REVEALED: Why the Troika’s ‘Validation’ of the Greek PSI May Open Up a Can of Worms

By John Ward


Evidence of public sector bribery raises doubts as Venizelos accused of personal gain

Although the ways and means used to get to 85.8% overall Greek swap participation (0.8% over what ISDA wanted) and 95.7% including CAC enactions (0.7% over what Brussels wanted) are roughly 0.0001% relevant to the now inevitable death of the eurozone, I think it behoves all good bloggers and investigative hacks to raise some doubts about them. I believe this because all those who think 21st century commerce and politics need a major ethics transfusion always require some evidence to go on….if only to shatter the risible arguments put up by the opposing side.

First up, let’s do some forensics on how that magical 85.8% was achieved.Thursday March 9th at 9.18 am, I posted that participation was stalled at around 75%. It had been when I went to bed the night before, too. It still was at noon on Thursday, when Reuters claimed it was ‘slightly above 75%’. But eight hours later when the deal closed, another 10% had piled in.

As closure approaches, one sometimes does find a sudden rush. But by and large, if you’ve had a week to think about stuff – and two weeks before that poring over the paperwork – yet on closure day you still haven’t shown up, it means you’re holding out. This is why, in that morning post, I was fairly confidently expecting 75-80% participation. So were others I spoke to. So were most of the Telegraph staff.

There are three ways you can get that many in such a short time: blackmail, bribes, or ballot-stuffing. My mailbox from Friday contains allegations of all three.

According to the Berlin Finance Ministry source, ‘The Greeks – not anybody else – are responsible for issuing the percentage number of PSI acceptances‘. The German authorities claimed not to have an inside track on progress at all, but a Frankfurt source told me Wednesday evening that, at that stage, Berlin was ‘less than impressed’ with the 74/5% figure. The point is, the PSI count was a totally Athens-run operation.

I’m left wondering why there was no Troika presence at all. Given that thus far the Greeks had deceived them at almost every turn, one would’ve thought they’d be expecting some fiddling of the results. But as the Troikanauts were due to go over the accounts of the process yesterday (Friday) it may well be that they felt it unnecessary. It may also be, of course, that they wanted to distance themselves from it.

Either way, Friday passed without any Troika announcement saying they were satisfied with the results process. This is slightly different to what The Slog’s Berlin FinMin source suggested:

Greeks announce a number which the troika has a few hours to check and “validate” before a teleconference of finance ministers’

In fact, I understand officials will spend more time over the weekend on it, and reconvene Monday. So far, 35 bn euros of ‘immediate’ debt relief has been issued. But as yet, I haven’t seen any trumpeted validation.

Meanwhile, it seems that several Greek pension funds came on board during Thursday. And there were also some other irregularities. One thing you need to deliver participation (as with most things in life in these times) are lots and lots of lawyers and civil servants. It is not commonly understood that upwards of 105bn euros of the bonds swapped this week were owned by Greek public sector institutions and pension funds. How strange, then, that on March 7th itself, the Athens government’s Official Gazette announced backdated pay increases for certain folks. Drill down a bit – and here I’ve needed the help of Athenians, for which they get my eternal gratitude –  you find some rather suspiciously specific job functions:

‘The legal advisers appointed in independent authorities, the Capital Market Commission and the Accounting and Auditing Oversight Board (ELTE) will have an additional monthly bonus of 400 euros…’

Note the immediate ‘monthly bonus’. Further research reveals that

‘….the Court of Audit will start with a monthly salary of 1,906 euros. They will also be entitled to family benefits, Christmas, Easter and summer vacation bonuses, as well as, position related bonuses. The salary increases decided will be retroactive from Nov. 1, 2011…’

This second group are largely young gofers recently qualified. So a starting salary of 1,906 euros might not seem much to you and me, but if you’re 23 years old and hungry, that’s a lot of money.

The overall announcement – ‘The monthly salaries of legal advisers appointed in the public sector will gradually increase 10-15 per cent within the next three years’ – has been widely reported in the Greek media, and offers a stark contrast to, said Adesmeftos Typos, for example, “times when many households suffer from unemployment and Greece’s biggest social insurance fund IKA recently borrowed another 200 million euro in order to pay pensions”.

Even the normally quite staid Athens News allowed a female reported to add this acidic comment at the end of her column: ‘Romantic and stylish woman seeks marriage with legal adviser in the Greek public sector’.

All up, some 500 people working in the public sector have been exempted from the planned salary cuts, and instead awarded rather generous new pay and emolument contracts. Again, the official gazette describes them quite openly as being located ‘in the ministries of Finance and Administrative Reform [for] civil servants working next to deputy ministers and secretary generals’.

It’s quite possible of course that, like most brotherly, equality-seeking trade unionists when they see an opportunity, the beagles and Sir Humphreys blackmailed their bosses. Either way, it seems likely that they were paid in this extraordinary manner with one purpose in mind: looking the other way – and/or forcing through legal compliance.

