EU: "Corruption? What Corruption?"

Source: NewEurope
April 3 2021
By Mihai-Razvan Corman

In response to the unprecedented social and economic crisis triggered by COVID-19, the EU agreed on a historic recovery plan worth €1.8 trillion in November 2020. Member States that have been experiencing serious corruption received considerable financial assistance. Given the huge amounts of money involved, the plurality of funding sources and complex allocation criteria, the rescue package is prone to increased risks of corruption and fraud.

The Rule of Law Reports and the budget conditionality – the EU’s most recent response to corruption backsliding – are unfit to prevent further corruption backsliding in Europe.

The EU’s once comprehensive approach towards corruption has long fallen into oblivion. In 2014, the European Commission published the Anti-Corruption Report – the first EU-wide, uniform monitoring mechanism against corruption. In an unprecedented manner, the document addressed corruption as a cross-cutting issue and recommended country-specific actions for follow-up.

The Commission intended to use these periodic snapshots as a starting ground for enhanced policy actions against corruption. However, after having publicly committed to publishing the nearly finished follow-up report, in a widely criticised letter to the European Parliament the Commission surprisingly announced to discontinue the monitoring mechanism in 2017.

Following severe corruption and rule of law backsliding in the EU, in 2019, the Commission put forward a new set of actions aimed at strengthening the rule of law. After having pursued a ‘two-track approach’, where corruption and the rule of law were treated as entirely distinct policy areas, the Commission redefined anti-corruption as an implicit objective of strengthening the rule of law. Suddenly, the rule of law became the silver bullet for corruption. This recent switch to focusing exclusively on the ‘rule of law track’ was made at the expense of a comprehensive EU anti-corruption policy.

The 2020 Rule of Law Report, one of the main pillars of the ‘rule of law track’, reveals that the Commission’s approach towards anti-corruption is fragmentary and superficial. The extensive scope of the new EU monitoring mechanism, which is supposed to annually assess a variety of rule of law aspects in the Member States takes the focus off of crucial areas with increased risks for corruption. The reports entirely ignored corruption in public procurement – the area most affected by the misappropriation of EU funds. This is surprising, given that the EU disposes of precise data in this area. Since July 2019, the European Single Market scoreboard provides red flag procurement indicators that trace corruption in the EU in real time.

Moreover, the 2020 Report does not include any country-specific recommendations. One can only wonder how the Commission intends to ‘measure’ progress in the next rule of law cycle of 2021. This naïve form of benchmarking renders the rule of law reports completely toothless and marks the Commission’s failure to live up to its objective to “develop possible solutions … to problems before they escalate”.

The report also reveals serious methodological flaws. Instead of spotlighting objective country facts, the Commission chose to mainly focus on the legal and institutional frameworks of the bloc’s members and perception-based corruption indicators. However, as has been observed elsewhere, the legislative and institutional set-up in a country is devoid of substantive significance regarding the extent of corruption on the ground. While corruption surveys allow to identify general trends, they provide unreliable data on corruption levels across longer periods of time.

The EU budget conditionality – the second main pillar of the ‘rule of law track’ – foresees cutting funds for members that do not respect the rule of law.

While it is an innovative legal instrument in many ways, the budget conditionality has an extremely narrow scope of application, as it only covers rule of law breaches that cause negative effects for the financial interests of the EU. Moreover, it adopts a narrow and bribery-focused criminal law understanding of corruption. Consequentially, the budget conditionality will hardly contribute to alleviating the pressing issues the EU is currently faced with – state capture, the destruction of institutional checks and balances and COVID-19-related public procurement corruption in the health care sector and cronyism, nepotism and favouritism in the recruitment and management of the health care workforce.

Most importantly, the EU rule of law track has not been able to find an answer to the question of how to proceed when the bloc’s 27 members deliberately seek to establish corrupt autocratic regimes and are not interested in strengthening the rule of law. Increased dialogue and enhanced cooperation – the key features of the ‘rule of law track’ – are unlikely to change the hearts and minds of Member States that sabotage EU anti-corruption initiatives or misappropriate EU funds on purpose.

Mihai-Razvan Corman is PhD Researcher at Ghent University and Research Fellow at the Institute of European Democrats (IED) in Brussels and the Institut für Europäische Politik (IEP) in Berlin.

Albania Parties Split Over New FBI-Style Agency

Prime Minister Edi Rama speaking in the Parliament

Πηγή: BI
By Fatjona Mejdini
12 Feb 2016

Albania's parliament was split on Thursday over the planned formation of a new body to fight corruption, modelled on the FBI, called the National Bureau of Investigation, BKH.

The new structure will be considered part of the police although it will closely collaborate with the General Prosecutor's office as well.

One or more representatives from the prosecutor's office will be permanent members of the bureau whose head will be appointed by the Interior Minister with the approval of the General Prosecutor.

Opposition parties previously supported the initiative - but on Thursday their MPs complained that the draft was inappropriate because the model does not leave the structure in the hands of state prosecutor.

"This institution should be 100 per cent under the authority of Prosecutor, as was... supported by the Venice Commission and agreed with our American partners," the head of Democratic Party, Lulzim Basha said.

Under the government draft, this new body will have an independent assessment commission within which experts from international missions will be represented.

"The Independent Commission of Review will be made up of experts in criminal justice, appointed by the European Union mission and the government of the US," the government draft reads.

The initiative has enjoyed strong support from the international community in Albania, who want to see a tougher fight against corruption at high level alongside judicial reform.

FBI officials visisted Tirana in April 2015 to help the Albanian government launch the new anti-corruption agency.

Speaking in parliament on Thursday, Socialist Prime Minister Edi Rama accused the opposition of agreeing to the model before - and now changing its mind.

"The draft that government has passed and brought into parliament is the draft that you [opposition] agreed to, 100 per cent. Now you are telling a big lie," Rama told opposition MPs.

While the government draft can pass in parliament with only the votes of ruling party MPs, cross-party consensus over the creation of the bureau is seen by the international community as an essential guarantee that the initiative will function in future.

In Greece, Elites Are Starting to Feel the Pain

Prosecutors have reeled in several prominent businessmen, including Dimitris Kontominas, the owner of a television station and insurance company, as well as Angelos Filippidis, the former head of Hellenic Postbank, and several of his colleagues, over a loan scandal deemed to have cost the former state lender some 500 million euros, or $680 million.

