The never-ending Chamber war

Is absolutely nothing working anymore at the French Chambers of Commerce and Industry? This is a question that has been on the lips of company heads within the CCI network, as the economic press publishes news – on a quasi-weekly basis – on yet another (bad) episode, pathetic in the eyes of the profane outside the Chamber circuit in France. The latest to date, occurring on 16 June, is the astonishing resignation of Pierre Simon, President of the Paris Chamber of Commerce (CCIP) from the position of Vice-President of the ACFCI (Assembly of French Chambers of Commerce and Industry – the national leading body of CCIS) that he has occupied since 2005.
In a press release, the well-known CCIP representative, company head and former banker explains that he “intends thereby to solemnly raise an alert on the excessive and inappropriate increase of the ACFCI’s spending and its degraded financial situation”. The following day, the Assembly of French Chambers, presided by Jean-François Bernardin, also President of the Versailles CCI, issued a cutting reply. In its statement, the ACFCI serenely explained its budget and accused its critic “of a deep lack of understanding of the functioning of our Assembly”.
Already committed to an immense reform which is to overturn the French Chamber landscape and which has irked a substantial minority of Presidents of local Chambers, is the CCI network sinking into a quagmire of internal quarrels for good? Is Pierre Simon’s alert call grounded? Or is it merely a pretext to once again flaunt the CCIP’s disagreement about the way the Île-de-France is to be reformed? One thing is certain: public exposure of such management disputes proves that the network can no longer manage to resolve its family problems. This is enough to fuel new controversies, notably amongst those who have been opposed to the reform project from day one, and the government – which may be led to take decisions fatal for the Chambers’ future very shortly – may be inclined to conclude that CCIs are public establishments that are difficult to keep under control.

Bankrout at the ACFCI ?
First off, the resignation of Pierre Simon. On the agenda of the general assembly of the national head body of CCIs on 16 June was the approval of 2008 accounts. From the outset of the session, Vice-President Simon announced his intentions, before leaving the platform to take his place alongside other CCI Presidents, office bearers and board members. The CCIP sums up, citing figures, its position on the budget presented to it: a 13.6 % increase in staff expenses in 2008, a result showing a deficit to the sum of 5.2 million euros, negative capital of 4.5 million euros, and debts exceeding 96 million euros. Asked by Commerce International about the fact that he himself had, in November 2008, voted in the ACFCI’s amending budget, Pierre Simon explains: “It’s true that I voted for the amending budget at the end of last year, but I did not vote for the accounts. There are now points on which I have reservations, notably on the problems of budgetary management and means for evolution today and for tomorrow. What I wished was to exercise a type of right to call an alert, to indicate that I am concerned about the financial situation. In 2009, the network will be asked for contributions, up by 19 %, to finance all activities – and this in the context of the Révision Générale des Politiques Publiques (RGPP or General Revision of Public Policies) and the crisis.”
By resigning from his position as Vice-President of the ACFCI, Pierre Simon thus seems to show that he is no longer in solidarity with the leading gang of four that he formed with President Jean-François Bernardin, First Vice-President André Marcon, and Treasurer Denis Batard. He legally remains an office bearer and a member of the Assembly’s executive board. “I will carry out my responsibilities within the ACFCI on a long-term basis, as other Presidents have done. By resigning from vice-presidency, I wanted to regain a certain freedom of speech. My personal ethics force me, when I belong to the executive board of an entity, to display solidarity with the rest of the core of the board. Today, I no longer wish to be tied up in my capacity to express myself, for I have reservations,” adds Pierre Simon.
It remains to be said that accounting figures revealed by the CCIP have cast doubt on the management and financial situation of the ACFCI, obliged to explain that the transfer of a certain number of expenses of local Chambers to the leading body, such as the creation of a single counter for company procedures, necessarily led to a 15 % increase of its 2009 budget and not of its everyday expenses, but at the same time a global shrinking of network expenses. Moreover, on the issue of increases in staff expenses underlined by the CCIP, the ACFCI shows that this is the fruit of exceptional elements (an alignment of the Assembly’s index point with the national one, payment of retrenchment compensation and retirement benefits), as well as recurring elements (increase in staff for missions conferred by the government, and the effects of general increases), as well as expenses resulting from missions billed to certain Chambers. Nevertheless, before the general assembly on 16 June, certain local CCI personalities spoke of a considerable deficit. In his alert, Pierre Simon, no doubt because he does not adhere to all the criticisms, naturally made no allusions to several of the ACFCI’s sensitive finance files; others have done so in his place, including opponents to the reform currently underway.

