“The Remote Control“
“Tale told with the Mouth”, and Dialogue With my 10 yo Son
Once upon a time, in the United States, I met the Captain of the cruise ship “Elation”: he was a very witty Italian from Venice. His name was Marco.
At the beginning of the journey he would present the officers on the stage at the ship’s theater and invariably someone from the audience would shout at him:
“Hey Captain, who’s driving the ship?
“The Remote Control!”, would the Captain always reply with impeccable timing.
Then thunderous would be the laughter of the passengers’ audience…
That’s very funny Dad. (giggling).
Listen, Dad, by the way… Who’s the Italian Captain of Covid-19?
He is the Extraordinary Commissioner who was appointed by our Prime Minister after the 17th March Extraordinary Decree named: “Cura Italia” (say, sort of “The Italian Job”)
So, what exactly is an Extraordinary Commissioner?
An extraordinary Commissioner is the absolute chief in charge. He’s the person that in this Coronavirus time would take decisions “in order to implement and coordinate the containment of the pandemy as well as adopting all the procedures to contain this COVID-19 epidemiological emergency”
Then, Dad, is he a Doctor like you?
No, sweet heart, definitely he is not…
He must be then an epi… epi….
Epidemiologist? No, neither of them.
His name is Domenico Arcuri.
Who is, Domenico Arcuri, then?
What does he do in his life?
Son, it’s a long and complicated story. However, I will try to explain it to you. Domenico Arcuri is the CEO of a business company: a group of influential people. He’s the CEO of Invitalia.
What is a CEO, Dad? And what is Invitalia? Is Invitalia part of our state?
Wait up, my dear. A CEO is like a Commander-in-Chief. In the past this gentleman had been a Public Manager at IRI (Institute for Industrial Reconstruction). He then moved on to Invitalia where he was recently confirmed as CEO. He is therefore the new “Super Commissioner”, as they said on TV at RAI, “for the management of the fight against Coronavirus”.
Super? Dad! Is he like Superman?
More or less.
Indeed Super in Latin means “above”. Let’s say Mr Arcuri is above all! In fact, he will not even leave the position at Invitalia because the group he commands “will have a strategic role in strengthening production, distributing intensive care equipment, and also being able to set up new production plants”.
So, what about Invitalia?
Invitalia is, as described on their website, “the National Agency for Inward Investment and Economic Development”. In other words, Invitalia is an organization of private individuals with high financial resources: it means money. These people invest their capitals mainly in the so-called Joint Ventures sector. No, dear, Invitalia does not belong to the administration of our Country. But it does rather invest in our Country: collaborating with the Government or on its (of the Government) behalf.
I mean, what does that mean, Daddy?
Well, by investing its own capital and, above all, the resources of our Country, Invitalia is practically joining our Government Policies (“lo Stato”) targeting the development of our Country. It “helps us“ financially to better use our own Public Resources, although , for this purpose, to tell you the truth, we should already have Ministries in charge.
So, briefly: Invitalia collaborates with Our Central Administration (“lo Stato”) to create services for citizens. It can be a matter of managing Public Money to finance entrepreneurial activities (the so-called Start Ups). This Company could, for instance, intervene into the financing in order to improve telecommunications, research, technology in general and infrastractures, including hospitals themselves…
Therefore, also for Coronavirus, Daddy?
Yes, indeed: for Coronavirus too.
Then, in this respect, what would Invitalia gain, Dad?
Well, the remuneration that belongs to the intermediaries, or, if they participated personally, the difference between the earnings and the costs they had to face. The “Public Administration” (“lo Stato”) uses its profit to pay wages, pensions, education, defense, treatment of the ill citizens: that is, to keep the country efficient.
These private Companies, obviously, must look after their business: by saving part of their profits from the interests, or by investing them again and so, if they are good at that, they can succeed to raise their initial capital: they become richer and more influential. They would, as well, sponsor their own salaries, severance pay and retirement!
And what about Joint Ventures?
You are running too much, son! Let our Extraordinary Commissioner explain it to us with his own words (pronounced in Milan in November 2015, speaking at the Venture Up meeting, organized by AIFI – Italian association of Private Equity, Venture Capital and Private Debt and Italian Investment Fund)
Here it is, more or less, the meaning of Joint Venture. Sounds like some kind of oxymoron. If anything, however, I’ll explain this later to you boy.