Πηγή: New York Times

By NIKI KITSANTONIS
Jan 6 2013

ATHENS — Since the country’s financial meltdown, Greeks have protested what many here criticize as the unfairness of the biting austerity measures that have raised taxes and trimmed salaries and benefits for average Greeks, while the elite escaped similar burdens or being held accountable for their part in creating the mess in the first place.

Suddenly, to the satisfaction of many here, that dynamic has begun to change. With new vigor, Greek prosecutors working independently of politicians — and sometimes in the face of passive resistance from them — are pursuing corruption cases against a widening pool of current and former high-ranking state officials and members of the business elite once deemed untouchable.

In country after country, officials have had difficulty deciding whether or how to prosecute those responsible for the conditions that led to the financial crisis that began in 2008 and the dark economic period that followed. Here in Greece, the country most afflicted by the collapse, prosecutors say that investigations, launched over the past year or so, are finally coming to fruition.

Analysts add that the prosecutors have more sway now than ever as Greeks smarting from more than three years of austerity demand punishment for those who ransacked state coffers and pushed Greece close to bankruptcy. The combination of the strong public desire for catharsis and a weak government has given the prosecutors far more room to maneuver than they have had in the recent past.

“For the first time, Greek justice is reaching really high up,” said Aristides Hatzis, a professor of legal theory at the University of Athens. “One reason is that the public desire for catharsis is strong, another is that the political system is weak and has too much to lose by trying to intervene. It risks being exposed.”

In the past week alone, prosecutors have reeled in several prominent businessmen, including Dimitris Kontominas, the owner of a television station and insurance company, as well as Angelos Filippidis, the former head of Hellenic Postbank, and several of his colleagues, over a loan scandal deemed to have cost the former state lender some 500 million euros, or $680 million.

On Wednesday, Mr. Kontominas, 75, was released from detention after posting a record €5 million in bail and was banned from leaving the country. The day before, the businessman had answered to charges of fraud and money laundering from an Athens hospital bed.

Mr. Filippidis, who prosecutors allege recklessly approved loans without guarantees, is in a Turkish jail awaiting extradition to Greece following his arrest at an Istanbul hotel last week.

Also in custody is the former managing director of the country’s Skaramangas shipyards, Sotiris Emmanouil, who according to prosecutors, pocketed €23 million in bribes to secure a submarine deal with the German firm Ferrostaal. At the same time, prosecutors are deepening an investigation into a new scandal involving kickbacks for state defense contracts that has implicated senior members of the Greek military for the first time.

Meanwhile, a former conservative minister Michalis Liapis, is being investigated amid reports that he used European Union subsidies to renovate his holiday home. Mr. Liapis, a cousin of a former prime minister, Costas Karamanlis,, received a suspended jail sentence this month for driving a car with fake license plates in an apparent attempt to skirt increased road taxes.

At the frontline of this unprecedented crackdown are the capital’s two top corruption prosecutors — Eleni Raikou, 52, and Popi Papandreou, 36. The latter, known as “the terminator” for her meticulous investigations, compiled the report that led to former Defense Minister Akis Tsochatzopoulos being convicted for money laundering last October, a landmark verdict in a country where top-ranking state officials are rarely prosecuted.

Judicial officials, who spoke on the condition of anonymity, said they have not come under political pressure.

“We are a parallel authority,” one said. “I don’t take orders from the prime minister”

But they have also received little or no support for their efforts. Even as graft scandals multiply, no new employees have been hired, leaving four corruption prosecutors with a mounting caseload. In one office, telephones have a bar on international calls, obliging officials seeking access to suspects’ bank accounts to call from their cellphones, at their own expense.

Despite the practical difficulties, prosecutors appear determined and are pushing for a change to the law to allow those who return money stolen from the state to be spared prison time. “The point is to get the money back,” one official said.

The biggest challenge is recouping bribes pocketed by officials in exchange for securing defense contracts with foreign firms, she said.

Three deals for submarines, tanks and aircraft worth some €5 billion — all deemed to have been purchased at inflated prices — have come under the scrutiny of prosecutors, and another 10 deals are also slated to be investigated.

Greece had the highest defense expenditure, in relation to gross domestic product, in the European Union in 2009, before the debt crisis hit, amid enduring security concerns about its traditional rival, Turkey; that budget has since been halved to 1.7 percent of G.D.P. under pressure from Greece’s international creditors.

Asked to estimate the total pocketed in bribes from Greek defense deals over the past 20 years, the official shrugged. “I’ll retire and I still won’t know,” she said.

Some of the bribe money has been recovered. The €17 million recouped in the past month will go toward “covering needs in the health and education sectors,” the Finance Ministry said. Around half of that money was returned by a former Defense Ministry official, Antonis Kantas. “I took so many bribes that I’ve lost count,” Mr. Kantas told a magistrate. A lower-ranking Defense Ministry employee was found to have a private jet.

Equally eye-popping are the details of a new scandal embroiling Hellenic Postbank, a former state lender which was absorbed by Greece’s fourth largest lender Eurobank last summer after being stripped of its bad loans. One of the beneficiaries, the businessman Mr. Kontominas, is alleged to have used a portion of a €110-million loan to buy a luxury home in London for his daughter.

The judicial crackdown has been welcomed by ordinary Greeks who have seen their incomes cut by a third since the crisis hit.

“We drain our bank accounts to pay higher taxes, and they fill theirs by evading them and cheating the system,” said Aliki Theodorou, a 45-year-old teacher. “It’s about time someone else started paying.”

For Greece, Oligarchs Remain Obstacle to Growth

Lavrentis Lavrentiadis embezzled money from a bank he controlled, prosecutors say.

Πηγή: New York Times
By RACHEL DONADIO and LIZ ALDERMAN
Dec 6 2012

ATHENS — A dynamic entrepreneur, Lavrentis Lavrentiadis seemed to represent a promising new era for Greece. He dazzled the country’s traditionally insular business world by spinning together a multibillion-dollar empire just a few years after inheriting a small family firm at 18. Seeking acceptance in elite circles, he gave lavishly to charities and cultivated ties to the leading political parties.

Lavrentis Lavrentiadis, who took control of Proton Bank in 2009, paid $65 million to avoid prosecution. Nonetheless, he and 26 others were charged with fraud and other counts in March.

But as Greece’s economy soured in recent years, his fortunes sagged and he began embezzling money from a bank he controlled, prosecutors say. With charges looming, it looked like his rapid rise would be followed by an equally precipitous fall. Thanks to a law passed quietly by the Greek Parliament, however, he avoided prosecution, at least for now, simply by paying the money back.

