I don’t know if you remember or followed the Bio-on saga, but to make a long story short: a US-based short selling company run by an Italian national published a report on Bio-on claiming it was a fraud. The value of the Bio-on shares collapsed overnight and Bio-on was eventually placed under administration without any fair trial by the Italian justice.
Two senior Italian journalists just published a video and book over the Bio-on saga. The journalists have over 40 years of experience. They did a detailed investigation and revealed some intriguing facts.
You can watch the Italian video here, and under the video you will find some takeaways.
Info related to the video
The video is in Italian but you can have youtube generate english subtitling. How do you do it?
- Click on ‘CC’ to turn on the closed captions
- Click on ‘settings’
- Click on subtitles – and choose auto-translate to English
Play the video
A few takeaways
- Parmalat
The accusations said that Bio-on was a remake of Parmalat. The journalist says that is a psychological technique to associate Bio-on with a fraudulent (Parmalat) company to destroy Bio-on’s reputation.
- Empty boxes
The accusations said that Bio-on’s daughter companies and joint ventures were empty boxes. The journalist says these were genuine legal entities with their own statues.
- Overvalued
The accusations said that the stock market value of Bio-on was overvalued. The journalist says that startups are not valued on their current earnings but on their future potential earnings. This is common knowledge in business.
- Phony business model
The accusations said that Bio-on had a phony business model and that the joint-ventures were some kind of smokescreen. That Bio-on used its own money to buy its own products through its daughter companies and joint-ventures. That the Bio-on daughter companies had the same addresses and the same administrators as the Bio-on mother company; and that the daughter companies and JVs had no production unit or capacity on their own.
The journalist says that Bio-on’s business model was to license its technology and get royalties. Packaging is not the only PHA application and it can be used for other applications such as cosmetics, furniture, pharmaceutical, electronics, fashion, etc. The Bio-on joint ventures were created with strategic partners to market all different kinds of applications, not just packaging.
My opinion: I’m not a corporate finance professional and I may be missing something but I think it’s normal that the mother company transfers money to the startups otherwise the startups have no cash or assets to conduct business. The mother company owns the startup; it’s a bit like parents giving pocket money to their children. You also need to set up the corporate structure and organise the financial stream between the mother company and the joint ventures. As there are many PHA applications possible, and because Bio-on went for a ‘licensing’ business model, which I think was the wisest thing to do, the mother company needs to sell its licenses to its joint ventures if they want to see some cash and profits in the future. Eventually, you may want to set up daughter companies per application so that you can sell them more easily afterwards.
- No production, no clients
The accusations said that Bio-on wasn’t producing anything and never sold any products.
The journalist says that Bio-on and its daughter companies were startups and that it takes time to build the factory, start production and get things up and running properly. The journalist says that agreements were made and written down with suppliers of organic feedstock to produce PHA.
My opinion: after the construction of the TotalEnergies Corbion plant in Thailand, the bioplastic production was delayed by at least six months because they needed time to tweak the machinery to have it working properly. When you buy a mobile phone or pc and use it for the first time, you also need to set the settings correctly and connect your device with external devices (wifi, printer, …). I can imagine that the amounts of settings with an innovative factory is something else than tweaking the settings of a new mobile phone produced in millions of units.
- Novamont Connections
The accusation claim to have used a renown accounting professional named ‘Maurizio Salom’ to verify whether Bio-on was respecting Italian accounting laws because they were not sure that US accounting laws were identical to Italian laws. According to the accuser, Mr. Maurizio Salom confirmed his suspicions.
The journalist says that Mr. Maurizio Salom is the sole director of a company called ‘IMT srl’ who holds 0.12 % of a company called ‘Melville srl’ who controls the company ‘MaterBi spa’; and IMT, Melville and Mater Bi are all registered at the same address as another company called ‘Salom Ricciardi Tedeschi’, the name of the president of Mater Bi is Mr. Tedeschi Giovanni who is also domiciled at that same address. Mater Bi is the company that holds and control Novamont (before the recent acquisition by Versalis) and holds the commercial name of Novamont’s main product …. ‘Mater Bi’ which is the brand name for compostable plastics bags. Mr Salom is also member and president of Novamont’s board of auditors with his partner … Guido Ricciardi.
The journalist says that Novamont and Bio-on have competing bioplastics technologies; Novamont Mater-Bi (corn starch) is a compostable plastic; Bio-on (PHA) is a biodegradable plastics and both are thus main competitors when it comes to packaging applications (plastic bags).
Note – Italian chemical company ‘Versalis’ (owned by Italian oil company ‘ENI’) was at that time one of the major shareholders of Novamont, and recently Versalis (ENI) acquired the totality of Novamont and they’re already looking to sell it according to the rumours. And ENI is an extremely powerful company in Italy.
Personal Remarks
I stopped watching at 30 minutes… because it’s Monday, and I have other things to do and it seems as if I have lost half a day.
But let me tell you a couple of things.
To be honest with you…. after following and publishing 10 years of bioplastics news, I came to the conclusion that the bioplastics industry is a fish tank…. and not just any kind of fish ….. sharks….. and I’m not talking about vegan sharks.
This Italian journalist accuses Novamont people (directors, auditors and shareholders) to be the mastermind behind a conspiracy to eliminate Bio-on.
But listen to this …. a UK based bioplastics startup called “Symphony Environmental” claimed that Novamont was also the mastermind behind a conspiracy and cabal to have their ‘oxo bioplastics’ technology banned at EU level (more on this: The Anti Oxo History). In this anti-OXO saga, an Italian politician and MEP named Vittorio Prodi played a central role. Vittorio Prodi was the rapporteur of the ‘European Parliament Committee’ report that pushed OXO bioplastics off the cliff …. and Vittorio coincidentally happened to be the brother of ex European Commission president Romano Prodi).
What a funny coincidence; isn’t it?
Just for the fun of it I asked myself the question: is there a connection between ENI (owner of Novamont) and Romano Prodi? Not that I know of … Well, however now that you mention this …. Prodi was offered the job of President of the South Stream pipeline (owned by Russian Gazprom and ….. Italian ENI) in 2008. (More)
Last but not least
To my knowledge there’s no connection between ‘Bio-on’ and ‘Symphony Environmental’, with one exception being that both Marco Astorri (CEO of Bio-on, PHA) and Michael Stephen (Symphony Environmental, OXO) have or had a column on Bioplastics News but I need to add that both got their columns after their problems started. In fact, this is why I chose them as columnists because, I tend to have some empathy and sympathy for the outcasts, the underdogs, the people who are victim of injustices … this must be a by-product of my British education and upbringing.
I like to go biblical on this: who would Jesus help? The rich and powerful or the outcasts and victims?
And what about you? Who would you help? Are you part of a system that does injustices?
Giving a platform to Michael Stephen and Marco Astorri as columnists came at a price. I’m being boycotted by European Bioplastics association and recently also by the CBI-JU since they have nominated an …. Italian national as director.
But hé, tides tend to turn and Karma is around the corner and who knows: people may get fired to clean up the bioplastics stage.
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