So let’s continue on Joint Ventures. For example, even here in Tuscany, between 2010 and 2014 four Public Hospitals (as it is written in their information booklet) were built using the Joint Venture system. They are the hospitals of Prato, Pistoia, Lucca and the Apuan Alps. They are so beautiful! In their booklet you will read that: “the hospitals we have known are changing profoundly and quickly, the cultural characteristics have changed (I would not know exactly what it is meant here by culture because I ‘m still stuck at Aaron Swartz) as well as the management that they were based on… the hospitalization areas, for example, are no longer rigidly divided by specialty but are instead set by intensity of care and the spaces dedicated to them consequently require structural modifications “.
As it is being done now, all over our hospitals, because of Coronavirus, isn’t it?
Yes, quite so. Wards have been transformed to host and assist the largest number of citizens who are infected with this virus. If you keep your attention I can carry on, as long as it is not boring you, obviously!
Certainly I am not bored, Daddy: I love your stories!
Well then, the builders, the “Pizzarotti’s”…
What a funny surname! (chuckling)
As I said, the Pizzarotti’s, namely by contract, the “Concessionaire” (S.A.T.), were expected to finance about half of the works, while the State would have to finance the rest: that is, each would have contributed around 50%.
In theory: because, actually, it seems that our Public contribution was about 82% and that of Pizzarotti of 18%
How comes, Daddy?
Because, dear son, our Government (“lo Stato”), apparently, decided it would take some extra financial charge into this joint venture; even knowing that the Public portion of these shared properties would remain fairly unchanged: just around 53%, rather than the expected 82%.
No matter if the Italian NHS would have a minimal 13,46% quota of the costs, because in Italy, eventually the NHS is included into our Public balance!
“Mamma mia”, it is all so acrobatic, Daddy!
Yes, so acrobatic, indeed!” (both start chuckling)
So, what did these private builders gain back from investing into these hospitals if they already knew their public destination?
Well, according to their agreement, based on PF – Project Financing – (that is, “an innovative financing instrument (very) public – (less) private that allows you to involve public (more) and private (less) capital in the realization of works of public utility) the two “financiers”, the State (which would also include its NHS branch) and the Concessionaire (S.A.T. of Pizzarotti), accepted that, as soon as these hospitals would be activated, it would be the Public Side (see in the picture above: “Stato” and “Aziende Sanitarie”) in charge for the so-called human resources (i.e. the staff assisting patients) while the private Concessionaire, on their side, would provide the remaining services at the hospitals for 19 years: that is, non medical services (i.e. maintenance, machinery, equipment et cetera).
But Daddy, how can you earn from all this? And how much?
Dear son, you’re asking me too many difficult questions!
I’ll try to answer you the best I can. The Public “profit” in providing good standard of medical care to citizens is that the “Stato” is preventing them from getting sick; and by keeping workers in good health he’s then reducing expenses on the long run, therefor for many years.
Private business companies, on the other hand, earn as if they were “merchants” who buy and resell products. In this case they sell their products to citizens and also to the National Health Service: practically to the “Stato” (us!) with which they built the hospitals.
In the very same case of these four hospitals, the estimated profit for 19 years was apparently around 1 billion and 200 million Euros *!
(* Daniele Rovai, author of the book “The new Tuscan healthcare. The 4 new Tuscan hospitals and the scam law of project financing“, 2013).
Just consider that in other realities, for example in the UK, the Public Authority, therefore Her Majesty the Queen and her “subjects-citizens”, few years ago, had to pay a very high rent to use one of the hospitals where British citizens would receive assistance and care through their public NHS: simply because this building did not belong to the NHS but to a private company: Innsfree Ltd. I will tell you later a bit more about this company.
Moreover, there were additional commitments with other companies. For instance, in order to replace the unused equipment they could not buy them directly from the manufacturer but from the same company which was managing the hospital (namely the UME: United Medical Enterprise; much alike S.A.T. for the four hospitals in Northern Tuscany): therefore, everything done there inevitably would have additional costs, ultimately charged to the NHS. In fact, UME, upon an additional £10 million agreement, would provide for the supply and maintenance of new equipment for 30 years through its supplier: General Electrics. As I said, It was the British National Health Service which had to pay for this intermediation. Eventually, the South London Healthcare NHS Trust went into administration in 2012 and dissolved shortly after in 2013. That hospital, the Princess Royal University Hospital, PRUH, in Bromley, eventually was acquired by a new Trust: the King’s College NHS Trust in London.
Wait Daddy, isn’t that the place where you worked many years ago? The one where if you wanted to plant a hook in the wall to hang a picture, you were forced to call a team of workers sent by the hospital owners, and this would end up costing a few hundred pounds?
