What I now know
In 1994 the board of the University sent a confidential report to the university council about the financial problems of STP. In the report was mentioned that STP had created over the period 1990-1993 a cumulative negative result of fl 2.9 millions. As director of STP I had not received any detailed information how this result was determined. That was also not necessary because the journalist of Folia used this information to make his name as investigative journalist as I have written before and the marketing organization GFK used this information to send this information around to its potential clients to regain its monopoly in the consumer market. Since I could not improve the situation anymore I resigned as director of STP.
Recenly preparing stories about this period of my life, I asked the university about the documents on the basis of which the loss of 2.9 millions was based in a report of 1994. This report was mainly written to decide whether STP could continue or not, and if so in what way. There was only one document about the period of 1990-1993. This document in Dutch, made by the well-known accountancy firm KPMG, is presented below at the right side. The translation of it is presented at the left side.
Recenly preparing stories about this period of my life, I asked the university about the documents on the basis of which the loss of 2.9 millions was based in a report of 1994. This report was mainly written to decide whether STP could continue or not, and if so in what way. There was only one document about the period of 1990-1993. This document in Dutch, made by the well-known accountancy firm KPMG, is presented below at the right side. The translation of it is presented at the left side.
Some general explanation
The Dutch Science foundation provided 1.4 million guilders for the equipment needed for the telepanel (2000 computers, modems and limited number of monitors) under the condition that the university would add a same amount. The investment turned out to be a bit chaeper. In total fl. 2.065.165 was spend on buying the equipment and built up of the panel (see above "goods and services"). That means the revenues that were not spent on building up the panel were around fl 3 millions.
In the same report KPMG presents business plans for the next years of STP where they neither mentioned the costs for depreciation, costs for interest and costs for the director of STP who was a full professor at the university like I was. If that would have been done for the calculation over the first three years, the negative result would have been reduced to less than 600.000 guilders. That would not be so bad for a new entrepreneurial organization of a University.
I don´t understand how the same organization, KPMG, can make two overviews in such different ways. I also don´t understand how the board of the University can accept such a report with such differences in calculations and can draw conclusions on such a report even though the report mentioned that the data were unchecked
Below I want to say something about the different cost items mentioned.
The Dutch Science foundation provided 1.4 million guilders for the equipment needed for the telepanel (2000 computers, modems and limited number of monitors) under the condition that the university would add a same amount. The investment turned out to be a bit chaeper. In total fl. 2.065.165 was spend on buying the equipment and built up of the panel (see above "goods and services"). That means the revenues that were not spent on building up the panel were around fl 3 millions.
In the same report KPMG presents business plans for the next years of STP where they neither mentioned the costs for depreciation, costs for interest and costs for the director of STP who was a full professor at the university like I was. If that would have been done for the calculation over the first three years, the negative result would have been reduced to less than 600.000 guilders. That would not be so bad for a new entrepreneurial organization of a University.
I don´t understand how the same organization, KPMG, can make two overviews in such different ways. I also don´t understand how the board of the University can accept such a report with such differences in calculations and can draw conclusions on such a report even though the report mentioned that the data were unchecked
Below I want to say something about the different cost items mentioned.
Depreciation costs
I was most surprised about the fl 1.712.929 for depreciation of the equipment which was estimated at 20% per year. We expected to realize a permenent facility for survey research. Nobody ever told us that we should earn more than fl 500.000 per years to compensate for the depreciation of the hardware. On the other hand we had hired Rob Hoeijmakers to take care of the equipment.
Once in 1992 he proudly showed me his perfect administration of all available computers, modems and monitors. He knew that 30 computers were lost due to earlier administrative problems. He repaired all equipment that came back with problems. There were only very few computers and modems (around 10) which he could not repair. Thanks to this effort very little depreciation occurred. If we make an estimate we can say that STP lost only 2% of its hardware in 3 years. So a depreciation over 3 years of fl 56.000 would have been a more realistic number. This makes a difference of fl 1.656.929.
I was most surprised about the fl 1.712.929 for depreciation of the equipment which was estimated at 20% per year. We expected to realize a permenent facility for survey research. Nobody ever told us that we should earn more than fl 500.000 per years to compensate for the depreciation of the hardware. On the other hand we had hired Rob Hoeijmakers to take care of the equipment.
