SPECIAL REPORT - Greece's triangle of power

ATHENS Mon Dec 17, 2012 8:08pm IST

Greece's Finance Minister Evangelos Venizelos listens to a question during a news conference in Athens in this March 9, 2012 file picture. REUTERS/Yiorgos Karahalis/Files

Greece's Finance Minister Evangelos Venizelos listens to a question during a news conference in Athens in this March 9, 2012 file picture.

Credit: Reuters/Yiorgos Karahalis/Files

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ATHENS (Reuters) - In late 2011 the Greek finance minister made an impassioned plea for help to rescue his country from financial ruin.

"We need a national collective effort: all of us have to carry the burden together," announced Evangelos Venizelos, who has since become leader of the socialist party PASOK. "We need something that will be fair and socially acceptable."

It was meant to be a call to arms; it ended up highlighting a key weakness in Greece's attempts to reform.

Venizelos' idea was a new tax on property, levied via electricity bills to make it hard to dodge. The public were furious and the press echoed the outrage, labelling the tax 'haratsi' after a hated levy the Ottomans once imposed on Greeks. The name stuck and George Papandreou, then prime minister, felt compelled to plead with voters: "Let's all lose something so that we don't lose everything."

But not everyone would lose under the tax. Two months ago an electricity industry insider revealed that some of the biggest businesses in the land, including media groups, were paying less than half the full rate, or not paying the tax at all. Nikos Fotopoulos, a union leader at power company PPC, claimed they had been given exemptions.

"It was a gift to the real bosses, the real owners of the country," he said. "The rich don't pay, even at this time."

This time the media made little fuss. "The news was not covered by the media ... because media owners were among those favoured," Fotopoulos said later. Leading daily newspapers in Athens either did not mention or downplayed his claims, a review by Reuters found.

To many observers the episode illustrates the interplay between politics, big business and powerful media owners. The interwoven interests of these sectors, though not necessarily illegal or improper, are seen as an obstacle to Greece's attempts to rescue its economy. They are, say critics, partly to blame for the current crisis and for hindering reform.

Leading media owners contacted by Reuters denied exerting any improper influence or seeking favours, or did not respond to questions.

But given the international impact of Greece's crisis, concerns now extend beyond the country. A source in the troika of lenders keeping Greece afloat - the European Union, International Money Fund and European Central Bank - said: "The system is extremely incestuous. The vested interests are resisting reforms needed to make the economy competitive."

Opposite sides of the Greek political spectrum speak about the subject in colourful terms. "In Greece the real power is with the owners of banks, the members of the corrupt political system and the corrupt mass media. This is the triangle of sin," said Alexis Tsipras, leader of Syriza, the main opposition.

Panos Kamenos, leader of the right-wing Independent Greeks party, said: "The Greek media is under the control of people who depend on the state. The media control the state and the state controls the media. It's a picture of mutual blackmail."

Others are more measured. Asked about the haratsi tax, Venizelos acknowledged there were some "blatant cases of paying less tax or none at all", but blamed this on poor records held by the state-run electricity company. "In no way was there any discrimination in favour of specific property owners," he said.

Simos Kedikoglou, a government spokesman, said officials were monitoring the property tax and any errors would be rectified.

Previous efforts to curb potential conflicts of interest - in particular relating to the media - have had little effect, according to a European Commission report on media freedom and independence, published in December 2011. It said Greek media policy "has remained highly centralised in the hands of the government of the day," and that it "has been thoroughly influenced, albeit in opaque and informal ways, by powerful economic and business interests who have sought to gain power, profit, or both."

RISE OF PRIVATE MEDIA

Interplay between politicians and the media is common in many European countries, notably in Italy where Silvio Berlusconi was both prime minister and head of a media group, and in the UK, where media owners such as Rupert Murdoch, chairman of News Corp, have had contacts with successive prime ministers.

But critics say such connections are particularly significant in Greece because the state plays a large role in the economy, and because of the way media has developed there.

