Corruption in Greece (I)

Contingency Plan

The Greek government does not exclude new corruption indictments targeting German companies, according to recent reports on a contingency plan Athens has prepared for the event of state bankruptcy. The plan includes investigations targeting German companies such as Siemens, Lidl or Hochtief.[1] For years, German companies' corruption in Greece has been notorious, even though only some cases have ended in trials, sentencing and out-of-court settlements. The plan to initiate new legal proceedings is based on the hopes that German companies will pay at least selective reparations for the billions in damages caused in Greece by alleged bribery.

At the Expense of Taxpayers

The case involving Siemens is probably the largest among Greece's cases of corruption by German companies. It has been discovered that since the late 1990s, Siemens has used bribes to secure lucrative contracts, including the digitalization of the Greek telephone network and the establishment of a monitoring system for the Athens Olympics in 2004. This monitoring system was aimed at testing a new type of "anti-terror" technology. Even though it was not operative on time, it flushed considerable profits into the company's coffers.[2] The telecommunication contracts had been particularly attractive because Greece did not ask to renegotiate prices, although the prices in this sector were halved every three to four years, experts estimated. Therefore the telecommunication company OTE had at least €57.4 million in damages.[3] As in similar cases, Greek taxpayers had to pay for the bribes. "Whoever uses bribes for government contracts, can add a couple million more to his margin," explained an investigator of these procedures. "It's at the expense of taxpayers, who have to pay for the excessive prices."[4] In 2010, a 2,000-page report by a Greek parliamentary investigation committee estimated the damages caused to the Greek population by Siemens to be at €2 billion.[5]

Got Off Cheap

With an out-of-court settlement at the beginning of March 2012, Siemens was able to avoid the Greek government's damage suit, which was looming once the investigation committee's report was concluded in early 2011. According to reports, the case was handled at the highest levels of the governments in Athens and Berlin, at a time, when Greece was under enormous German and EU pressure because of its debt crisis. Siemens could be satisfied with the results. The €2 billion were no longer a theme, and both parties agreed to a €270 million indemnity to Athens. To give an idea of the meager significance of this indemnity payment for this German company, in the second quarter of 2015 alone, Siemens raked in €1.4 billion after taxes - more than five times what it had paid Athens. With the indemnity payments, Siemens also assumed an obligation to pay €170 million for projects not directly within the company's business sector. The Munich-based company wrote up €80 million in outstanding debts to Greece and pledged €90 million to the Greek government for educational and anti-corruption programs. Siemens also promised to invest €100 million in the expansion of its business venture in Greece.[6]

Taken to Court in Munich

The case of Michalis Christoforakos is a good example of the pragmatic German approach to individual Siemens manager's corruption offenses in Greece, which had landed the company in court even before the out-of-court settlement. Christoforakos had been the manager of the Siemens Greek subsidiary until 2007 - making headlines in the spring of 2009, when he fled to Munich - where Siemens has its headquarters - to avoid prosecution in Athens. While the Greek courts were applying for Christoforakos to be extradited, the Bavarian authorities, themselves, pressed charges against him. At the beginning of March 2010, he was ultimately given a ten month suspended sentence, while a second case was closed upon payment of €350,000.[7] The rulings in Munich were a 'lucky break' for the former Siemens manager, who could have expected an appreciably higher sentence in an Athens courtroom. Christoforakos had also reached an out-of-court settlement with Siemens for 1.2 million Euros. German authorities, claiming that the corruption charges have surpassed the German statute of limitations, are still refusing his extradition to Greece.

"The Greeks only Want Money"

In Greece, anger is still livid over how cheap Siemens and its manager could escape the consequences of the affair. Critics, for example, point out that the German company - unlike the stipulations of the 2012 out-of-court settlement - had not invested the 100 million Euros in Greece, to help stimulate the economy of that country, but rather used the money for the recapitalization of its existing Greek companies. Notwithstanding, in November 2014, the prosecutor's office in Athens brought indictments on 64 individuals, including numerous managers of Siemens, such as the former board director Heinrich von Pierer. They are being charged with bribery, and money laundering in transactions with the Greek OTE telecomunication company. Siemens circles have reacted with indignation. "That is illegitimate," complained a Siemens defense counsel. "The Greeks only want money."[8] As a matter of fact, not the Greeks, but the managers of Siemens are the ones, who only wanted money, when they used bribes to obtain the lucrative double-digit million Euro contracts in Greece.

New Investigation

In late Mai, the Greek parliament had also launched a new investigation of the Siemens scandal. Called as a witness, the head of the previous Siemens investigation committee, Syfis Valyrakis, declared that there is scope for probing the affair more deeply than the committee managed, which he had presided over in 2010. Siemens should be pressured to reveal more details about the bribes it allegedly paid to politicians and public officials to facilitate the solution of corruption cases that have come under international criticism. Valyrakis also suggested that the government should review the out-of-court settlement of 2012.[9] The last word on the German corruption in Greece has obviously not yet been spoken, as new inquiries into other German companies indicate. german-foreign-policy.com will soon report.

[1] Griechenland soll Prozesse gegen deutsche Firmen geplant haben. www.spiegel.de 01.08.2015.
[2] See Millions for Billions.
[3] Effi Lambropoulou: The appearances and realities of corruption in Greece: the cases of MAYO and Siemens AG. In: Gregg Barak (Hg.): The Routledge International Handbook of the Crimes of the Powerful. New York 2015. S. 427-440.
[4] Jörg Schmitt: Ein paar Millionen draufschlagen. www.spiegel.de 10.05.2010.
[5] Alkman Granitsas: Greece Targets Siemens Over Bribes Scandal. www.wsj.com 25.01.2011.
[6] Siemens erlässt Griechen 80 Millionen Euro Schulden. www.spiegel.de 08.03.2012.
[7] Tatjana Meier: Verfahren gegen Ex-Siemens-Manager eingestellt. www.focus.de 03.03.2010.
[8] Klaus Ott, Tasos Telloglou: Griechische Justiz plant Prozess gegen Siemens-Manager. www.sueddeutsche.de 11.03.2015.
[9] Parliament starts fresh inquiry into Siemens scandal. www.ekathimerini.com 26.05.2015.