Once in 1992 he proudly showed me his perfect administration of all available computers, modems and monitors. He knew that 30 computers were lost due to earlier administrative problems. He repaired all equipment that came back with problems. There were only very few computers and modems (around 10) which he could not repair. Thanks to this effort very little depreciation occurred. If we make an estimate we can say that STP lost only 2% of its hardware in 3 years. So a depreciation over 3 years of fl 56.000 would have been a more realistic number. This makes a difference of fl 1.656.929.
Extra costs declared by the faculty /university
The Dutch Science Foundation provided fl 1.400.000 as a subsidy for the hardware for the panel but required that the University would do the same. The University did this indeed but part of that budget was provided as a loan which had to be paid back and for which STP had to pay interest. Because of this arrangements and interests over temporary negative budgets of the Telepanel, the University claimed fl 470.131 interest. This seems to me a very unjustified claim.
Finally the University also claimed costs for administrative and other facilities which were provided to STP for an amount of fl 178.142. We had our own administration but I have asked many times for their financial overviews which I never got. Nevertheless I suppose that they did their best and I don´t want to complain about these costs.
The Dutch Science Foundation provided fl 1.400.000 as a subsidy for the hardware for the panel but required that the University would do the same. The University did this indeed but part of that budget was provided as a loan which had to be paid back and for which STP had to pay interest. Because of this arrangements and interests over temporary negative budgets of the Telepanel, the University claimed fl 470.131 interest. This seems to me a very unjustified claim.
Finally the University also claimed costs for administrative and other facilities which were provided to STP for an amount of fl 178.142. We had our own administration but I have asked many times for their financial overviews which I never got. Nevertheless I suppose that they did their best and I don´t want to complain about these costs.
Personnel costs for telepanel research
Given that the revenues from the commercial research was around 2.3 million the labor costs were much too high being around 3.6 million. KPMG has suggested in its report that for the planning of the work in 1994 and later for just running the panel around fl 430.000 per year was needed. In the earlier period we used also students to build up the panel and to keep contact with the participants. That costed around fl 100.000. Over the period of 3,5 years this means that the labor costs were 1.855.000.
The three big studies we did in these years were the EUROSTAT project on income and expenditures followed by consumer research and the study for the trade unions. Such complex studies can´t be done by the people who manage the panel. We needed academic people for these studies which cost at that time fl 70.000 per year. Two academic researchers did these tasks which costed an extra fl 560.000 in 4 years. In total this would lead to a total costs of fl 2.425.000. That is however 1.1 million below the real personnel costs. So the question is what is the reason for the difference? There were two reasons for this difference.
Given that the revenues from the commercial research was around 2.3 million the labor costs were much too high being around 3.6 million. KPMG has suggested in its report that for the planning of the work in 1994 and later for just running the panel around fl 430.000 per year was needed. In the earlier period we used also students to build up the panel and to keep contact with the participants. That costed around fl 100.000. Over the period of 3,5 years this means that the labor costs were 1.855.000.
The three big studies we did in these years were the EUROSTAT project on income and expenditures followed by consumer research and the study for the trade unions. Such complex studies can´t be done by the people who manage the panel. We needed academic people for these studies which cost at that time fl 70.000 per year. Two academic researchers did these tasks which costed an extra fl 560.000 in 4 years. In total this would lead to a total costs of fl 2.425.000. That is however 1.1 million below the real personnel costs. So the question is what is the reason for the difference? There were two reasons for this difference.
Unjustified personnel costs
In the KPMG report about 1994 I saw that the personnel costs for software expert, who stopped working after a few month, remained on the pay role of the Telepanel which was fl 27.000 a year.
Besides, I saw that fl 40.000 per year were booked as costs for my work as research manager while this was not done in the new budget plans. In fact I had a full time position at the university with respect to teaching and research. I was still teaching and my research was done with my PhD students using the telepanel. In total this increased the costs for the telepanel was fl 268.000
Extra costs for scientific research
The subsidy was obtained from the Dutch Science Foundation in order to realize scientific research, especially MTMM experiments. For this research Annette Scherpenzeel got a research position during these years. This created an extra costs of fl 280.000 over 4 years. This research was indeed done because the data were collected in the weeks that there was no commercial research.
Time budget research was another scientific project that was done in these years. Nelly Kalfs developed a new procedure for the registration of activities of people. The idea was that this research could also be used for commercial purposes because different organizations occasionally were collecting these data.