Private radio stations and TV channels emerged only in the 1980s, after decades of state media control. As businessmen hurried into the fray, regulation was haphazard. Successive governments let broadcasters operate without proper licences, according to the 2011 EU report on Greek media. This semi-regulated approach led to Greece having a large number of media outlets for its population of 11 million.

In 2009 the country had 39 national daily newspapers, 23 national Sunday papers and 14 national weekly papers, according to an earlier EU study of media. Per capita, Greece has far more national newspaper titles than, say, Germany or the UK. The country also has nine national TV stations, six of them privately owned, and numerous private radio stations.

A 2006 cable from the U.S. Embassy in Athens, obtained by Wikileaks, noted: "How can all these media outlets operate profitably? They don't. They are subsidised by their owners who, while they would welcome any income from media sales, use the media primarily to exercise political and economic influence."

At the same time, much of the economy outside the shipping industry depends on state contracts or licences.

"Most companies in Greece are essentially waiting to get money from the state," said Theodoros Roussopoulos, a former government press minister. "Greece is officially capitalist, but in effect socialist."

Media owner Ioannis Alafouzos told Reuters that some of the media "are in effect press offices for business groups." Alafouzos, whose family owns SKAI TV, Greece's fifth largest station, and Kathimerini, a leading newspaper, added: "It's developed into a completely unhealthy situation. The purpose of media has been largely to execute specific tasks for their owners."

Alafouzos, whose wealth comes from shipping, said his family had been careful not to depend on government dealings. His critics say that SKAI was among the companies found to be paying no haratsi tax - an omission SKAI says was caused by local bureaucracy - and that his media interests benefit from state advertising. Alafouzos described the latter as a minimal proportion of his media interests' revenue.

FAMILY CONNECTIONS

One nexus of interwoven interests is MEGA Channel, Greece's biggest TV station, which is co-owned by businessmen who are leaders in, or have strong connections to, other sectors of the economy.

The biggest collective stake in the TV station is owned by members of the family of George Bobolas. One of his sons, Fotios, is a director of Teletypos, the channel's holding company. Another son, Leonidas, is chief executive and a major shareholder of Ellaktor, a construction giant founded by his father that has participated in multi-billion euro contracts with the state. Leonidas has no stake in Teletypos.

The Bobolas family also controls Ethnos, a popular daily and Sunday newspaper, other print media and websites. From the large, grey headquarters of their publishing company in Halandri, a northern suburb of Athens, the extent of the family interests is evident. Nearby is the Athens ring-road, built by an international consortium that included Ellaktor. Alongside the road is a new railway line to the airport, also built with Bobolas involvement.

George Bobolas did not initially respond to questions about his family's various interests. Instead, his newspaper Ethnos published several articles in the days after Reuters submitted questions to him. One alleged that Reuters "continues, it seems, to target our country, the Greek economy and entrepreneurship." Another described Reuters as a "fifth column" for the troika and alleged that Athens was being flooded by foreigners out to "undertake the demolition of public figures according to Anglo-Saxon practices."

After a further request from Reuters, Bobolas said in a letter: "I have never used the media owned by companies in which I participate, for the promotion of interests of the holding company Ellaktor S.A. ... Newspaper Ethnos has never used influence or asked any favours from rulers, for the benefit of Ellaktor."

Bobolas said former prime ministers could verify he had never asked for any favours and added: "One could say that Ethnos' severe judgment on governmental actions and politicians in general, could be considered as obstacle and not help to Ellaktor's corporate interests".

In a written statement, construction firm Ellaktor said its subsidiaries engage in both private and public contracts, and that it pursues public contracts "by participating exclusively in open international tenders, in accordance with Greek and European legislation."

Other figures involved in MEGA Channel include the family of Vardis Vardinoyannis, who is prominent in oil and shipping, and Stavros Psycharis, who controls the DOL media company.

George Vardinoyannis, son of Vardis, serves on MEGA Channel's board, and the family also owns a smaller station called Star Channel. The family is also the major shareholder in Motor Oil Hellas, one of two Greek refinery operators.

In an email, a spokeswoman for the family said: "Most of our companies are based abroad or have an international exposure. The production and sales of Motor Oil Hellas refinery, our biggest investment in Greece, are consistently 70 percent export oriented ... None of our companies rely in any way on government contracts or business."

