Yesterday we reported [5]that Goldman's attempt to buy an 18% stake in Dong Energy, the world's biggest operator of offshore wind farms, while largely preapproved by Danish politicians, had met with solid resistance by the broader population, which had started a petition to block the sale, signed by nearly 200,000 as of yesterday. Alas, despite the valiant effort by the population to keep the energy company - with 68% of the population polled as being against the deal - the country's politicians, certainly with no palms greased by the world's biggest depositor-insured hedge fund - just let Goldman have the DONG. As Bloomberg reports [6], "a majority in Denmark’s parliament will let Goldman Sachs Group Inc. proceed with its purchase of a stake in state-owned utility Dong Energy A/S, according to a senior lawmaker in the ruling Social Democrat Party."
The socialists were not happy, and as a result left the ruling coalition:
"The coalition, which the Socialist People’s Party quit today amid resistance to the Goldman deal, will be able to count on votes from the opposition Liberal and Conservative Parties to muster a majority in parliament, Benny Engelbrecht, a spokesman and lawmaker for the Social Democrats of Prime Minister Helle Thorning-Schmidt, said in an interview. “The votes are there,” he said.
As a reminder, here is what the Dong fiasco is all about:
Parliament’s finance committee is due to vote after a meeting at 1 p.m. in Copenhagen today on the Wall Street bank’s bid to pay 8 billion kroner ($1.5 billion) for an 18 percent stake in Dong. A Megafon poll conducted by TV2 showed 68 percent of Danes are against Goldman holding the stake and thousands of protesters gathered outside the parliament last night to voice their anger over the deal.
“The Dong share sale is putting more nails in the government’s coffin,” said Christoffer Green-Pedersen, a political science professor at the University of Aarhus. “They won’t survive the next election unless they find a way to highlight their successes.”
Finance Minister Bjarne Corydon, a member of the premier’s Social Democrat party, has fought off growing opposition to the deal from unions, lawmakers and voters while maintaining backing from opposition parties. Poul Nyrup Rasmussen, a former Social Democrat premier, publicly urged Corydon to scrap the deal, calling Goldman a “shady partner.”
Goldman, of course, was unruffled, and said no terms would change as it was about to swallow 18% of the Danish Dong:
“This case emerged out of nowhere; there are so many things that seem off about this, and this was the time to come out,” said Solveig Weiss, a retired Social Liberal voter who was among the protesters. “I’m very disappointed a red government can push this kind of sale. It’s completely right-wing policies and certainly doesn’t help that they’re selling shares to a somewhat dodgy enterprise.”
Goldman says the political and popular backlash won’t prompt the fifth-biggest U.S. bank by assets to reassess its bid. The bank won’t -- “as a matter of principle” -- comment on the political situation in Denmark, Sophie Ramsay, a London-based spokeswoman at Goldman Sachs, said earlier this week.
“The government already has low support in polls and this case won’t help in any way,” Jens Hoff, a professor of political science at the University of Copenhagen, said by phone. “Core voters are running away because Social Democrats and Socialists consider the whole thing a very bad idea.”
Oh well: another government brought to its knees by Dong and Goldman. Won't be the first time this has happened...