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TFI Daily News

World News for World Changers

Jan 17

In Greece, Elites Are Starting to Feel the Pain

By Niki Kitsantonis, NY Times, Jan. 16, 2014

ATHENS—Since the country’s financial meltdown, Greeks have protested what many here criticize as the unfairness of the biting austerity measures that have raised taxes and trimmed salaries and benefits for average Greeks, while the elite escaped similar burdens or being held accountable for their part in creating the mess in the first place.

Suddenly, to the satisfaction of many here, that dynamic has begun to change. With new vigor, Greek prosecutors working independently of politicians—and sometimes in the face of passive resistance from them—are pursuing corruption cases against a widening pool of current and former high-ranking state officials and members of the business elite once deemed untouchable.

In country after country, officials have had difficulty deciding whether or how to prosecute those responsible for the conditions that led to the financial crisis that began in 2008 and the dark economic period that followed. Here in Greece, the country most afflicted by the collapse, prosecutors say that investigations, launched over the past year or so, are finally coming to fruition.

Analysts add that the prosecutors have more sway now than ever as Greeks smarting from more than three years of austerity demand punishment for those who ransacked state coffers and pushed Greece close to bankruptcy. The combination of the strong public desire for catharsis and a weak government has given the prosecutors far more room to maneuver than they have had in the recent past.

“For the first time, Greek justice is reaching really high up,” said Aristides Hatzis, a professor of legal theory at the University of Athens. “One reason is that the public desire for catharsis is strong, another is that the political system is weak and has too much to lose by trying to intervene. It risks being exposed.”

In the past week alone, prosecutors have reeled in several prominent businessmen, including Dimitris Kontominas, the owner of a television station and insurance company, as well as Angelos Filippidis, the former head of Hellenic Postbank, and several of his colleagues, over a loan scandal deemed to have cost the former state lender some 500 million euros, or $680 million.

On Wednesday, Mr. Kontominas, 75, was released from detention after posting a record €5 million in bail and was banned from leaving the country. The day before, the businessman had answered to charges of fraud and money laundering from an Athens hospital bed.

Mr. Filippidis, who prosecutors allege recklessly approved loans without guarantees, is in a Turkish jail awaiting extradition to Greece following his arrest at an Istanbul hotel last week.

Also in custody is the former managing director of the country’s Skaramangas shipyards, Sotiris Emmanouil, who according to prosecutors, pocketed €23 million in bribes to secure a submarine deal with the German firm Ferrostaal. At the same time, prosecutors are deepening an investigation into a new scandal involving kickbacks for state defense contracts that has implicated senior members of the Greek military for the first time.

Meanwhile, a former conservative minister Michalis Liapis, is being investigated amid reports that he used European Union subsidies to renovate his holiday home. Mr. Liapis, a cousin of a former prime minister, Costas Karamanlis„ received a suspended jail sentence this month for driving a car with fake license plates in an apparent attempt to skirt increased road taxes.

At the frontline of this unprecedented crackdown are the capital’s two top corruption prosecutors—Eleni Raikou, 52, and Popi Papandreou, 36. The latter, known as “the terminator” for her meticulous investigations, compiled the report that led to former Defense Minister Akis Tsochatzopoulos being convicted for money laundering last October, a landmark verdict in a country where top-ranking state officials are rarely prosecuted.

Judicial officials, who spoke on the condition of anonymity, said they have not come under political pressure.

“We are a parallel authority,” one said. “I don’t take orders from the prime minister.”

But they have also received little or no support for their efforts. Even as graft scandals multiply, no new employees have been hired, leaving four corruption prosecutors with a mounting caseload. In one office, telephones have a bar on international calls, obliging officials seeking access to suspects’ bank accounts to call from their cellphones, at their own expense.

Despite the practical difficulties, prosecutors appear determined and are pushing for a change to the law to allow those who return money stolen from the state to be spared prison time. “The point is to get the money back,” one official said.

The biggest challenge is recouping bribes pocketed by officials in exchange for securing defense contracts with foreign firms, she said.

Three deals for submarines, tanks and aircraft worth some €5 billion—all deemed to have been purchased at inflated prices—have come under the scrutiny of prosecutors, and another 10 deals are also slated to be investigated.

Greece had the highest defense expenditure, in relation to gross domestic product, in the European Union in 2009, before the debt crisis hit, amid enduring security concerns about its traditional rival, Turkey; that budget has since been halved to 1.7 percent of G.D.P. under pressure from Greece’s international creditors.

Asked to estimate the total pocketed in bribes from Greek defense deals over the past 20 years, the official shrugged. “I’ll retire and I still won’t know,” she said.

The judicial crackdown has been welcomed by ordinary Greeks who have seen their incomes cut by a third since the crisis hit.

“We drain our bank accounts to pay higher taxes, and they fill theirs by evading them and cheating the system,” said Aliki Theodorou, a 45-year-old teacher. “It’s about time someone else started paying.”