A drama worthy of Kafka has been playing out between Germany and Greece, and it involves all the classic stuff of political scandal: Huge bribes, government and corporate corruption, debt, corrupt defense and construction contracts, and those nasty national stereotypes.
The bottom line: Germany, which has been delivering high-toned morality lectures to Greece about profligate spending and reckless indebtedness, has been the source of big fat bribes directly responsible for much of that debt and spending, a lot of it bankrolled by loans from German banks.
One of the major players has been Siemens AG, a fine old German company based in Munich with a record for bribing foreign governments that goes back at least a century.
But the IMF’s boss says it’s just a question of lazy Southern Europeans resenting those thrifty Nordic types [really, read on to the end].
The latest casualty, a high-flying socialist
Today was a bad day for former Defense Minister Akis Tsochatzopoulos, who was arrested at his Athenian mansion on charges of money laundering, allegedly stemming from dry-cleaning bribes from German corporateers.
The mordida was given in exchange for contracts for the Greek purchase of, among other things, submarines and Patriot missiles.
Some background from Greek Reporter:
Tsohatzopulos has been linked in numerous bribing, money laundering and tax evasion scandals. In early 2011, following an investigation by a specialized committee of the Hellenic Parliament, evidence emerged that Tsochatzopoulos was also involved in the Siemens scandal. Among others, the committee statement included: “Mr. Tsochatzopoulos is being checked in regards to his activities in the capacity of Minister for National Defence between 1996 and 2001. The Committee combines the orders for defence systems that occurred under his leadership with the confessions of the people managing the ‘black’ money given by Siemens as bribe for the MIM-104 Patriot systems”.
In April 2011 new evidence emerged that tied Tsochatzopoulos to yet another scandal in addition to the previous two, this time with the German company Ferrostaal in relation to the purchase of German submarines. According to the newspaper Real News, Tsochatzopoulos had received thanks from the German representatives for having been chosen for the purchase before a deal had been signed. Tsochatzopoulos threatened to go to courts over the newspaper’s front page, which he considered to be “insulting”. In mid April the parliamentary group of PASOK decided on the creation of committee to investigate the submarine scandal. Tsochatzopoulos accused the parliamentary group of acting in line with the opposition and of making wrong moves against him. A few days later he made a request to the Areios Pagos, Greece’s supreme court, to move faster with the procedure of investigating his assets. On 11 April 2011 the George Papandreou government decided to expel him from the party.
More from Athens News:
Television showed images of plainclothes police officers leading the 72-year-old away from his luxurious neoclassical mansion on Dionysiou Aeropagitou St, opposite the Acropolis.
His purchase of the mansion prompted the investigation.
Tsochatzopoulos, who has held a total of seven portfolios including defence between 1981 and 2004, faces felony charges in relation to property deals and possible tax violations, a court official said on condition of anonymity.
And then there’s the ex-Minister of Transportation
Tasos Mantelis, another capitalist in socialist party [PASOK] garb, admitted two years ago that he’d taken a hefty chunk of change from Siemens, as Chania reported [and, yeah, their translation is atrocious]:
Mantelis acknowledged in his testimony to the Selection Committee for Siemens, the German group that gave him 200 thousand euros for the election campaign. “All and all the light, as we said from the beginning, without any discrimination and exclusion,” commented cycles Maximos Mansion.
Preceding the filing of the entrepreneur and the best man, George rakes, who said the former minister said that the amount deposited to an account in Geneva from sponsorship of the German company.
George Tsougrani admitted that he Tasos Mantelis had asked him in 1998 to open an account in his name so that in him to be deposited donations of friends of the former minister for his own campaign. Indeed, on 2 November 1998 and February 8, 2000 filed by an unknown source 200. 000 250 000 marks respectively.
But according to witnesses, no money went to campaign Tassos Mantelis, but given the children, while a section of 163 800 was transferred a few months when they have broke the Siemens scandal on behalf of Alpha Bank in Greece.