Now 40, Mr. Lavrentiadis is back in the spotlight as one of the names on the so-called Lagarde list of more than 2,000 Greeks said to have accounts in a Geneva branch of the bank HSBC and who are suspected of tax evasion. Given to Greek officials two years ago by Christine Lagarde, then the French finance minister and now head of the International Monetary Fund, the list was expected to cast a damning light on the shady practices of the rich. Instead, it was swept under the rug, and now two former finance ministers and Greece’s top tax officials are under investigation for having failed to act.

Greece’s economic troubles are often blamed on a public sector packed full of redundant workers, a lavish pension system and uncompetitive industries hampered by overpaid workers with lifetime employment guarantees. Often overlooked, however, is the role played by a handful of wealthy families, politicians and the news media — often owned by the magnates — that make up the Greek power structure.

In a country crushed by years of austerity and 25 percent unemployment, average Greeks are growing increasingly resentful of an oligarchy that, critics say, presides over an opaque, closed economy that is at the root of many of the country’s problems and operates with virtual impunity. Several dozen powerful families control critical sectors, including banking, shipping and construction, and can usually count on the political class to look out for their interests, sometimes by passing legislation tailored to their specific needs.

The result, analysts say, is a lack of competition that undermines the economy by allowing the magnates to run cartels and enrich themselves through crony capitalism. “That makes it rational for them to form a close, incestuous relationship with politicians and the media, which is then highly vulnerable to corruption,” said Kevin Featherstone, a professor of European Politics at the London School of Economics.

This week the anticorruption watchdog Transparency International ranked Greece as the most corrupt nation in Europe, behind former Soviet states like Bulgaria, Romania and Slovakia. Under the pressure of the financial crisis, Greece is being pressed by Germany and its international lenders to make fundamental changes to its economic system in exchange for the money it needs to avoid bankruptcy.

But it remains an open question whether Greece’s leaders will be able to engineer such a transformation. In the past year, despite numerous promises to increase transparency, the country actually dropped 14 places from the previous corruption survey.

Mr. Lavrentiadis is still facing a host of accusations stemming from hundreds of millions of dollars in loans made by his Proton bank to dormant companies — sometimes, investigators say, ordering an employee to withdraw the money in bags of cash. But with Greece scrambling to complete a critical bank recapitalization and restructuring, his case is emblematic of a larger battle between Greece’s famously weak institutions and fledgling regulatory structures against these entrenched interests.

Many say that the system has to change in order for Greece to emerge from the crisis. “Keeping the status quo will simply prolong the disaster in Greece,” Mr. Featherstone said. While the case of Mr. Lavrentiadis suggests that the status quo is at least under scrutiny, he added, “It’s not under sufficient attack.”

In a nearly two-hour interview, Mr. Lavrentiadis denied accusations of wrongdoing and said that he held “a few accounts” at HSBC in Geneva that totaled only about $65,000, all of it legitimate, taxed income. He also sidestepped questions about his political ties and declined to comment on any details of the continuing investigation into Proton Bank.

Sitting in the office of his criminal lawyer last month, relaxed, smiling and dressed in a crisp blue suit and red-and-blue tie, Mr. Lavrentiadis said he found it puzzling that he had been singled out in reports about the Lagarde list when other powerful figures appeared to evade scrutiny.

“My question is, ‘Why me?’” he said. “I’m the scapegoat for everything.”

In the interview, Mr. Lavrentiadis depicted himself as an outsider and upstart, an entrepreneur in a small country dominated by old families who frown on newcomers. “I am not from a third-generation aristocratic family,” he said repeatedly.

Indeed, by some lights, Mr. Lavrentiadis fell in part because he rose too quickly and then failed to secure enough of the right friends to protect him, a perception he did not dispute.

“Why me, something that is clean, and why not something that has bigger problems?” he said. Pressed on who might be responsible for his troubles, he smiled enigmatically. “I could tell you thousands of names,” he said, “but it’s not my style.”

Mr. Lavrentiadis’s mettle was forged early, when he took the reins of his family’s chemical supply firm, Neochimiki, in 1990, after the death of his father. Bright and charming, and stricken with rheumatoid arthritis, he quickly enlarged the company and stormed into the Greek business world in 2003, when he listed the company on the Athens Stock Exchange. In 2008, the Carlyle Group, one of Wall Street’s largest asset management firms, paid more than $970 million for a stake in Neochimiki.

Over the next four years, Mr. Lavrentiadis built an empire that included holdings in pharmaceuticals, banks, a soccer team and works of art. He also took stakes in print and electronic news media outlets, following a pattern in which magnates own virtually every nongovernmental news media outlet in the country. But the veneer began to crack soon after the financial crisis hit. Carlyle lost more than $65 million on Neochimiki and accused Mr. Lavrentiadis of overstating its financial health. Cash was bleeding from a range of other business holdings.

In December 2009, four months before Greece sought a foreign bailout, Mr. Lavrentiadis bought a controlling stake in Proton Bank, which had expanded rapidly after acquiring a small bank called Omega in 2005. Omega’s board members included Mr. Lavrentiadis; the father-in-law at the time of Evangelos Venizelos, now the Socialist Party leader; and a brother of a former prime minister, George Papandreou.

Regulators now charge that from the moment Mr. Lavrentiadis took over Proton, he began looting it to prop up his failing businesses and those of a network of what appear to be shell companies. In 2010 alone, a total of $925 million — more than 40 percent of Proton’s commercial loans — were made with virtually no credit checks to his firms or to shell companies he had sold to associates, according to an audit by Greece’s central bank, first reported by Reuters.

His problems burst into the public realm in mid-2011, when Greek financial prosecutors charged him with embezzling the $65 million, following investigations into suspected money laundering.

Several months earlier, however, lawmakers had quietly passed a law that allowed suspected wrongdoers to avoid prosecution if they repaid the money they were accused of stealing in certain crimes. The idea, legislators said, was to speed resolution of cases in Greece’s notoriously slow courts. Mr. Lavrentiadis quickly paid back the $65 million to Proton and claimed immunity.

Then in March, a financial prosecutor charged him and 26 others with fraud, embezzlement, forming a criminal gang, money laundering and breach of faith stemming from loans believe to have been issued by Proton Bank. The $65 million repaid by Mr. Lavrentiadis in a bid to secure immunity is regarded by prosecutors as only a part of the more than $915 million in bad loans that prosecutors say Proton floated to dormant companies.

In the interview, Mr. Lavrentiadis confirmed that he had returned the $65 million but declined to say under what circumstances. He dismissed the Bank of Greece report as not “objective,” and said prosecutors had not yet called him for questioning or detailed the charges against him personally, beyond those against the 27 as a group. “I trust Greek justice,” he said.

