Eye-Popping Greek Corruption: And the Collusion between Athens Officials and EU Interests

By Zoakos, Criton M. | The International Economy, Spring 2010 | Go to article overview

Eye-Popping Greek Corruption: And the Collusion between Athens Officials and EU Interests


Zoakos, Criton M., The International Economy


As overburdened German taxpayers become indignant over having to pay for the consequences of corruption in Greece, it behooves them to know that German prosecutors are investigating at least two German companies--Siemens and Ferrostaal (a subsidiary of MAN AG)--for promoting that Greek corruption.

In Greece itself, a parliamentary commission of inquiry (the Siemens Commission) is going through the motions of investigating which Greek politicians have been bribed by Siemens. It is an exercise in futility because existing Greek law (N. 2509/1997 as revised in 2001) makes it practically impossible to prosecute ministers and even members of parliament for crimes committed while in office.

This peculiar law, which has drawn the ire of the European Court of Human Rights, of Transparency International, and others, was promulgated in 1997 by the Socialist Party (PASOK). It was adopted after a prior conservative government had prosecuted for corruption four Socialist ministers and a Socialist prime minister (Andreas Papandreou) over the 1989-92 period.

Those found guilty during these prosecutions were promptly given parliamentary pardon as soon as the Socialists regained majority in 1993. Taking no chances, the Socialists proceeded to pass the law that virtually immunizes corruption and which remains in force to date.

Corruption in Greece became endemic after 1981, the year when Greece joined the European Community (later European Union) and elected its first-ever Socialist government. Between then and now, scores of major corruption scandals (some count over 150) broke out in the Greek press. Only a tiny handful, however, perhaps numbering no more than five, were tried in the courts. Of these, three were terminated by parliamentary vote, one resulted in a not guilty verdict, and the fifth in a guilty verdict that triggered an almost instantaneous parliamentary pardon.

Most corruption scandals throughout this era involved collusion between Greek officials and European Union interests. The most notorious of these are of course the Siemens and Ferrostaal scandals that have attracted the interest of German law, and both involve bribery of Greek officials for the purpose of securing contracts by German companies with the Greek government.

The Siemens case entails a large number of briberies going back twenty-four years. In the Ferrostaal case, the briberies helped lubricate the sale of defective submarines to the Greek Navy.

Politically, the most interesting bribery case is that of the general manager of the Public Power Corporation in 1986. The gentleman in question was accused of receiving 500 million drachmas (equivalent of about 350,000 [euro] [ECU] at the time) from an Italian construction company contracted to build a hydroelectric dam. When then-Prime Minister Andreas Papandreou (father of the current Prime Minister) was informed, he made a joke of it saying that he had no problem if an official "makes a little gift to himself," provided that the amounts not be outrageously high.

This phrase--"makes a little gift to himself"--became the official green light for generalized corruption among government officials at all levels in the 1980s. That was the decade when the culture of corruption was institutionalized in Greece. And it all started with Greece's membership in the European Community in 1981.

With EC membership, Greece became entitled to European Regional Integration funds--the so-called Delors Package I--and, more importantly, to new sources of borrowing from abroad. Prior to 1981, Greece's public debt was 8.5 billion [euro] or 22.8 percent of GDP; ten years after entry to the EC it was 48 billion [euro] or 71 percent of GDR

The corruption of that decade was all about politicians distributing these newfound grants and loans to favorite beneficiaries, both individuals and companies. Much of the Delors Package I money was spent in the form of subsidies to farmers and to state-owned enterprises for the express purpose of building a stable political constituency that backed European integration. …

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