Sensitive files
Firstly, management of the Chamber portal www.cci.fr (CCI FR) for institutional information and service purchases, created in 1999 and whose utility is yet to be proven, apparently represents a negative outcome of 6.4 million euros over seven years. Jean-François Bernardin, President of the ACFCI, is astonished that he even has to say anything on this issue: “CCI.fr was decided on during an assembly presided by my predecessor in which everyone was fighting to carry out the maximum number of initiatives. The concept was supposed to be highly profitable and it has to be said that we were in the thick of the Internet craze. It was decided that the ACFCI would not manage the issue which would be administered by a monitoring council and a board presided by a CCI president (and a general manager from the CCIP, editorial note). Management was collective. The ACFCI only intervened when the shortcomings of a certain number of Chambers were remarked on. We therefore picked up the pieces, and today, there is a management contract with the association Firmnet (whose members are CCIs, editorial note). It seems evident that we should probably have better distinguished what belonged to the institutional portal from commercial tasks. Wanting to exercise two tools with a single instrument was probably a collective strategic error from the start. As for the cost of CCI FR over ten years, it does not seem excessive if we compare it to the total expenses of CCIs for their web sites or to an institutional portal such as the APCE (French Agency for Business Creation).”
The other cloud hanging over the ACFCI’s 2008 budget is a prickly real-estate file. Two criticisms have been made. The first refers to the sale, in 2007, of the former Parisian premises (3 buildings) of the Assemblée des Chambres Françaises de Commerce, made to a company which found itself unable to honour its commitment. The 48 million euros missing from the expected sale have made their absence felt on the accounts, all the more as a loan had been contracted to purchase a new head office. Even if the law recognises the ACFCI’s position and records from various general assemblies prove that the sale had been subjected to the agreement and assessments of all, including the supervising Ministry, the financial impasse in which the ACFCI seems to have found itself worries part of the network and some are wondering whether the real-estate sale received all the attention it required. According to Jean-François Bernardin, the ACFCI is indisputably “a victim and not guilty in this case. The purchaser was faulty and I do not think that we are the only ones to suffer a setback from the financial crisis in recent times. It is true that we are out-of-pocket by a considerable sum, but this does not raise any short-term problem as we have a line of credit.”
What remains is the second criticism targeting renovations of the new ACFCI building. Initially estimated at 3 million euros in 2006, the sum today reaches somewhere between 11.6 and 13.4 million euros. An extra cost that in normal circumstances could have been financed by the attractive capital gains promised by the sale of the previous premises... The President of the Assembly, all the while admitting that the cost of renovations has not stopped rising since the start, explains that a series of restrictions further complicated the situation, notably regarding security issues. An assessment hiccup? “We are subject to the Code of Public Markets and we were above all in the heat of the real-estate surge. So between the time when experts gave their assessments and the time when the market response presented by companies was made available, a significant difference was notched. The expected capital gains from the sales of our previous head office will amply cover these extra investments,” specifies Jean-François Bernardin.
At the Paris Chamber of Commerce, Pierre Simon makes no comments on these issues to which he has never been opposed: “I am simply saying that on the level of our national Chamber organisation, we must take into account all external factors. The RGPP forces us to pool together and to cut down, and then the crisis will necessarily have repercussions on our income. Finally, the evolution of professional tax remains uncertain to this day. All these represent threats to our income. I firmly draw attention to the fact that despite good intentions, we cannot manage ourselves on a long-term basis while having rising staff expenses and network contributions.” This is merely a question of point of view according to the President of the ACFCI, for whom “everything depends on the network’s desire to finance its national head body or not. I can moreover point out that the vote for the executed budget obtained 113 votes for, 20 against, and 12 abstentions. So for a large majority of Presidents, the ACFCI budget is not a problem. Until the building purchase, we had excess funds, and when the former premises will be sold, we will have several tens of millions in capita gains. As for the renovations of the new building, I say that it is odd to confuse investment with everyday costs. And finally, may I remind you that the ACFCI accounts were approved by our supervising Ministry.”
Indeed, this opinion is shared by the Ministry supervising the CCIs, for whom the ACFCI’s debts are the result of a transitory situation. One member of the entourage of Hervé Novelli, Secretary of State in charge of Trade, considers that the prospects for reducing the debt in the short term are very good, giving cause to expect a happier outcome soon. Our contact also indicates that the complicated relationships between the various personalities in the world of Chambers were no doubt exaggerated when the Ministry transferred the draft law on Chamber reform to the State Council.