Unfortunately these organizations at that time were not interested in this research and we did not see that we could sell also parts as separate studies. This research costed also fl280.000 over a period of 4 years. The personnel costs for these scientific research projects were fl 560.000.
In the KPMG report about 1994 I saw that the personnel costs for software expert, who stopped working after a few month, remained on the pay role of the Telepanel which was fl 27.000 a year.
Besides, I saw that fl 40.000 per year were booked as costs for my work as research manager while this was not done in the new budget plans. In fact I had a full time position at the university with respect to teaching and research. I was still teaching and my research was done with my PhD students using the telepanel. In total this increased the costs for the telepanel was fl 268.000
Extra costs for scientific research
The subsidy was obtained from the Dutch Science Foundation in order to realize scientific research, especially MTMM experiments. For this research Annette Scherpenzeel got a research position during these years. This created an extra costs of fl 280.000 over 4 years. This research was indeed done because the data were collected in the weeks that there was no commercial research.
Time budget research was another scientific project that was done in these years. Nelly Kalfs developed a new procedure for the registration of activities of people. The idea was that this research could also be used for commercial purposes because different organizations occasionally were collecting these data.
Unfortunately these organizations at that time were not interested in this research and we did not see that we could sell also parts as separate studies. This research costed also fl280.000 over a period of 4 years. The personnel costs for these scientific research projects were fl 560.000.
Scientific results
The scientific results of the telepanel were of course not included in the KPMG calculations. However they were also a result of the telepanel. These results consisted of data sets and dissertations that were realized directly or indirectly on the basis of the work of the telepanel. Directly on the basis of the telepanel research 6 doctoral theses have been realized. Besides, 3 dissertations were realized by PhD students during the same period who also profited from the information that was collected via the telepanel.
At some point in time, I was informed that the University got fl 60.000 from the government for each PhD that was realized. This would mean that the University received from the Government fl 540.000 for the dissertations that were realized in the period of the telepanel or even explicitly by the telepanel.
The data collected for the MTMM research are still a very valuable part of a database of MTMM experiments which are the basis for the program SQP 2.1 which is a well-recognized program for the evaluation of the quality of questions. The value of this database is very difficult to evaluate.
The scientific results of the telepanel were of course not included in the KPMG calculations. However they were also a result of the telepanel. These results consisted of data sets and dissertations that were realized directly or indirectly on the basis of the work of the telepanel. Directly on the basis of the telepanel research 6 doctoral theses have been realized. Besides, 3 dissertations were realized by PhD students during the same period who also profited from the information that was collected via the telepanel.
At some point in time, I was informed that the University got fl 60.000 from the government for each PhD that was realized. This would mean that the University received from the Government fl 540.000 for the dissertations that were realized in the period of the telepanel or even explicitly by the telepanel.
The data collected for the MTMM research are still a very valuable part of a database of MTMM experiments which are the basis for the program SQP 2.1 which is a well-recognized program for the evaluation of the quality of questions. The value of this database is very difficult to evaluate.
General conclusion
By providing this “unchecked overview of the cumulative result of STP over the period 1990-1993” the University itself has created a difficult situation for STP. Given my analysis above the negative result, specified on fl 2.903.132, would have been much lower if one would have realized that
- the depreciation was fl 1.656.929 too high
- the personnel costs were incorrect by fl 268.000
- the required interest of fl 477.031 was not in agreement with the contract with the Dutch
Science Foundation
These three amounts make a difference of fl 2.401.960 which means that the negative result would have been approximately fl 500.000 instead of 2.9 million.
If this result would have been published there would have been no reason for papers in Folia and GFK would have had no basis for its campaign against STP.
If we take into account that the aim of the panel was to facilitate scientific research then one could even argue that this loss of fl 500.000 was the price that had to be paid for the scientific results that followed directly and indirectly from this activity. One could even express this result in money which would be fl 540.000. In that case there would have been no negative result at all.
This being said I think that I have to admit that we were too optimistic about the commercial result of the telepanel. We expected that also the salaries of the scientific researchers could be paid from the commercial research. This clearly was too optimistic an idea, given that at that time the salary of a researcher was around 70.000 a year.
The data collection for the scientific studies was not the problem and has been very successful. The personnel costs for scientific researchers should also have been covered by a subsidy for scientific research as is common in scientific laboratories in the beta sciences.