Yes, son, just that. Consider that 2 years after we returned to Italy, in 2013, the British “ASL”, the South London Healthcare NHS Trust, was so indebted, for about 420 million Pounds, then losing more than £1m a week, that the British government had to close it down for bankruptcy: it was the first time in the history of the British NHS that an “English ASL” went bankrupt. Moreover, British taxpayers will end up paying £1.2 billion to the PFI owners in a deal which lasts for 60 years (additional link). The owner of PRUH, as I already mentioned to you, is Innsfree Ltd, a PFI Company founded in 1995 by David Metter, “the King of PFI” which, by the way, “is the largest external investor in NHS hospitals”.
This was, apparently, for the UK NHS, its first Joint Venture experiment.
With the difference that in the UK it was called PFI where the “P” stood for “Private”, whilst in Italy, thank goodness, that “P” stands for “Project”.
Though, it seems a little the same to me, Daddy, doesn’t it?
So does to me, dear son…
And now what is going to happen next?
According to their agreement the Concessionaire would be managing their side for 19 years. But meanwhile Pizzarotti Costruzioni has partnered with the largest Italian construction group, Impregilo, and, last January, they started a railway construction site in Norway!
I mean, Daddy, are they building railways now?
Yes indeed: tracks, bridges, stations, tunnels etc… those kind of things. It is certain that, if this terrible pandemic had not erupted, there would have been lots of works to be done in Italy.
Just consider that after the the Genoa motorway bridge, the Ponte Morandi, collapsed in 2018, all the other sections of the Italian motorways were inspected and it was discovered that major maintenance works were required. But now, everything is expected to be stuck for a long term. However, building a railway must certainly be very demanding, and therefore I am not surprised if these builders, Concessionaires, before the contract would expire, took the decision to sell almost their entire quota of the hospitals to another company operating in the private health sector: Equitix. Therefore, they gave up the expected additional profits trying to compensate them with these huge sale: after all, they gave up a half for which they would have invested only 18%! Anyway, it sounds a good deal, isn’t it?
Does this Equitix also own horses? You know the name reminds me of it…
(note: ĕquus is the word for horse in Latin, still the root is familiar in modern Italian for “horse”)
I have no idea if they own horses. Certainly they are interested in Healthcare. They invest capitals too, that’s how they “create work” and, if they invest intelligently, they make their profit, a bit like Arcuri’s Invitalia does.
In reality, Equitix refers to a European group called Private Equity Europe, and Private Equity Europe, in turn, has roots, try to guess, in the US. In America they are connected to another company “leader in the sector of global private investment”, that is of the entire planet: this is called TPG.
Private Equity Europe also has its own CEO. He’s Italian too, you know! After all, we are famous in the world for our brains. Here, the brain of Private Equity is called Vincenzo Morelli.
He is a very, very smart guy: he has got two degrees. One in philosophy at Oxford in England, the other one in MBA at Stanford in the United States: two of the most prestigious universities in the world! And then he is also a benefactor, being member of the “Board for the Oxfam’s Enterprise Development Program”. Oxfam is, in fact, an organization based on philanthropy: that is, a group of benefactors who pursue the goal of fighting poverty. What is said for the good of others: “people’s power against poverty” is, in fact, their slogan.
Like Aaron Swartz, Daddy?
Roughly, dear son… Roughly…
Mr Morelli is currently Chief Executive Officer of Fantuzzi Industries SARL (the holding of industrial machinery in Reggio Emilia, former workshops of the railway, aeronautics and agricultural machinery industries) and Chairman (means “man-chair”, funny, isn’t it?) at TeamSystem Holding SpA but also Chairman of Harley Street Medical Center in London. He was also TPG’s “Partner Emeritus” between 2012 and 2013 upon appointment of the General Assembly of the European Private Equity and Venture Capital Association (EVCA) of which he had also been director since 2010. But before that, he had been “Operating Partner” of TPG Capital Europe from 2005 until 2012 and had managed the “corporate governance and the strategic reorganization of the portfolio of TPG Europe companies”.
Wow, Daddy: this gentleman has a lot of chairs to go and sit in!
No doubts, son, indeed. Just know that, again, in 2019, he was also director of the United Medical Enterprise: that is, the same company that had managed the equipment at the PRUH in Bromley before 2013. In short, one could say that he is an expert in finance of health systems! And when he was younger, he was also CEO of General Electrics. That is, the same company that was supplying the machinery to Bromley Hospital.
Daddy: but here we are in Italy, and the story you are telling me is a sort of Chinese puzzle box! You know that I like “stories told with the mouth”, Mickey Mouse, Lego and table foosball!
