Latest banking scandal shakes Greece

30/01/2014

The former chairman of Hellenic Postbank and other executives and businessmen are among 29 people charged in a loan scheme worth about 500 million euros.

By Andy Dabilis for Southeast European Times in Athens -- 30/01/14

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Former Hellenic Postbank chairman Angelos Filippidis was arrested in an on-going unsecured loans and corruption probe. [AFP]

The Greek government said it continues to crack down on corruption by arresting financial officers, businessmen and their associates in the latest scandal involving a Greek bank that provided hundreds of millions of euros in unsecured loans.

The government arrested 29 people after discovering that the failed state-owned Hellenic Postbank -- also known as TT Bank -- gave about 500 million euros in loans to prominent businessmen and companies without requiring collateral, much of the money ending up in the businessmen's personal bank accounts.

TT Bank's former chairman Angelos Filippidis and the bank's former vice chairman Marios Varotsis were among those arrested.

Police also arrested Kyriakos Griveas and his wife Anastasia Vatsika in Manchester, England; authorities said they received 19.8 million euros in loans they did not repay. They were freed on 61,000 euros bail each.

A Bank of Greece report revealed the bad loan practices, saying TT Bank concocted a scheme to hand out loans without collateral or guarantees even to heavily indebted companies, while Griveas and Vatsika pocketed the proceeds.

"The crackdown shows once again the government's commitment to continue the fight against any kind of corruption," Antonis Klapsis, head of research at the Constantinos Karamanlis Institute for Democracy in Athens, told SETimes.

Others, however, said the government has yet to show it will prosecute politicians that enabled TT Bank's scheme.

"The government is trying to bring tougher sanctions and clean up corruption, but where is the effort to bring those politically responsible to justice? Where is the money?" George Tzogopoulos, a research fellow at the Hellenic Foundation for European & Foreign Policy in Athens, told SETimes.

The scandal broke at a bad time for the Greek banking sector, which relies on a 50 billion euro recapitalisation the government took from international bailout funds to restore financial integrity.

The previous government imposed 74 percent losses on investors and bondholders in 2011, and austerity measures brought about nearly 40 percent in non-performing loans in the banking sector.

TT Bank was rescued by the government last year.

"Some banks may need additional funds after a stress test is completed by analysts," said George Provopoulos, governor of the Bank of Greece.

As a sign of the on-going tension over the role of banks in Greece's economic crisis, Provopoulos received bullets in an envelope from an unknown sender just as the probe into TT Bank's case widened.

Investigators said they found 14 million euros in various secret foreign bank accounts in Filippidis' name.

They said the probe uncovered a series of bribes and kickbacks, and at least three prominent businessmen that benefited from the scheme are under arrest.

Police asked Swiss authorities to open Filippidis' accounts at HSBC Private Bank, Banque Privee and other institutions as they seek to examine the origin of his wealth.

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Authorities said they are expanding the probe to track money flows in Montenegro as the country has shared information on one suspect involved that played a key role in TT Bank's scheme.

Klapsis reiterated the widening probe in the TT Bank case as well as arrests in other cases, particularly in the defence ministry, are evidence Greece is working hard to clean up its reputation as the most corrupt country in the EU and one allowing the wealthy and the politically connected to escape with impunity.

"If it was only one case then one might have doubts about the government's intentions, but after a series of blows against corruption I do not think there is room for doubts," he said.

What can the Greek authorities do to prevent banks from giving bad loans? Share your opinion in the comments space.

This content was commissioned for SETimes.com.
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