Psycharis, whose company DOL publishes leading newspapers and has won state contracts in education, culture, travel, and printing, is MEGA Channel's chairman.

In 2006, he sued two investigative journalists who alleged on a radio programme that he lobbied for the sale of Eurofighters to Greece and had used his newspapers to promote the merits of a deal. Psycharis denied the allegations. Three years later, after a court hearing, his case was dismissed.

The court rejected one claim by the journalists, but accepted that Psycharis' newspaper had campaigned for the Eurofighter deal. An appeal is pending. Psycharis did not respond to questions about the case.

In late November one of his newspapers chastised Apostolos Kaklamanis, a former speaker of the Greek parliament, who had told PASOK lawmakers that the era when oligarchs "appointed the party leader" had passed. Days after Kaklamanis spoke out, To Vima, a leading newspaper controlled by Psycharis, ran an article referring to his comments and promising to make allegedly embarrassing revelations about Kaklamanis.

Psycharis did not respond to questions about his media holdings or his wider interests.

Critics of links between media and business also cite the case of a gold mine project in Halkidiki, northern Greece. The mines were sold by the Greek government in 2003 to a newly-formed Greek mining company. Soon afterwards the construction firm in which the Bobolas family has an interest acquired a stake in it.

Local opponents campaigned vigorously against a licence for the mining project being granted, claiming it would harm the environment. Tolis Papageorgiou, a leading figure in the protest group Hellenic Mining Watch, alleged that newspapers controlled by the Bobolas family failed to report large demonstrations opposing the mine and vilified an environment minister, Tina Birbili, who blocked a licence for it.

"Just days into her new job in 2009 she became the target of media controlled by Bobolas because she refused to issue a licence to the mining company," Papageorgiou alleged.

Soon after Birbili's appointment in 2009, newspapers owned by the Bobolas family christened her "Green Tina" and criticised her performance. Reports said she was blocking many kinds of development. The articles did not mention that the newspapers' owners had a family interest in the mine or the construction trade.

In his letter to Reuters, Bobolas said that Ethnos strongly supports large-scale projects that create employment and help the country recover from its economic crisis.

Birbili, who declined to comment for this article, was sacked in June 2011; a licence to operate the mine was subsequently granted. After it was issued, construction firm Ellaktor, according to its annual accounts, booked a profit of 261 million euros from partly selling off and partly revaluing its stake in a Canadian company that had by that time bought 95 percent of the mine.

A former aide to the Greek prime minister of the time said Birbili's sacking was not related to the mine. The former environment minister who authorised the licence, George Papaconstantinou, said "the decision was made solely on the basis the environmental impact study", which had been positive about the mine.

In his letter to Reuters, Bobolas said the only remaining connection his family has with the mine is his son's indirect stake of less than one percent.

TWO HATS

In the media, potential conflicts of interest can arise even at low levels. Tucked away inside the headquarters of the Athens union of journalists, ESHEA, is a list of its members who work for the government, for example in press offices; dozens wear a second hat as newspaper journalists at the same time.

The union's rules ban its members from working for bodies they cover as journalists. In an effort to unmask those breaching that rule, the union obtained a list of government-employed journalists in 2005. But it was never published.

Some of those named on the list complained; Greek officials judged that publishing the list would violate personal privacy. It was a decision that Dimitris Trimis, the union president, calls a serious defeat.

"There is a triangle of political powers, economic powers and media owners, and nobody can tell who has the upper hand," he told Reuters, sitting under the dusty portraits of his predecessors. "It starts from the top, between the minister and the publisher, and it trickles down to the press office and the journalist. It's a pyramid."

One example, he said, was a TV studio set up in 2007 by the Agriculture Ministry to promote its activities. Although about 50 people, including political journalists, were hired, only a few had anything much to do, he said. "Many more than would be needed were hired and it was clear it was a perk," Trimis said.

A spokesman for the ministry said the studio never employed full-time staff and that it closed in 2009.