Despite the fraud accusations against him, Mr. Lavrentiadis was still the beneficiary of questionable government actions. In July 2011, Mr. Venizelos, then the finance minister, authorized a $130 million deposit of government money to Proton for a single day, he says to avoid a calamitous collapse. The action was approved by the Greek central bank but was in defiance of a ruling by Greece’s General Accounting Office that it was illegal. The $130 million, plus interest, was returned to the government, Mr. Venizelos said in written answers to a list of questions.

“It was absolutely necessary to preserve Proton — not Lavrentiadis — in order to save huge amounts of public money,” added Mr. Venizelos, who resigned as finance minister in March. A month after the $130 million transfer, Mr. Venizelos was co-writer of a law that retroactively granted the finance minister full power to bail out banks with public money, regardless of the recommendations of other state institutions.

Mr. Venizelos said the law was necessary because “Greece had not had a clear legislative framework that could allow it to handle public deposits in crisis situations.” But legal experts said it was part of a broader pattern in Greece where actions by influential figures are later smoothed over with new legislation that eliminates any questions of illegality.

Mr. Lavrentiadis declined to comment on his ties with Mr. Venizelos, beyond saying, “I never asked a favor.”

In October 2011, Proton was nationalized. “I was shocked,” Mr. Lavrentiadis said, adding that he did not believe the bank’s finances merited the move. In March, he challenged the decision in the Supreme Court and is awaiting a ruling.

Asked if the Proton case was evidence of a regulatory system that was working or one that had failed, Mr. Lavrentiadis smiled. “It’s a regulated market without rules,” he said of Greece. “You can interpret it however it’s to your benefit.”

Corruption Continues Virtually Unchecked in Greece

While Athens waits for more aid from the European Union, the country continues to be administered in the same old careless manner. Corrupt politicians and the rich continue to help themselves to Greece's funds, and little is being done about it.

Πηγή: Spiegel
By Julia Amalia Heyer
Oct 16 2012

How can someone who has declared an annual income of €25,000 ($32,400) transfer €52 million abroad? What kind of supplementary income must an individual have who, according to his tax returns, earned €5,588 in 2010, yet still managed to move €19.8 million abroad? And how can it be that a Greek citizen sequesters €9.7 million abroad although he supposedly earned exactly zero euros?

These are the questions that tax fraud investigators will have to ask of a number of individuals whose identity has so far only been made public in the form of initials. For instance, a "G. D." stands at the top of a list with the names of 54,000 Greek citizens who relocated major assets abroad between 2009 and 2011. The list stems from the Greek central bank and is now in the hands of the Finance Ministry.

It is the longest of four lists that are currently circulating in Athens. Each contains the names of people whose financial circumstances -- bank balances and real estate holdings -- do not correspond at all with what they claimed on their tax returns. But hardly anything is being done about it. The Greek reality is sometimes paradoxical: While the governing coalition was busy squabbling with international creditors over how many hundreds of euros can still be trimmed from teachers' and nurses' paychecks, and Athens continued slashing employee pensions, wealthy Greeks moved billions abroad with relative impunity.

The odyssey of the "Lagarde list," as it's known, exemplifies the typically lax attitude toward tax criminals. For many months, it was thought to be lost, but then it resurfaced in early October. Now, the public prosecutor for financial crimes has a copy. It lists 1,991 Greek owners of Swiss bank accounts, and reportedly includes many prominent individuals from the realms of politics, business and culture.

List Goes Missing

The story of this list primarily illustrates the unwillingness of politicians to do anything to improve the situation. In the autumn of 2010, Christine Lagarde, who was still the French finance minister at the time, gave her Greek counterpart Giorgos Papakonstantinou a digitalized list of bank accounts with information on Greek customers at the HSBC Bank in Switzerland. The accounts contained a total of some €1.5 billion. While the French state was using this list to help collect half a billion euros from its own tax offenders, the Greeks showed little interest in attempting a similar initiative.

It wasn't until many months later, in June 2011, that Papakonstantinou finally relinquished only 10 names from the list to the head of Greece's Financial and Economic Crime Unit (SDOE). The former minister said a few days ago that he didn't pass on all of the information because he had "no confidence in the agency."

He was succeeded by Evangelos Venizelos, who is the leader of the Panhellenic Socialist Movement, better known as PASOK, and thus part of the governing coalition. Venizelos served as finance minister for nine months. He negotiated the debt haircut and the second bailout package -- and vowed time and again to tackle the big problem of tax evasion.

Meanwhile, tucked away in a drawer of his secretary's desk, there was a USB stick with information that had already been gathered on Greek tax offenders -- the Lagarde list. The authorities merely needed to launch investigations. But Venizelos didn't instruct the SDOE to conduct inquiries, nor did he inform anyone of the existence of this information. Everyone else in the government thought that the list had disappeared. It was only when the current Finance Minister Yannis Stournaras heard about the lost information, and wanted to ask Paris for a copy, that Venizelos supposedly remembered the USB stick in the drawer. He sent it by express courier to Greek Prime Minister Antonis Samaras. Venizelos maintains that he didn't know "that no one aside from me had a copy."

Both Venizelos and Papakonstantinou have had to justify their actions before an investigative parliamentary committee -- and both men have attempted to shift the blame on each other.

Allegations Ignored

There is yet another, shorter list, which despite its diminutive size is even more politically charged. Greek tax authorities are currently investigating the assets of some 60 politicians, and the probe apparently extends beyond suspicions of tax evasion alone. The speaker of the Greek Parliament, Evangelos Meimarakis -- a member of the governing conservative Nea Dimokratia, or New Democracy party -- recently stepped down due to corruption allegations, and he is not the only one implicated. A number of high-ranking former ministers are also suspected of involvement in sham transactions and money-laundering schemes.

Corruption allegations still don't necessarily interfere with a political career in Greece, as exemplified by the case of the former prefect of Thessaloniki, Panagiotis Psomiadis. He allegedly personally received nearly €1 million for public works projects that were never built. Psomiadis is also suspected of being connected with a mafia ring of loan sharks. None of this has apparently damaged him. In May, Prime Minister Samaras made him his election campaign organizer for northern Greece.

"We are very bad now as a society. We have become bad. We are greedy and asocial," says Costas Bakouris, 75, chairman of Transparency International Greece. Bakouris sounds very different than many European politicians who suddenly find that things are taking a turn for the better in Greece. Now that it's clear that the creditors will continue to pay, he says people are turning a blind eye to the inevitable.

