Georg Grosz, Lovesick Man, 1916

The Grand Embezzler

Former PASOK Minister Akis Tsochatzopoulos was arrested last week on charges of money laundering and tax offenses, including the failure to declare the true value of a €1.8 million mansion at the foot of the Acropolis. Grand, debonair Akis, the tall, lean, almost-Prime-Minister who had been stripped as a young man of his citizenship by the junta because of his resistance activities but who many years later held his (second) wedding reception in the Four Seasons Hotel in Paris so that he and his guests could have a view of the Eiffel Tower, spent Easter in police custody at the Athens Police headquarters on Alexandras Avenue. Akis, an engineer by trade who “served” as Minister of Public Works and Minister of Defense and various other positions from which he is alleged to have profited was finally behind bars. At least until the trial. Public prosecutors Evgenia Kyvelou and Eleni Siskou, who have documented the charges, have indicated that under-the-table payments for defense procurements had been going on for more than a decade, with funds from kickbacks being funneled through various offshore companies that the former Minister owned but were managed by associations, including Nikolaos Zigras, a first cousin (who was also a former minister).

We may never know the true extent of the former Minister’s dealings. The prosecutors have located millions of euros’ worth of deposits in several European banks, including 16.2 million Swiss francs in Switzerland, which have been linked to the procurement of Tor M1 missiles. But according to the prosecutors’ report, this is just a fraction of the suspected theft.

The Tsochatzopoulos case is exceptional, not for the singularity of his crimes—corruption has been pervasive at high levels in both left and right governments in the last three decades, though few admittedly led a lifestyle as opulent as Tsochatzopoulos did. No, it is exceptional because he is the only politician to have been arrested and charged for corruption in recent memory.

His arrest has a certain symbolic value. The fall of Akis. The details of the case seem to confirm what many here already mistakenly believe is the true cause of the crisis: an unprecedented massive theft of public money engineered by a corrupt political elite. But few here feel satisfied, precisely because so many others are still untouched. Even fewer believe that he will actually serve much time if convicted. But for many the arrest is a way to put a face on at least one of the perpetrators who have robbed the country of its prosperity and promise. It lets us name the villain. Personal greed is always an easier mechanism to understand than trade imbalances, monetary policy, investor confidence, and bond yield spreads (even when these are often partly driven by greed as well).

Tsochatzopoulos is just one of the gallery of crooks, tyrants, rogues and fools at the helms of political and economic power within and beyond the country who are ascribed responsibility, in many instances with ample justification, for creating, prolonging or exacerbating the tragedy that besets the country. My friend Natalie tells me that if she were to be diagnosed with an incurable disease and two months to live, she’d take some of these down with her. How many, I ask? “I don’t think I’d have time for more than 5,” she says. “After all, I would be busy dying.” She made it sound like a terribly complex project that was about to run over budget. The dying part, not the killing, I mean.

“Five’s such a small number given the circumstances,” she said. I wasn’t sure if she was sad because she couldn’t execute more or because there were so many to execute.

“How many do you think would need to go?” I asked. “Seriously. I don’t mean executed. I mean, put in jail. Assuming we could get our hands on the convoluted paper trails of their crime—if any were left to trace—and build up a good enough case. How many would be enough?”

“What an odd thing to ask!” she said. It seemed so obvious to her, who the guilty ones were.  It was if she could she see them in front of her. Members of a ruling elite who plundered staff coffers, people like Tsochatzopoulos, who skimmed millions off a huge submarine procurement deal.

But the patronage system is much vaster than arms deals and national roads. The crimes committed by the grand embezzlers at the top were multiplied on a much smaller scale with a myriad of lesser deal-makers. Ministry officials, hospital managers, deputy mayors, customs officials, army officers, state planning officials, tax officials—each had something to leverage for votes, loyalty or cash: jobs, contracts, subsidies, grants, hospital beds, consultancies, licenses, commissions, protection, transfers, exemptions. Not all engaged in this marketplace of patronage; perhaps most didn’t, but enough did so to make the idea of “purging” the system and satisfying justice highly problematic. How deep do you go? Where do you stop?

The extent of corruption is bewildering. A study for the Brookings Institute in 2010 concluded that political corruption, kickbacks and patronage was costing the Greek economy roughly 8 percent of GDP.

