Greece’s corruption prosecutors on Monday announced the launch of an investigation into the 2002 privatization of Hellenic Shipyards in Skaramangas. According to their initial findings, there are indications of significant losses for the Greek state through the sale, amounting to more than 53 million euros.

The evidence regarding the sale of the shipyards to the German-led consortium HDW/Ferrostaal will now be forwarded to the chief of the corruption prosecutors’ Eleni Raikou, following evidence uncovered by Corruption Magistrate Ilianna Zamanika and assistant magistrate Giorgos Evangelou during their own investigation of defence procurement programs.

Among others, the German consortium failed to fork up the sums promised for a share capital increase while, in what the prosecutors view as highly suspicious timing, the privatization agreement coincided with the signature of a contract to refurbish the German submarines bought by Greece, with both signed on May 31, 2002. The investigation also showed a lack of a transparency in the tender process leading to the sale and violation of European Commission guidelines.

An earlier investigation conducted by the European Commission’s Competition directorate also concluded that the Greek state had suffered losses through the sale and that HDW/Ferrostaal offer had been chosen illegally, with evidence that members of the Greek government and shipyard officials had acted to give the German consortium a clear advantage over other participants in the tender.

Among others, with full information on the shipyards financials and pending contracts, the German consortium was able to successfully bargain for trade-offs and benefits, such as buying the shipyard without liability for accrued fines, interest and other outstanding debts.

The prosecutors have not ruled out the possibility that the damage to the state may be even greater than initially estimated, especially if the goal of the privatisation was to keep the shipyard running and preserve jobs, since it was afterward allowed to fall into decline and hundreds of jobs were lost.

The investigation will focus on whether the evidence supports charges of criminal breach of faith at the expense of the public sector.

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