In reality, says Bakouris, an incompetent political class continues to govern the country -- the same people, the same story. For decades, they have created a sick system that permeates all segments of society.

Indeed, it's not just former ministers and parliamentarians who have squirreled away millions of euros of dubious origin in their bank accounts. Investigators even discovered €2.8 million -- none of which had been declared -- in an account belonging to the deputy mayor of a town of only 14,000 inhabitants in the Thessaly region. The man receives a monthly salary of approximately €1,500.

Conditions Ripe for Corruption

Greece's largest social security organization, IKA, has been used by many in the country as their personal piggy bank. The fact that IKA coffers are actually empty hasn't stopped department heads or low-level employees from continuing to transfer money to friends and relatives who are not entitled to receive any payments whatsoever. But even everyday citizens take advantage of the system: Of the supposedly 700 blind people on the island of Zakynthos, for instance, in reality there are only 60 who truly cannot see.

Thanks to such commonplace tricks, an estimated 40 percent of Greece's annual gross domestic product (GDP) still generates no revenues for state coffers, says Athens-based corruption investigator Leandros Rakintzis.

According to Transparency International's Costa Bakouris, Greece has all the right conditions for corruption: plenty of bureaucracy, no functioning justice system, laws with numerous loopholes -- and economic pressure. Bakouris was himself an entrepreneur and lived for 20 years in Switzerland. He says Greeks like him, who have lived abroad for many years, have the clearest perception of the problems in their homeland. Bakouris also briefly worked for the state as the managing director of preparations for the 2004 Olympic Games in Athens. After two years, he "more or less fired" himself. He says that he refused to accept that all bids -- whether they were for major infrastructure projects or for the carpeting in the Olympic village -- should be roughly three times as high as they were in Sydney, which hosted the games in 2000.

Bakouris doesn't believe that all the information on the lists will actually be investigated. Only one top politician has been sitting in jail awaiting trial for the past six months: former Defense Minister Akis Tsochatzopoulos. He allegedly accepted many millions of euros in kickbacks for defense projects. Tsochatzopoulos, who denies all of the allegations, was a political protégé of socialist Andreas Papandreou, the founder of PASOK and the father of former Prime Minister Georgios Papandreou.

The legacy of corruption goes back generations. In the days when Papandreou the elder governed the country, after the story broke that the head of the state electricity provider had lined his own pockets with some 1.5 million drachmas, the prime minister reacted with the following quip: "We all agree, of course, that we are allowed to give ourselves a little present from time to time. But please don't make it too large."

Translated from the German by Paul Cohen

Debt crisis: Greek government signs €330m settlement with Siemens

Πηγή: The Telegraph
By Louise Armitstead
August 27 2012

It is not quite the bail-out booster Greeks were hoping for, but Athens has extracted €330m from Siemens, the German engineering group, in settlement of corruption charges.

In a deal loaded with Schadenfraude, the Greek finance ministry announced it had signed a settlement with Siemens that “achieves significant financial benefit and the benefit to the real economy.”

The deal formally settles long-running allegations that Siemens used bribery to secure a raft on contracts for the Athens’ Olympic Games in 2004.

It was signed by Greece’s finance minister Yannis Stournaras last week, according to a notice on the Greek treasury website. At the time, prime minister Antonis Samaras was in Berlin asking Angela Merkel for “time to breathe” on the bail-out deadlines. “By signing the agreement, the Greek government achieves significant financial benefit and the benefit to the real economy through positive actions and a range of benefits,” the statement said.

Under the terms of the settlement, the German group has agreed to write-off €80m it is owed by the Greek state and guarantee a further €250m of investment in the country.

Siemens will pay €90m over five years to fund Greece government infrastructure, from medical equipment to university research programmes. It has also pledged to invest a €100m in Greece during 2012 “to ensure the continued presence and activity of the company, which currently employs more than 600 employees”, according to the statement. In addition, the company has agreed to “build a new plant in Greece with a budget of over €60 million, which will lead to the employment of over 700 people.”

Greece also intends to appoint its own equivalent to the troika inspectors: Siemens has agreed to a “corporate compliance program under a committee appointed by the Greek government.” Finally the company must pay the Greek government’s legal costs, as well as its own.

Siemens declined to comment.

Greek prosecutors spent years investigating allegations that Siemens bribed officials to win contract from Hellenic Telecom between 1997 and 2020, and a new security system for the Athens Olympics.

Last year a Greek parliamentary committee sent a letter to Siemens claiming the total damage to the economy amounted to €2bn. The company rejected the claim.

Even so opposition politicians in Athens have reacted angrily to the size of the settlement. Dimitris Papadimoulis, spokesman for the leftist Syriza party, said it was an “extrajudicial compromise” that favoured Siemens not Greece. He said the company was being asked to provide “crumbs” before walking “scot free” from a huge scandal that cost the state €2bn It was “yet another scandal in a larger scandal”, he said.

Costas Markopoulos, group secretary of the Independent Greeks party, said: “Mr Samaras was elected with the banner of a renegotiation (of the Memorandum), which he immediately forgot... he went to Ms Merkel with a ‘gift’ being the settlement of Siemens’ debts, and forgot the extension.”

Central Banks, The Veil Of Secrecy, A Hotbed Of Corruption, And Now Another One Got Ensnared

Πηγή: Tetosterone Pit
August 23 2012

Central banks are designed to be “independent,” and they shroud themselves in secrecy. But they have formidable and, when it comes to money, “unlimited” powers that they harness for the benefit of their clientele, banks. And hiding behind their veil of secrecy are shenanigans that rarely seep to the surface, but when they do, they just get worse and worse. And the latest is a sordid bribery and kickback scandal at the Reserve Bank of Australia (RBA) that appeared to be neatly contained to two subsidiaries, until now.

Securency International Pty Ltd, jointly owned by the RBA and Innovia Films, develops polymer materials for Australia’s banknote technology used in 27 countries. Note Printing Australia (NPA), a wholly owned subsidiary of the RBA, manufactures polymer banknotes. In May 2009, Age newspaper broke the scandal: eight former executives of Securency and NPA had paid millions of dollars in bribes and kickbacks to officials in Vietnam, Malaysia, and Indonesia between 1999 and 2004 through middlemen, including a Malaysian arms dealer, in order to win contracts for manufacturing bank notes. Forced to deal with the ruckus, Securency asked the Australian Federal Police to investigate.

In July 2011, finally, after two years of foot-dragging, and after international pressure to do something, the Federal Police arrested six former executives of Securency and NPA—Australia’s first prosecution under its foreign bribery laws.