The somewhat late decision of the Greek public sector pension funds to buy into the bond-swap has, I’m informed, wiped out 11,370 pensioners entirely. Not just reduced their stipend, but – as Tyler Durden put it at Zero Hedge – ‘vaporized it’. He too quotes a figure of ‘around 11,000′ – and who am I to argue with a bareknuckle pugilist? And when you’re 10% adrift on the participation count, what’s 11,000 citizens compared to the survival of this Great European Project of which we are all so fond, according to Herman van Rompuy?

Now, I am a man with a suspicious mind nurtured by a decade of dealing with EU institutions, pension providers, banks, property developers, local planning authorities, the police, and senior mandarins. Am I besmirching the good name of those who work for IKA (the State Social Security Board) when such is ill-deserved? Am I bigoted against Evangelos Venizelos because he is a toad with piggy eyes that are too close together? Possibly; but on the other hand, here’s a little recent history.

Last week a major fraud by IKA staff was uncovered. IKA officials had managed to siphon off a cool 6 million euros since 2003.  The IKA officers involved were certifying decisions to grant medical care of all kinds. In some cases and in cooperation with insurers, they issued fake hospitalisation orders, gave 20% of the illegal fund to the insurers, and kept the rest for themselves. And here’s the most worrying aspect: the whole thing was done by four (count them) employees. Imagine the graft going on if just 5% of employees in one small section of that Greek DSS were up to one scam or another.

Earlier this week, the German company Siemens agreed to pay 130 million euros compensation and create 700 new jobs in Greece in order to avoid a long-running bribery scandal going to Court. That’s a big price to pay, so the mind boggles at just how smelly the whole process must’ve been. Personally negotiating the compensation was – guess who? – Evangelos Venizelos. The bribery concerned bungs that Siemens gave to Greek politicians and senior civil servants over several decades to secure public contracts.

The ‘over several decades’ emphasis there is to enable us to take a trip down Bribery Lane with Finance Minister Venizelos. For a while, he played a major role in the Olympic Games construction projects. Later he was instrumental in taking procurement decisions for weaponry in his role as Defence Minister. The Games went badly over budget, and both in that portfolio and Defence, clouds regularly followed him around. As Culture Minister, he was directly involved in some of the Siemens projects; here too there were allegations of graft and corruption…now seen to have been true.

In order to protect himself and others against the growing evidence of wrongdoing, Venizelos – he being a Doctor of Law and Constitutional Expert – in 2006 wrote and and pushed through an amnesty law for Government MinistersOn the Responsibilities of Ministers, as a result of which all senior politicians are practically immune to public prosecution for cases of political corruption. It was described in a recent magazine article in Greece as ‘the most hated Law in our history’. Given that would include some pretty unpleasant ones passed by the Ottoman Empire in its time, that’s saying quite a lot.

One final twist. As a young lawyer, Evangelo Venizelos got his start in politics by defending former Prime Minister George Papandreou….against corruption charges. In a Slogpost last year, you may recall I covered some of the odder dealings of Papandreou and others in the removal of public funds to the account of a Swiss wealth management firm via the juxtaposition of CDSs. The Papandreou family is deeply implicated in the scam…..but thanks to his one-time saviour Venizelos, Papandreou can rest assured that he is immune from prosecution in any Greek court. This is a shame, as the total embezzled is an eye-watering 27 billion euros.

Greek readers of The Slog (who now number quite a few I’m glad to say) should not take these accusations as a slur on their people. The German press is fond of portraying the average Greek as bone idle, but the EU’s own stats give the lie to this: the average Greek worker puts in 1.2 hours per day more than his Teutonic counterpart. Rather, I am saying that the worst kind of corruption is endemic in Greek Government – it often involves, I must add, German suppliers – and that the pols have effectively indemnified themselves against any comeback on every front. No man in Greece is more up to his neck in that cover-up than Evangelo Venizelos.

So these are not people you’d want to leave alone with an unguarded ballot box, to do a vital multi-billion dollar audit crucial to the country’s survival. Yet that’s exactly what the Troika – so keen just three weeks ago to put its own Kommissars into Athens – did. How very odd that is coming from people whose most telling feature is an inability to stop ordering people around.

And finally my Greek friends, I must acquaint you with a very serious allegation. I have no evidence to support it, but if you do, please get in touch with me at I assure you that you can do so in confidence of complete anonymity.

I understand that, as the country’s leading consitutional expert, Evangelo Venizelos has taken personal control of the trickiest poison pill put into the Brussels Accord: that of changing the speed at which Constitutional changes can be enacted in order to satisfy the control freaks in Brussels, Washington and Berlin. (Under current Law, the changes demanded by the Troika are impossible in the time frame of the bailout).

It is alleged that Mr Venizelos has extracted an extremely high price from the EU, for his personal use, in order to be a dutiful servant and good European in getting the legislation changed. This may of course be entirely scurrilous and completely untrue. But anyone who has intelligence to offer me on that one, send it to the email address above.

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