Supervisor ACM has made serious mistakes since the foundation of energy company Flexenergie. The energy company that went bankrupt in 2018 should not have received the necessary permits in 2014. In addition, ACM should have intervened in 2017 so that the debts with the tax authorities and the company’s customers would have risen less.
This is apparent from the report published on Wednesday by Willem-Jan van Andel, who is handling the bankruptcy as bankruptcy trustee. The modest size of Flexenergie left a financial trail of destruction. A debt of 20 million remained to the Tax Authorities in 2018, while 20,000 customers had 10 million in credit. The deficit totaled 23 million.
According to Van Andel, Flexenergie obtained licenses from ACM to supply energy, without it having been demonstrated to have ‘the organisational, financial and technical qualities’ necessary for proper business operations. In the nearly five years of its existence, Flexenergie made an increasing annual loss and the business model was ‘intrinsically loss-making’, partly due to high discounts to customers.
In a telephone explanation, Van Andel does not rule out the possibility that companies more often obtained a permit during the same period. “I wish I could convince myself that this just happened to be an industrial accident and not a system error. But I do think it is a system error.”
The two directors, Sivakumar Kandiah and Sathees Sampar, did not feel or only partially responsible for the business operations and the trustee Van Andel calls in his report “improper management an important cause” of the bankruptcy. “The energy market is too complex to allow people to enter without making serious demands,” explains Van Andel. “The checks on expertise, reliability and solvency fall short of the goal that it must all be about the lowest price. That is quite short-sighted.”
The fact that Flexenergie was able to survive for almost five years despite the losses was possible because the company deliberately “abused the tax authorities and its customers as – unintentionally – financiers of the losses”. In no year did the accountant give an unqualified opinion on the annual accounts and, according to Van Andel, the administration was “not for a moment” in order.
There was never any serious administration. Supervisor ACM says in a response to the trustee’s report that this administration could not be checked because a company is not allowed to supply without a permit. That is why „when granting permits, the functioning of the AO/IC [administratieve organisatie] not be tested”.
According to ACM, the fact that Flexenergie was allowed to continue to operate in 2017 despite the losses and the disorder is the result of the potentially major consequences of the withdrawal of a permit. That decision “has profound and irreversible consequences” for suppliers and customers. According to the bankruptcy trustee, this misrepresents the fact that customers ‘in some cases can actually enjoy protection through the withdrawal of a licence’.
During an auction organized by the Consumers’ Association in 2016 and 2017, Flexenergie was twice the cheapest. The result is that 24,000 customers switched to this energy supplier, with “often dramatic consequences”, according to the bankruptcy trustee. The Consumers’ Association says in a response that it has critically tested the company, but, Van Andel writes, “how Flexenergie can then pass that test is a mystery to the curator”. He advises the Consumers’ Association to “repay to the estate” the earnings of the auction, approximately 1 million euros.
A version of this article also appeared in NRC in the morning of November 24, 2021
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