On Aug 19, 2012, former Securency CFO David Ellery pleaded guilty to one charge of false accounting—he admitted to concealing a $79,502 payment to a Malaysian agent—and was given a six-month suspended sentence. In return, he handed over hard drives, provided details, and agreed to become a prosecution witness. In her ruling, the Judge lashed out against the company for its “corporate culture” where “staff were discouraged from examining too closely the use of, and payment arrangements for, overseas agents,” and where “secrecy and a denial of responsibility for wrongdoing” prevailed.

So justice reluctantly tiptoed around the lower levels. Suspicions that top officials at the RBA knew about the corruption were waved away by Governor Glenn Stevens. Hetestified before a parliamentary committee in 2011: he and others at the RBA learned about the scandal by reading the papers. Deputy Governor Ric Battellino—retired since February—sat right next him.

But at least Battellino knew since June 2007! A 5-page memo that ABC obtained from “sources” at the RBA, and made public yesterday, proves it. That June, NPA’s Brian Hood told Battellino in a secret meeting about the corruption issues. He later composed and sent the now surfaced 5-page memo to Battellino, detailing multi-million-dollar payments to overseas agents who in turn made payments to officials and politicians in Vietnam, Malaysia, Indonesia, and Nepal. Hood stated that he’d tried to address these issues within NPA but was told to “back off.”

Battellino reacted. Instead of calling the Federal Police to investigate, the RBA engaged a law firm to do an audit that gave the company a clean bill of health. Whistleblower Hood was axed in 2007, along with the foreign agents and some of NPA’s management. Despite the memo, the RBA, of course, continues to reject the “implication that the governor or other officers of the bank have misled” the parliamentary commission.

Central banks are special creatures, and investigating them turns out to be the hardest thing in the world. While pressures have been rising for an independent inquiry, Parliament voted against it last year, and may do so again.

But the RBA is not alone. Similarly sordid allegations have entangled Ewald Nowotny, Governor of the Austrian National Bank and member of the ECB’s Governing Council [read... Austrian Central Bank: Bribery, Kickbacks, Money Laundering]. At the Swiss National Bank, an insider trading scandal caused its chairman, Philipp Hildebrand, to resign. And in the US, an audit of the Federal Reserve System by the Government Accountability Office shed some light on the dizzying conflicts of interests and cronyism at the New York Fed when it decided who got which billions during its multi-trillion-dollar bailout mania [read.... The GAO Audit of the Fed Doesn’t Call It ‘Corruption’ but it Should].

Piercing the veil of secrecy surrounding central banks is tough. While Ron Paul [His Legacy, A Complete Fed Audit?] and others have long pushed for regular Fed audits, not much has been accomplished beyond the GAO audit. Inspector General Neil Barofsky was looking after TARP to prevent fraud and abuse, though it was handing out peanuts compared to the trillions the Fed was handing out—secretly and unobserved. Read.... All Heck Breaks Loose on CNBC, TARP Gets Sanctified, Bank Bailouts Get Whitewashed, And The Fed Escapes Scot-Free.

Forgiving Siemens: Unraveling a Tangled Tale of German Corruption in Greece

Cartoon by Khalil Bendib

Πηγή: CorpWatch
By Lena Mavraka and Vasilis Papatheodorou
June 11 2012

After almost two years, the traffic lights in the city of Athens are finally being fixed without delay or makeshift solutions. For Greece - a country that appears to be rushing headlong off a financial cliff and bringing down the rest of Europe with it - this small miracle might seem to like an omen that things are changing for the better or at least, the correction of a bureaucratic mistake.

The truth is that this simple act reveals the enormous power that one single company holds over the country of Greece: Siemens from Munich, Germany, a manufacturing behemoth with $96 billion in 2010-2011 sales.

On November 11, 2010, Siemens turned off 35 traffic lights in central Athens in protest against Greek government fines as high as €500 million ($650 million) to settle allegations of bribery to win contracts. In April 2012, the Greek government agreed to settle with Siemens for €270 million to settle the charges. In return the state issued the company a €41 million contract to work on an extension to the Athens metro and fix the city's traffic lights.

It is a stunning turnaround for the company whose name has been tarnished for its role in what many consider the greatest corporate scandal in postwar history of Greece. Millions of Euros have allegedly been paid into secret Swiss bank accounts of high-ranking politicians of the two parties that have run Greece since collapse of the military dictatorship in 1974 - Pasok (the Social Democratic party) and New Democracy on the right. All told the bribery is estimated to have had a cost of €2 billion to the Greek economy, according to a high level parliamentary investigation - and Siemens had a starring role.

"In Greece Siemens has spend the most black money (bribes) than in any other country of the European Union between the late 1990s and 2004," says Tassos Telloglou, author of "The Network: File Siemens."

The tale came to a dramatic head in June 2009 when Michael Christoforakos, the former CEO of Siemens, was arrested in Rosenheim, a southeastern suburb of Munich, after disappearing when Greek judicial authorities began investigating the charges.

Building the First Telephone Exchanges

Siemens has had a long history in Greece dating back to the founding of the German company by Werner von Siemens in 1847 when he pioneered the building of the first international telegraph lines. In the 1920s Ioannis Voulpiotis, a Greek engineer who married the daughter of Werner von Siemens, was appointed head of the Athens office of AEG-Siemens-Telefunken. As a member of the board of directors of Greek Telephone Company Limited (AETE) and Greek Radio Company Limited (AERE), Voulpiotis was uniquely placed to win contracts for the German company.

In 1926 AEG-Siemens-Telefunken installed the first telephone networks in Greece and won the contracts to install new telephone exchanges and new radio facilities. According to the Biographical Encyclopedia of Modern Hellenism 1830-2010, Voulpiotis paid a fee of three to five percent of the contract to Greek politicians and government officials. This money was called the "extra fee" and it was paid into bank accounts in Switzerland, according to the Archives of Greek Bibliography (Metron Publications, 2011, Volume A)

During the Nazi occupation of Greece (1941-1944), Voulpiotis was put in charge of all German business in the country as well as the Greek radio authority. When the Nazis were defeated, Voulpiotis was tried at the Special Court for Nazi Collaborators together with his “colleague”, Dr. Nikolaos Christoforakos, father of the future and fugitive CEO of Siemens Greece. The two men were acquitted and moved to Germany.

