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The Comfort Blanket of Guarantees
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London Underground. Early 2000s. Two monster 30-year PPP contracts to upgrade and maintain nine lines. ​ The lenders? Lined up to pour in £2 billion. Why so confident? Because the government had guaranteed the loans. ​ The Problem When you know you’ll get your money back no matter what… …you stop asking hard questions. ​ No one pressed the consortium on delivery capacity. No one dug into whether the timelines were fantasy. No one cared if the contractors were in over their heads. ​ The guarantee made due diligence a nice-to-have. ​ The Crash? Metronet missed targets. Upgrades were late. Safety issues piled up. ​ 2007 — administration. The PPP died. The Underground went back to public hands. ​ The bill? Up to £410 million for the taxpayer. Did the lenders get their money back? Of course they did. ​ Lesson: When lenders hide under the government’s comfort blanket, they stop doing their job. And you, dear taxpayer, get to pay for their nap. ​ Do you think that this is surreal? You should check this. ​
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Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | C-Suite Executive | Mentor, Coach, Strategic Consultant | Real Estate Investor | 👇JOIN +2k readers 👇
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