More from a Google translation of an article in Ta Nea Online:
As members of the examining Mr. T. Mantelis argued that the money was never used by Siemens for his campaign expenses and had already gathered the required amount for his campaign. And when asked how he approached the people of the German company, said that one of the stranger who called in English said he was from the German company and they want to deposit the amount for an election expense. And when he asked him about what money was, the stranger replied that what is customary in these cases … Speaking to parliamentarians and the Inquiry argued that there is nothing more than an office and a home and prompted them to open all accounts!
Ta Nea also reports that the former minister has managed to accumulate, in addition to his home, at least 26 pieces of real estate totaling at least a million square meters, most of it in Megara.
That’s some kind of socialist!
Siemens gets off with a swat on the wrist
So what happened to Siemens, the drug dealer to the Greek “socialist” bribe junkies?
Here’s the latest from RT, posted Monday:
German electronics company Siemens has agreed to pay about 270 million euro to the Greek state in order to settle a legal action over bribing Greek officials.
Siemens promised to pay 80 million euros for debt repayments, 90 million will be spent on compensation of losses. Siemens will also invest about 100 million euro in academic and research programs.
Siemens has officially apologized to Greek people for corrupt practices used by the firm in the past.
In response, the Greek Government promised not to file any further claims against the company and allow it to bid for new orders.
The investigation by the Greek authorities in 2007-2011 revealed Siemens bribed officials during 1997-2002 to get telecoms as well security contracts for the 2004 Athens Olympics. The former Transport Minister, Tassos Mantelis admitted receiving the equivalent of 100,000 euros from Siemens in 1998.
But the company is already on the way to recouping some of their losses, as A. Papapostolo notes at Greek Reporter:
German engineering giant Siemens, which recently settled a bribery dispute with the Greek government, said Wednesday it has won a 41-million-euro contract for the Athens metro.
Siemens said in a statement it will supply signalling technology and components for a 16-kilometre (9.9-mile) extension of two subway lines in Athens.
The subway extension will help alleviate the traffic chaos in Athens, reducing the number of cars on the city’s streets and cutting carbon emissions, Siemens said.
The first section is scheduled to be opened in late 2013.
Around 70 percent of the project was being financed via EU funding, Siemens added.
So what’s a little graft between submarine pals?
Siemens isn’t the only German company that’s been under investigation for allegations of bribing Greek politicians.
Jörg Schmitt of Spiegel provided a detailed account of some of the suspicious deals in an 11 May 2010. This excerpt caught our eye:
The German defense industry has also apparently been just as active as Siemens in Greece. Athens spends between €3 billion and €4 billion on arms imports each year, according to estimates — an absurd amount for such a small country. German arms manufacturers have reaped the greatest benefits from these sales. Between 2004 and 2008 alone, they delivered roughly a third of Greece’s defense imports.
Munich’s state prosecutor is currently investigating whether everything was done by the book during the sale of four submarines. The order amounted to nearly €3 billion, and €2 billion had to be paid in advance – which is unusual for such deals.
Investigators became suspicious when they discovered a questionable payment to a supposed consultant for the deal. A few years ago, a Greek man reportedly contacted the Essen-based conglomerate Ferrostaal and demanded a double-digit million euro amount in connection with the submarine transaction. At the time, Ferrostaal had formed a consortium with ThyssenKrupp subsidiary HDW. When company executives in Essen refused to pay, the man threatened them with a lawsuit.
They eventually agreed to an out-of-court settlement brokered by a Zurich lawyer in 2006. Shortly thereafter, Ferrostaal transferred €11 million. What was the payment for? That is precisely what the Munich state prosecutor who is investigating the company’s top executives would now like to know. Ferrostaal CEO Matthias Mitscherlich, who was recently forced to leave the firm and is one of the defendants in the case, allegedly knew about the dubious payment.