Voulpiotis returned to Greece in the 1950s to represent Siemens and to bid again telephone and radio contracts as well as for railway tenders. Spyros Markezinis, then minister of economic coordination, allegedly cut a deal with him for contracts to modernize the telephone and radio network installation across the country. On April 3, 1954 Markezinis resigned as a minister when news of the deals became public. Months later the German government forced the Greek government to uphold the contracts or risk losing German aid.

In the following months Voulpiotis accused Konstantinos Karamanlis and Konstantinos Papaconstantinou, the minister and deputy minister of Public Works respectively, of asking for bribes. The two politicians counter-attacked and accused Voulpiotis of demanding $1 million in payments to be technical advisor to OTE (the Greek Teleommunications Authority) for 10 years. The case ended up in the courts and Voulpiotis was sentenced to 18 months for slander.

In 1956, Konstantinos Karamanlis became prime minister, and granted Siemens a no-bid contract to provide the lion's share of supplies of telecommunication equipment of the Greek State.

Dizzying Array of Government Contracts

For the next 50 years, Siemens continued to get Greek government contracts with a dizzying variety of ministries and Greek government institutions ranging from the Hellenic Railways Organization (OSE) to the ministry of culture.

For example, in December 1997, OSE and Siemens signed seven contracts totaling 705 million marks ($397 million). (The contracts ended up in court in May 2010 for failing to meet deadlines). Siemens also had a number of major contracts with the ministry of defense such as the €300 million ($390 million) Hermes telecommunications program with the Greek Army signed in 1999.

In February 2007 Siemens won a 14 month contract with the ministry of culture to supply portable information systems for visitors to museums and archaeological sites. In October 2008, Michalis Liapis, then Culture Minister canceled the contract for failure to deliver.

(The role of Liapis became controversial when the media revealed that he had traveled to Germany in the summer of 2005 to attend major football matches at the expense of Michalis Christoforakos, then CEO of Siemens Greece.)

Perhaps the most controversial contract with Siemens was the $325 million joint venture with San Diego-based SAIC in 2002 to set up a security system for the Olympic Games of 2004. The Command, Control, Coordination, Communication, Integration system (referred to by the acronym C4i) never “got off the ground” in the time.

The Scandals Break

In late April 2005, Greek authorities began to investigate the C4i case. At about the same time the U.S. Department of Justice also began to investigate Siemens for bribery, working closely with the Munich public prosecutor's office. The sprawling U.S. investigation that would eventually encompass Siemens activities in Argentina, Bangladesh, Iraq and Venezuela.

A second Siemens contract quickly came under scrutiny from the Greek authorities: the supplies of telecommunications equipment material to the Hellenic Telecommunications Organization (OTE) notably a December 1997 agreement with Siemens to digitize the network for €464.5 million (known as the 8002 agreement).

In April 2006, Prodromos Mavridis, the head of the telecommunications' department of Siemens Greece suddenly left the company after 18 years of work, without any public explanation after receiving a €300,000 payoff from the company. In November of that year, lawyers for Siemens sued Mavridis in Greek courts accusing him of embezzling €8 million.

But it was too late. A year prior, Swiss authorities had opened an investigation into Mavridis for a network of "extensive money laundering." The investigators zeroed in on a company called Martha Overseas Corporation, registered in Panama that was receiving money via Liechtenstein from Eagle Invest & Finance SA, registered in the British Virgin Islands, from Reinhard Siekaczek, a Siemens executive in Germany.

Siekaczek was arrested in November 2006. He told the Munich prosecutors of dozens of bribery schemes around the world and he named Mavridis as the man in charge of handling payments to Cyprus, Bulgaria and parts of the former Yugoslavia.

Siekaczek also told Greek investigators at the Munich public prosecutors office that he was responsible for the payment of €10 million in "black funds" to individuals in the ministry of defense and the Greek army. Among then high level names be mentioned was Akis Tsochatzopoulos, minister of defence in the Pasok government from 1996 - 2001. The payments were also mentioned by Rainer Niedl, a retired anti-corruption officer for Siemens, in a November 2007 apology for his role in the Siemens' bribery scandals.

Some of the payments were subsequently found in the accounts of two of Tsohatzopoulos' associates: Anthony Cantas, deputy general director of the directorate general for infrastructure, and Paul Nicolaides, the vice president of Greek Arms Industry.

On December 17, 2007, Siemens announced that Michalis Christoforakos was no longer with the company.

One year later, the U.S, announced that Siemens was pleading guilty to paying out $1.36 billion on bribes around the world. "Today's filings make clear that for much of its operations across the globe, bribery was nothing less than standard operating procedure for Siemens," said Matthew Friedrich, acting U.S. assistant attorney general. "(We) and our international colleagues will continue our efforts to level the business playing field, making it free from corruption and fair to those who seek to participate in it."

Greek authorities were not part of the settlement.

In May 2009 Christoforakos disappeared from Greece. The following month he was arrested in Germany. He immediately invoked his German citizenship (acquired from the time his father had lived in the country after the Second World War). His lawyers argued that the allegations were for activities that took place before 2003 so he could not be prosecuted under German law which has a five year statute of limitations. The attorneys also pleaded that Christoforakos be allowed to take refuge in the country.

"Dozens of senior Greek politicians are hanging on this case," said Stefan Kursawe, a lawyer hired by Christoforakos. "I fear for the life of my client as soon as he sets foot on Greek soil."

It was a shameful moment for the high-flying executive who owned a series of properties on the islands of Antiparos, Paros and Tinos via offshore companies, and once hob nobbed with senior politicians like Konstantinos Mitsotakis, honorary president of New Democracy, and his daughter Dora Bakogiannis, former minister of foreign affairs.

On August 11, 2009, the Munich prosecutor jailed Christoforakos for a year, stating that he had paid money to the treasurers of the major two parties (Pasok and New Democracy) in order to win contracts for Siemens from the two parties. (German authorities set him free two months later after he paid a huge fine. Christoforakos has not appeared in public since)

Paying Off The Political Parties

Tassos Mandelis was a director of OTE from 1985 to 1988, who also served as minister of transport and communications for Pasok from 1997 to 2000. During his tenure in the government, Mandelis advocated abolishing the state company that provided technical solutions to OTE.

To date Mandelis is one of the few politicians who has publicly admitted that he had received money from Siemens. "At the end of October 1998 an employee of Siemens, called me and told me in English: "We want to help you on your election campaign," Mandelis told a parliamentary investigation. "How much are you talking about?" I asked him and he replied: "As much as we usually give out."