Reuters has identified at least nine press officers for financial institutions who also write in the media, which has largely failed to report the need for the nation's financial system to be reformed. The "double hatters" include Alexandros Kasimatis, a financial journalist at a Sunday newspaper, who also works as head of public relations for the Capital Markets Commission (CMC), a key financial regulator of listed companies. Reuters could find no articles by Kasimatis, who writes about companies but not the CMC, in which he declared his CMC role.

Kasimatis said: "It is not a conflict of interest. The Athens Journalists' Union allows members to work at press offices provided they don't cover who they work for. And I never write about the CMC."

In an email to Reuters, Costas Botopoulos, chairman of the CMC, said Kasimatis' two jobs were compatible.

Another journalist, who did not face direct conflicts of interest, was still nicknamed Ms Light-Water-Telephone by fellow journalists because she was said to work both for To Vima newspaper and three public utility companies. Ioanna Mandrou, who now works for Kathimerini and SKAI TV, confirmed she had worked in the press office of OTE, a state telecoms company, and briefly as a consultant to a state water company. She said she had not worked for an electricity company.

"In To Vima I was a reporter covering judicial affairs and that had nothing to do with my work in OTE. And when I say I 'worked' for OTE, I literally mean I worked," she said. "I can tell you that around 95 percent of the people employed in similar jobs do nothing."

She said it was common for politicians to arrange such jobs as favours.

Kedikoglou, the government spokesman, said members of the journalists' union "have the right to work in state companies and as press officers under certain conditions and providing that they do not have conflicting interests."

PROSPECTS FOR CHANGE

Over wine and kebabs on a cool October evening in 2004, then prime minister Costas Karamanlis declared war on powerful forces in Greek society.

"We will not let five pimps and five vested interests manipulate our political life," he told conservative lawmakers invited for dinner at Bairaktaris taverna in Athens, according to people present at the meeting. He did not specify who he was referring to.

Karamanlis' subsequent efforts to restrict access to state contracts by media owners were met with full-frontal attacks from the press. But in the end, defeat came from the European Commission: in 2005, it said Karamanlis' plans violated EU competition rules, forcing him to scrap them.

Since then, no significant attempt has been made to tackle the interweaving of interests. Politicians who clash with media owners risk a bad press, according to one senior Greek politician who spoke to Reuters about his experiences when he was a minister in a former government. In one instance, he said, a media owner asked him to help stop a judicial investigation into the media owner's affairs. And, in another, a newspaper publisher who owed a million euros to a state-owned company contacted him seeking a deal to escape the debt.

"He said 'I will put an advert for the state-owned company every day in the paper to settle it.' He expected me to call the company and make a deal. I refused to intervene," said the ex-minister, who spoke on condition of anonymity. He said he was subsequently the subject of negative reports in the publisher's paper.

The persistence of potential conflicts of interest is reflected in the latest Corruption Perceptions Index compiled by the campaign group Transparency International (TI). It ranked Greece 94th - 14 places lower than in 2011 and the lowest ranking of any euro zone country - and the group's Greek branch concluded "there are significant structural issues with the executive, the media and the business sector."

Kedikoglou, the government spokesman, said ministers now want to "normalise" broadcasting. The government intends to reform the regime of "provisional licences" and bring in "legislation that will permanently set the rules applying to the television market," he said.

Even without legislation, the landscape is changing. By 2013 Greece's economy will have dwindled by a quarter in five years. Financial pressures have intensified. Advertising has shrunk and a Reuters study of recently-published accounts shows the top 18 Athens-based media companies have declared debts totalling more than 2 billion euros.

At the same time the international lenders keeping Greece afloat want real reform in exchange for their billions. They are, for example, demanding that trustees appointed by the troika sit on bank boards and have the final say in approving major loans, including those to media organisations.

The newspapers Ethnos and To Vima reacted to that proposal with scathing editorials. "Greece is not a colony," wrote Psycharis in a front page article in To Vima. "I address those who think that what the Third Reich failed to do will now be achieved by Europe's money peddlers." (Additional reporting by Nikolas Leontopoulos and Costas Pitas; Editing by Richard Woods and Simon Robinson)

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