive» to the concentrations in banking and in telecommunications. In the financial sector, the BSCH is finished of making with the control of the first entity of the country, the Bank of Santiago, and possesses the second, Bank Santander Chile.
As far as they are concerned, the deputies Zarko Luksic, Tomás Jocelyn-Holt, Ricardo Corner and Andrés Palm, of the official Christian Democracy (DC), denied that these measure have as a goal to affect the Spanish interest in this area, but to favor to all the Chileans.
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