Money was then deposited in a Swiss in November 1998 in a Swiss bank under the name "A. Rokos". Greek investigators later found almost 200,000 German marks ($112, 600) in the bank account. A withdrawal of of €35,000 had been made in favor of Mandelis' son (identified only by the initial H) for his studies at Columbia university in New York. (The son now works for Siemens in Cyprus while a daughter of Mandelis now works for OTE.)

Mandelis was convicted for failing to declare his assets to the tax authorities. He was fined €7,500 and given a suspended sentence of three years in prison. Media reports suggest that is now working as a consultant in Azerbaijan.

Theodoros Tsoukatos, a close associate of Kostas Simitis, the former Greek prime minister, has also admitted publicly that he received one million German marks in 1998 from Christoforakos, to be used to re-elect Pasok, but he insists that he gave all the money to the party.

Nor were Pasok politicians alone in taking money from Siemens. Giannis Bartholomeos, the former treasurer of New Democracy, was revealed to have received money from Siemens after he was murdered by the husband of his mistress in February 2007.

All is Forgiven?

A 19-person multi-party Greek parliamentary inquiry committee was established on January 28 2010 to investigate the Siemens bribery cases, headed by Sifis Valirakis of Pasok. The committee dug up the names of the brokers and businessmen that were connected to New Democracy as well as links to a number of other scandals that shook Greek political life – such as the €100 million cost of the real estate scandal at the monastery of Vatopaidi in Mount Athos.

But in May 2010, when the financial crisis began, the investigation was jettisoned and a final report was published on January 24, 2011 that called for further investigation.

In early April this year, Siemens signed a reconciliation agreement with the Greek government that was approved by a majority of the Greek parliament. Under the terms of this deal, Siemens is required to pay a sum of €170 million to the government and it also required to invest €100 million in Greece in 2012. Siemens is also obliged to consider investing another €60 million for a factory that employs at least 700 employees.

Why did Siemens agree to pay? And why did the parliament halt its investigation and fail to ask for judicial help? No one knows for sure but evidence points to an audit of the company's finances conducted by KPMG, the global audit firm, on behalf of the U.S. Department of Justice in 2006. The sealed report, which has not been made public, allegedly contains the names of 20 of the leading Greek politicians who have together received more than €100 million in recent years to "promote" the company, according to Greek press reports.

It is surely significant that as soon as the ink was dry on the April agreement that absolved them of past blame, Siemens was given millions in new business for more work on the metro. Under the terms of the new contract, Siemens will be paid to provide signaling and other equipment for a new line to be built from Athens airport to the port of Piraeus. The contract will be financed mostly by European Union subsidies.

All, it seems, is forgiven for Siemens in Greece. But because the new agreement was negotiated in secret, we will have to wait for next parliamentary investigation to find out if there was yet another shady deal cut to get Athens traffic and metro working again.

-----

Other German Bribes

Siemens is not the only German company to pay large bribes in Greece. For example Athens spends a lot on military equipment ostensibly because of the threat posed by Turkey, its neighbor to the east. In reality, it seems, the purchases actually have more to do with propping up politicians and making money for Greek businesses and their foreign partners. Critics note that if Athens cut defense spending to levels comparable to other European states, ie by €150 billion ($195 billion), it would not have needed a bailout.

One of the biggest scandals in this arena is a €2 billion contract that Greece signed in 2010 for four Class 214 submarines from Ferrostaal of Germany. This past April Akis Tsochadzopoulos, the former Pasok defense minister, was arrested at his luxurious neoclassical mansion opposite the Acropolis and sent to jail for allegedly taking an €8 million bribe from the company. Ferrostaal has also agreed to pay a €140 million fine. (Only one submarine has been delivered so far and even that has proven to be faulty)

The Ferrostaal and Siemens cases suggests that the symbiotic system of German bribery in Greece is one of the key reasons why the country is in such bad financial shape. Ironically Germany is now making even more money from the bailout. The German finance ministry estimated that Greece has paid Germany €380 million in interest alone on the €15.17 billion in loans that it took out under the first bailout for the country in 2010, according to documents obtained by Reuters.

Editor's note: It is worth noting that part of the payment deal includes seminars on combating corruption for the Greek public servants.... conducted by Siemens' experts...

Greece a 'corrupt, failed state'

A woman walks past a wall covered with graffiti in Athens today.

Πηγή: Irish Times
By Bloomberg
May 25 2012

The incoming co-chief executive officer of Deutsche Bank today described Greece as a "corrupt" and "failed" state.

"Greece is the only country, I feel, where we can say 'it's a failed state,' it is a corrupt state, corrupt as far as its political leadership is concerned, and obviously other people had to be willing to support this," Juergen Fitschen, who takes up his post next week, said in a speech at a conference in Berlin.

Mr Fitschen travelled to Athens yesterday to meet executives from the banking, shipping and industrial sectors.

"I asked my counterparts, 'where are the people that you would trust to lead the country into a new era where you have open confidence that it can be a valued member of the euro zone?'" Mr Fitschen said. "Unfortunately, the number of names was very limited; you wouldn't find even a handful of names that are trusted political leadership candidates today."

"It is very unfortunate and the country has paid a very high price," said Mr Fitschen. "The political elite is totally isolated from the rest of the country. No country can be governed properly if there is no dialogue between the business elite and the social elite and the political elite," Mr Fitschen said.

The prospect of Greece leaving the 17-nation euro region increased after parties opposed to the terms of the country's second bailout by the European Union and the International Monetary Fund won most of the votes in May 6th elections.

A fresh round of voting will be held June 17 after politicians failed to form a government. For the first time since the crisis began in November 2009, European leaders and central bankers are speaking openly of Greece abandoning the currency union.

His comments contrast with a statement the bank's CEO, Josef Ackermann, made in June 2010. Mr Ackermann said at the time that he was confident Greece could repay its debt because the nation was committed to reform. Greece has since restructured its debt, asking private investors to take losses on their bonds.

The foregone conclusion that Greece will leave the euro area made by some leaders and market participants is "dangerous," said Mr Fitschen, who takes over as Deutsche Bank co-CEO with investment bank chief Anshu Jain at the end of the month.

"We should not talk so much about the exit, but we should talk more about how we can make sure that this event comes to an end and we focus all our attention, all our interest on how to maintain Greece as a member of the euro zone because, I believe, that would change the whole debate very fundamentally," he said.

"People are just not seeing the light at the end of the tunnel," said Mr Fitschen at the conference hosted by the American Chamber of Commerce in Berlin. "They accept that they have to go through painful adjustment processes, but where's the carrot that can guide them to accept it and cheerfully wait for better times to come?

"The moment that the public would feel that the momentum has returned, it becomes much easier."