Greek authorities have now also taken a keen interest in the submarine deal. Investigators in Athens are looking into suspicious payments that were reportedly made via Austria, the Caribbean, Liberia and Cyprus. The beneficiaries have yet to be identified.
The U-boat deal led to indictments against 29 Greeks last September on charges that include bribery, embezzlement, breach of duty and money-laundering.
In December, Ferrostaal agreed to pay a 129 million euro fine for their part in the deal.
Siemens, a company with a history of graft
Lest you think Siemens’ solicitous corruption has been limited to Greece, consider the following from a December piece by Edward Wyatt of the New York Times:
Shell companies, Swiss bank accounts, double-crossing middlemen and cash being smuggled across borders were all part of a decade-long bribery scheme aimed at helping Siemens, the German industrial giant, secure a $1 billion contract to produce national identity cards for Argentina, the Justice Department said Tuesday.
Eight former executives and contractors of Siemens were charged on Tuesday with criminal bribery in the case, the department said. According to the indictment, the men conspired to pay more than $100 million in bribes to “high-level Argentine officials” in violation of the Foreign Corrupt Practices Act. Among those indicted was Uriel Sharef, who from July 2000 to July 2007 was a Siemens managing board member, a position just below the rank of chief executive.
Roughly $60 million in bribes were paid in the case, a Justice Department official said.
The cases were filed in United States District Court in Manhattan. The Justice Department said that at least $25 million of the bribes were funneled through United States institutions, giving criminal authorities here jurisdiction. Siemens began issuing financial securities in the United States in 2001, giving the Securities and Exchange Commission jurisdiction over the $31 million in bribes that are said to have been paid after that time. Siemens has about 60,000 employees in the United States.
In 2008, Siemens and its Argentine subsidiary pleaded guilty to criminal violations of the corrupt practices act, agreeing to pay fines of $448.5 million and $500,000, respectively. At the same time, the companies paid an additional $1.15 billion to settle charges brought by the S.E.C. and the Office of the General Prosecutor in Munich.
Those fines were the largest ever levied for corporate corruption.
But at Siemens, bribery has been a way of doing business for at least a century.
As Forbes noted in an article last May:
An indication of Siemens’ international clout comes from reports following a 1914 bribery scandal in Japan. In a letter to the home office in Berlin, a Siemens executive in Tokyo downplayed the threat from a Japanese naval attaché in London who was asking embarrassing questions. If the attaché “continues to annoy us he must go; it will not be hard for us to manage it,” he wrote.
Blaming the victim?
IMF boss Christine Lagarde says it’s all the Greeks’ fault, as Keep Talking Greece reported Monday on her interview by 60 Minutes the day before:
Lagarde also noted that the divide exists between Northern Europeans — the Germans, the Dutch and the Finns — who are industrious, prosperous and frugal, and the Southern Europeans — the Greeks, the Portuguese and the Italians — who are much more relaxed about work, money, and paying their taxes.
Lagarde said it didn?t matter much until 2008, when the global financial crisis rolled in, separating the savers from the spenders.
According to the chief of the IMF “you know, it?s like when the tide goes away, you see those that do not have their swimming costume on. And that was the case in Europe”.
Relaxed about money?
But then, as German Finance Minister Wolfgang Schaeuble told 60 Minutes:
The ill will many Greeks feel toward Germany for imposing painful financial conditions on the massive loans the country made to them are just a normal response to a difficult situation. It’s natural for people suffering from their own mistakes to blame others.
So let’s see if we’ve got this right.
Those swimsuit-wearing Greeks are needlessly angry at the Germans. And never mind that some of those debts they incurred from German banks were used to pay German companies like Siemens and Ferrostaal, who had secured those contracts by paying bribes.
And, yeah, there’s plenty of corruption in Greek politics, and the socialist-in-name-only party has been the first hog to the trough.
But it’s been German hands dosing out the swill.
Is there any wonder that Greeks are angry both at the Germans and the corrupt political system German corporateers have done so much to enable?