Danish PM reshuffles cabinet amid Goldman Sachs uproar

February 3, 2014
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Danish Prime Minister Helle Thorning-Schmidt/AFP
Danish Prime Minister Helle Thorning-Schmidt/AFP
COPENHAGEN, Feb 3 – Denmark’s prime minister announced a sweeping cabinet reshuffle on Monday after her coalition collapsed over a deal involving US investment bank Goldman Sachs.

Six ministers from the leftist Socialist People’s Party left Helle Thorning-Schmidt’s government Thursday over the controversial sale of a stake in state-controlled utilities giant DONG Energy to a group of investors led by the bank.

The deal sparked an outcry few had anticipated amid fears Goldman Sachs could use tax havens to administer their holding in DONG and claims that the investment bank had been given unusually favourable terms.

In Monday’s new line-up, former Minister of Climate and Energy Martin Lidegaard was named foreign minister and Morten Oestergaard, the former minister for higher education and research, was named tax minister.

The naming of a minister for social affairs and integration from the Social Liberal Party drew criticism from the anti-immigrant Danish People’s Party, who fear the Danish immigration laws could be relaxed.

“Cutbacks for the elderly and weak, but more money and privileges for people from another continent,” former party leader Pia Kjaersgaard wrote on her Facebook page.

The government’s sale of a 19-percent stake in DONG to the Goldman Sachs-led group for eight billion kroner (1.07 billion euros, $1.46 billion) had been justified by a need for the group to make new investments, especially after it lost money on natural gas bets.

But for the Socialist People’s Party, which had already been accused by grassroot members of supporting a government that was too right-wing, it became the straw that broke the camel’s back.

The Social Democratic-led government has cut the corporate tax rate to 22 percent from 25 percent and tightened the requirements for claiming social benefits.

Economic growth in Denmark has been persistently sluggish since a housing bubble burst in 2007, leading to anaemic household spending amid a high level of consumer debt.

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