That’true, Son: you’re absolutely right I hadn’t thought of that! (both laughing)
Listen, Daddy, now that you have explained all these things to me, I would actually have another question for you…
Just ask, dear?
But if Mr. Arcuri is a kind of “merchant”, “banker”, whatever, has he got Coronavirus expertise, too?
Good heavens, sweetheart. I hadn’t thought about it, but I’d be tempted to say no. I think, however, with this global health emergency, our Country will have to face many expenses, tens of billions of euros, and then, when a government has to use its economical resources, it rightly has to rely on experts to avoid squandering its money.
You’ve got that!
Daddy, this is what I think…
Go ahead, then.
… Uncle Scrooge would never entrust his money to a bank: he would always keep it in his deposit and he would decide how much to spend and how.
I can see your point, indeed!
Well, because he has built a bomb-proof deposit with many defense systems and so he is not bound to give interests to banks.
You are absolutely right. Now it is me following you. So…?
… Uncle Scrooge and the Bank cannot collaborate. They aim at different goals. Both want to earn, but with a difference: that is, as long as Uncle Scrooge holds his money to himself, the Bank cannot earn anything from investing Uncle Scrooge capitals. Unless, the bank would set Uncle Scrooge profits as its own goal. But this wouldn’t ever happen if the bank was allowed to spend Uncle Scrooge money!
This is a very good point, dear son.
In technical terms you could call it: “conflict of interest”.
That is: either you are Uncle Scrooge or you are the Director of the Bank. Either you work only for Uncle Scrooge, or you work only for the Bank. Any intermediate solution simply would not be realistic.
Do you mean Mr. Arcuri being at the same time Commissioner for the Coronavirus emergency and CEO of In… In… Invitalia?
Do you mean that for controlling this Coronavirus Pandemic, our Country should not rely on a Joint Venture?
As you say.
Ideally there should exist no double positions between public and private functions, no joint ventures between Country Government and Private investors or business companies.
The imperative dictated by this planetary emergency is now to save as many human lives as possible. Economic interests, as suggested by the Lancet editorial on 7th March, should be left behind.
Would this be, by any chance, what you call a “conflict of interest”?
Oh, let’s leave this subject of the “conflict of interest” alone: that’s an old story that has never been resolved in this country and, I am afraid, it will never be…
I see Daddy. But now, I would like to ask you a somewhat sad question.
If millions of people died from Coronavirus: what will be Banks worth?
I suspect, to buy for cheap hospitals all over the world, especially public ones, my son.
I also have one more thing to ask you, “Babbo”
But aren’t you tired yet?
I am too curious. Sorry! (chuckling)
Ok, “shoot” your question!
The word oxymoron, Daddy. You promised to explain it to me.
Right. By oxymoron we mean the juxtaposition of two opposing concepts. It comes from ancient Greek. We shall better ask our friend Gregorio, he is an expert in this language. However, I can still tell you that it derives from the association of the two adjectives “sharp” and “foolish”. For example, like to say “deafening silence” … or … (he is immediately interrupted by his child)
Ah, wait, I have got one: “Stato-Mercato”!
In a certain way, this is fairly true. Especially when it comes to health. In our country, health is a public good protected by the Italian Constitution: woe to those who dear to touch Health and Constitution!
The guarantee of universal access to medical assistance and care for citizens was, first of all, a conquest of the civilization: in Italy as well as in Europe. It is our Constitution that protects public health. Because the market would treat this “common good” as a salable or purchasable object.
In this sense, the two words “State” and “Market” together really sound like an oxymoron.
Therefore, ideally, no citizen called for a public function, that is to operate for the interest of the Country, should be ever allowed to hold positions and take care of interests on behalf of third parties. Despite of that, the article #1 of Arcuri’s appointment decree (18th March) establishes and “clarifies” that this assignment, “carried out free of charge, is compatible with other public and private assignments”.
Sorry Daddy, you words sound fairly complicated to me, now. Besides, this article #1 does not seem quite right to me.
However, you could simply tell me that before being appointed as a Public Authority, in a democratic Country, all sort of conflicts of interest must be first resolved.
Now you are speaking in a complicated way! However I must compliment you! You summarized this concept better than me! (both laughing together).
The ancient Romans would have wondered: “cui prodest?” In Italy, you could say “cui Prodist!” Perhaps I’ll explain to you this joke some other time…
Now, Daddy, my very last question. I really have to ask it!
Go ahead. Let’s hear. But be that the very last one!