Maximizing profit
The legal complexities and maneuvers plaguing the contest for the privatization of a 49-percent share of the Mont Parnes casino have intensified concerns over the conditions under which profitable state property is being passed on to private hands. The contest, which set a minimum bid of 80 million euros, brought two separate consortiums into conflict. The improved bid delivered by the consortium of the Loutraki casino and Piraeus Bank at the counterbidding was deemed overdue and the State has begun bargaining with Hyatt Regency – which won the bid – to push for a higher offer, said to amount to an increase from 92 million to 110 million euros. On Wednesday the rival consortium, which has protested its exclusion from the process, again raised the stakes in the bidding game with a 162-million-euro offer – double its original bid and 47 percent higher than the bid delivered by the Hyatt-led consortium. The government, which was about to close the deal, is faced with a dilemma. Making a decision is harder than it may seem. The 162-million-euro bid may be a striking one, but it failed to meet all conditions, which means that it is not legally binding. Accepting it may result in cancellation of the contest – and in a subsequent stage, no one can be certain about the size of the bids or the identity of the interested consortiums. This uncertainty may challenge the 162-million-euro bid but, on the other hand, it underscores reservations concerning the effectiveness of the process and the initial evaluation of the property on sale. When it comes to casinos, the State requires no quality guarantees like it does with other contests. It’s only interested in the price. Why should the State hinder higher bids with inflexible procedures which focus on formalities? Furthermore, in light of the unprofitable granting of mobile telephony permits and those for other casinos, how is the opening bid set at 80 million euros and then at 110 million before the amount jumps to double the original figure? If there is really a chance of receiving 162 million, how can the original bid be justified? Was the State’s original evaluation so low? If so, how can the difference be explained? The need to keep to legal procedures is understandable, but in such cases these procedures can end up cutting revenues for the State to the benefit of private enterprises. The State should not fall into this trap again, but rather should try to sell in a way which is both legal and maximizes its profit.