A reform that divides as it takes shape
All agree that even if the CCIP denies it, the main motivation for the alert on the ACFCI budget lies in the reform dispute. A dispute which, let’s recall, started off under the pressure placed by public powers upon Chambers of Commerce and Chambers of Trade – at the start, the position of the State was that the two networks should be merged. Since September 2008, the Presidents of CCIs and the ACFCI have been meeting and finally voted to adopt, with 98 voices for versus 59 against (including Paris) and 12 abstentions (including Greater Lille CCI) a project presented to the supervising Minister. A text which foresees the regionalisation of the network by the transformation of the current Regional Chambers (CRCIs) into politically-strong consolidated Regional Chambers (CCIRs), and the redefinition of the 126 CCIs into Territorial Chambers of Commerce (CCITs) which are to remain public establishments with elected representatives. The CCIRs are to become a resource centres for CCITs attached to their territories, notably by taking charge of budget distribution and voting or else human resources recruitment. Moreover, the ACFCI – which may take on a new name – will take on a more clearly defined role to commit the 22 CCIRs to national initiatives.
Today transcribed into a draft law by the Ministry of Economy, the text is in the hands of the State Council, and according to Hervé Novelli’s entourage, it should be presented at the end of July to a final ministerial council before being debated over by Parliament in Autumn 2009. While this option has not convinced 59 CCI Presidents and 12 others remain undecided, it is not for the same reason in all cases. Amongst the project’s opponents, the loss of the competence of local CCIs in favour of the Regional Chamber remains essential. Nevertheless, others, following the head of the Paris CCI, have claimed that the reform as proposed by the ACFCI does not go far enough in the Île-de-France region. Firstly, there was the fear of having to divide the CCIP into four, as it covers four departments today. But after a request made by the ACFCI to the Prime Minister, the draft law no longer imposes the establishment of one CCIT per department; in other words, Paris can choose to conserve its current borders or not. Public servants in charge of this file at the Ministry have confirmed this point to Commerce International.
Also confirmed, the possible merging of CCITs in the future as long as they respect the framework of the Regional Directive Schema on a regulatory level. Furthermore, the draft law remains neutral about the Chamber map. Confirmation depends obviously on Parliamentary debates and votes. But to go further in the Île-de-France, Pierre Simon would have liked to create an even stronger Île-de-France Chamber endowed with full powers, controlling the eight entities within its departments. “I appreciate that this schema is difficult to accept at this stage, for it is not possible to obtain a consensus in Île-de-France on this matter. But it is absolutely essential to keep this idea of a large regional Chamber on centre-stage. Let’s find for our region a homogenous organisation that does not curb in any way the creation of a large chamber by foreseeing future stages,” declares the CCIP President. For the moment, the reform project foresees that the CCIP will become a CCIT. Nevertheless, due to the qualified majorities in the CCIRs, Paris would have a blocking minority, notably for voting on the central budget, an element to which Pierre Simon intends to pay great attention.
 
All united against State budgeting measures
Whilst the reform has doubtless caused some damage in the Chamber landscape, to such an extent that the Syndicat National des Directeurs Généraux de CCI (National Syndicate of CCI General Managers) – created during reform discussions – accuses the ACFCI of “causing a permanent breakup of the network”, one aspect of the draft law arouses universal fear. It lies in the following paragraph: in Article L. 712-2, […] the words: “additional tax to the professional tax” have been replaced by the words: “resources allocated by finance law to CCIRs”. Lines that must be put in perspective with the reform of the professional tax, currently being prepared by the Ministry. Desired by French President Nicolas Sarkozy, a suppression or substantial reduction of the professional tax is liable to make ineffective any additional tax to the professional tax, an important source of revenue for Chambers of Commerce. Therefore, if a tax substitution is not found for the Chamber networks, the State may decide to provide CCIs with allocations, in other words, budget for the Chambers. The reference to resources allocated by finance law in the draft law on Chamber reform allows room for interpreting things in this sense.
In Pierre Simon’s opinion, “the risk of being included in the State budget is very real, and this would mean a total change in the nature of the Chamber institution. We are public establishments that serve economic development, managed by company heads. The presence of entrepreneurs is only justified as long as they are capable of defining priorities in terms of supporting companies and economic development. In a State budgeting context, public powers are free to tell us that we are financed on condition that we implement their economic choices. This is a major issue and I do not say this for the Chamber institution that may well disappear tomorrow, I say this for companies. Very clearly, if we are in a contract context with the State, we no longer have any role. It is up to us to make companies understand that it is in their interests for CCIs to maintain autonomous resources, otherwise we will no longer be able to develop what seems to us as useful for them.” This opinion is shared by Jean-François Bernardin who, for the same reasons, warns: “I will not stay in this network if the State is to take over budgeting. This is a matter of conceiving what CCIs are. If you are an element in the State budget, it is up to the State to fix your policy. And in the financial situation in France, we see that State budgeting should be kept to a minimum. State budgeting would transform the CCIs into decentralised State agencies. But it makes no sense to mobilise 5,000 company heads for this work , it would be better to appoint Sub-Prefects to manage these agencies.” The President adds that “there is a risk because for the moment, we have no technical solution for the reform of the professional tax, and because we believe that there are some people in the Ministry financial services for whom State budgeting would be a simpler solution.”
A simpler solution according to the Ministry of Budget. Apparently less convicted is the Ministry of Trade which, still according to our sources, considers it imperative to attach Chamber resources to local tax measures, a condition for the legitimacy of CCI governance. All the same, our contact in Hervé Novelli’s entourage recognises that as the Ministry of Trade is not the main force behind the reform of the professional tax, it will not be the source of any technical solution. State budgeting, which would undoubtedly mark the end of the Chambers of Commerce in France in the mid-term, is blocked by the issue of its difficult management. On condition that the State finds the necessary budget within its finances; and organising allocations for the 126 public establishments in relation to their territories seems unlikely.
Awaiting the final outcome, the CCI network and their members now have one issue on which it is in their interests to join forces. On this issue hinges the weight of companies in the governance of territorial economic development.