Global Financial Integrity estimates that Greece lost about $160 billion in the last decade to unrecorded transfers through its balance of payments, that is, illicit money that was channelled in or out of the country (e.g. illegal capital flight). As Transparency International notes, this is roughly equivalent to the latest bailout ($120 billion).

Transparency International’s 2011 National Survey on Corruption in Greece estimated that petty corruption—not the grand embezzlement schemes, but the corruption ordinary people are exposed to—cost Greece €554 million in 2011. Admittedly this is down by €78 million from the previous year, but it’s still shocking to think that in the midst of the crisis, small-scale bribes and fakelakia are still costing the economy half a billion euros.

Corruption Price List

Corruption Price List (Transparency International)

Six in ten Greeks expect public officials to abuse their position for personal gain. Over 1,000,000 Greeks paid money in fakelakia last year. Clearly they didn’t pay this to a million different officials and doctors, but even a ratio of 10:1 means you’ve got 100,000 people receiving this money.

How deep do you go? Where do you stop?

The endemic corruption and tax evasion is not a bogeyman the foreign media or German ministers have come up with to castigate Greece with. Revenue lost to the Greek state because of tax evasion is about 30-35% of total revenue. This is equal to this year’s budget deficit. The entire budget deficit.

How deep do you go? Where do you stop?

Of course, the difficulty in finding the exact point along this chain of smaller and smaller crimes where we can say, yes, this is enough, justice is served, does not mean that the grand embezzlers shouldn’t be brought to justice. They should. All of them, hundreds if the evidence is there, even though I doubt that in the end more than a dozen will land up in jail.

But the other thing with a patronage system is that it has patrons. It seems obvious enough, but we tend to forget that clientilism prospered for so long because we were its clients. Sometimes, when faced with the arbitrariness of a convoluted and self-serving bureaucracy, we became its unwilling clients. Other times, when political pull could help us find a job or build a house or get scheduled faster for an operation, we were its eager clients. In most cases, though, we were just resigned to it. Resigned that this was the way things were done. We weren’t told, of course, that the largesse of a system that hired more and more employees to the public sector, the waste and absence of accountability and audit that allowed—or indeed, encouraged—kickbacks, that all this was being financed by loans that the country would not be able to repay.

When did it all start? When did we begin to think that passing along a little envelope of money to someone to do something they were already getting paid to do anyway—or not to do something when they were supposed to do—was “just the way the system works”? When did we cease to be surprised when hearing of a planning official who is bribed to call a forest a field or confirm the flooding of a crop of rye that was never planted? How did we come to consider it ordinary practice for small businesses to keep half their employees and stock off the books? When did we first start fashioning this strange calculus of interest, in which we told ourselves that it was fine to hide a part of our income, since we had already paid our share and anything else was only going to line the pockets of corrupt politicians or cover a ten-fold markup in a big construction contract? At what turning point in recent history did the dreams of young people begin to coalesce in the single aspiration of a sinecure in the civil service?

There’s an enormous difference, of course, between a former Minister who reportedly lived on $50,000 a day and a plumber who doesn’t give receipts and thus declares only a fraction of his income. And there’s a difference between the plumber and me when I don’t ask for his receipt. But we all had our part in keeping this perverse system alive. Through our acquiescence and our votes.

Natalie says I’m blaming the victim. She says that ordinary people really didn’t have a choice. More often than not, it was a matter of survival. Perhaps she’s right. But isn’t this part of the very tragedy? It was arguably in our immediate self-interest to acquiesce. But it was always in our long-range interest to resist. It was always in our greater interest to create an alternative.

And this failure to forge a different vision is above all a failure of political leadership. We were duped into believing there was no other way, that the future was only a more finely tweaked and more prosperous version of the present. Embezzlers, Tsochatzopoulos aside, are often careful not to draw attention to themselves; they misappropriate only a portion of the assets with which they have been entrusted. The theft can thus go on undetected for years. Then comes an unexpected crisis and assets are suddenly needed. Only then do the victims see that they have been deceived and part of their assets has gone missing. And only now do we realize how much of our future has been stolen from us.


Image: Georg Grosz, Lovesick Man, 1916


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