[ Mislilac68 @ 14.06.2012. 20:34 ] @
||Specijalan izveštaj Rojtersa: Kako je jedna grčka banka zarazila Kipar. Reč je o Marfin banci koja posluje i u Srbiji.|
Special Report - How a Greek bank infected Cyprus
ATHENS/NICOSIA | Thu Jun 14, 2012 3:25pm IST
(Reuters) - Like many Greek tycoons these days, Andreas Vgenopoulos is in trouble.
The self-made businessman built one of Greece's leading corporate empires over the past two decades. Among its jewels was a major bank in the nearby Mediterranean island nation of Cyprus. Then it all started to unravel.
In 2010, Marfin Investment Group (MIG), the firm Vgenopoulos managed which has stakes in everything from privatised national carrier Olympic Air to food giant Vivartia, lost 1.8 billion euros. The loss, largely made up of write-downs on goodwill, was the biggest ever for a Greek company to that point. There is a joke in Athens that MIG's initials stand for "Money Is Gone."
Meantime the Marfin Popular Bank was a major lender to an order of Greek monks who received swathes of prime state-owned land in sweetheart deals, and who in turn bought shares in MIG. A Greek parliamentary inquiry alleged serious "conflicts of interest" in how bank loans were issued to finance MIG's wider activities.
Vgenopoulos denies any wrongdoing. But his travails shed light on a factor largely overlooked in the narrative of the Greek economic crisis, which is now threatening to force Athens out of the euro zone and unravel the currency along with it: the debts many Greek banks built up by lending to each other and to associates.
As Greeks head back to the polls in an election that may help to decide whether they stay in Europe's common currency, and as Cypriot politicians move closer to asking for an international bailout - perhaps as early as this week - the story of Vgenopoulos and Marfin helps explain how Greece and Cyprus got here.
Last November, regulators in Cyprus pressured Vgenopoulos to give up his chairmanship of Marfin bank. Now renamed Cyprus Popular Bank, it was placed under state management in May. The bank's new executives have uncovered what they suggest is evidence of huge exposure at its Greek businesses to risky investments, including loans issued to investors who bought shares in the MIG conglomerate. They allege this has left the bank too vulnerable to MIG's fate.
"I think clearly there were many decisions which were in retrospect unwise," said Michael Sarris, a former Cypriot finance minister who has taken over as chairman of the seized bank. Senior bank officials say the central bank of Cyprus is preparing to order an inquiry into what may have gone wrong at Marfin - and into shortcomings by Cypriot regulators.
Analyses of the Greek crisis have focused on the most glaring cause of the country's woes: the hundreds of billions of dollars in debts racked up by Athens, which has so far required two bailouts.
Less attention has been paid to the nation's banks, which are due to be bailed out with 30 billion to 50 billion euros in guarantees from European taxpayers. A look at Marfin, along with previous Reuters examinations of Greek lenders Proton and Piraeus, suggests that the nation's financial woes were exacerbated by conflicts of interest at some banks and by light regulatory supervision of them.
Manolis Bedeniotis, a just-retired MP with PASOK, the Greek socialist party, said it was clear there was a "lack of substantial regulatory control on the banking system". Loans were often issued based on "a network of personal relationships," starving those in the real economy - small and medium businesses and farmers - of access to finance. "This is the evolution of a system that was functioning according to its connections with the political and the economic power, and in the end reached a point of even being above it."
The scale of Marfin's problems poses difficulties for the Cyprus government. In a parliamentary session on May 17, they voted to help the bank fill a capital shortfall estimated by the bank and the country's finance ministry at nearly 2 billion euros. Lawmakers in Cyprus fear that if no new private investors are found, the bank could even force the republic, one of the smallest economies in the euro zone, to seek its own bailout. The money needed represents a tenth of the country's GDP.
An independent MP, Zacharias Koulias, told the Cypriot parliament ahead of the parliamentary vote that in his years in parliament, "it's the first time we are in such a difficult position." Like many other Cypriot politicians, he blames Vgenopoulos.
"How could (Cypriot authorities) be fooled by a man who took the capital of Cypriot depositors to Greece and turned it into thin air?" Koulias said. "Is it even possible for a man to come to our country, grab the capital and leave, and all these managers didn't realize what was going on?"
Vgenopoulos rejects any suggestion of blame. Interviewed in his wood-panelled MIG boardroom in Athens, dressed in jeans and polo shirt, he said Cypriot regulators had conducted a smear campaign against him. His exit as non-executive chairman of Marfin - Vgenopoulos said he jumped rather than was pushed - was part of a "coup" organised by the then-governor of the central bank of Cyprus, Athanasios Orphanides.
"The biggest mistake of my career," he said, was to keep his bank in Cyprus, where now "they are throwing allegations against me, they are discovering old things ... I ended up in a trap."
Orphanides declined to comment for this story.
The former Marfin bank's biggest immediate problems stem from having to write down the value of its investment in Greek government debt to 720 million euros from 3.05 billion. Such haircuts have been forced on banks holding Greek sovereign paper across Europe, as part of the latest bailout of Athens.
"There was too much lending, too much concentration of risk in one instrument," said Sarris, the new non-executive chairman. "And that suggests that the mechanisms of the bank did not work properly."
But the bank's other lending in Greece may have added to the problems. Of its capital shortfall, the bank estimates nearly one-third arises from provisions for bad loans in Greece. According to Sarris, the "single most important factor" dissuading investors from helping recapitalise the bank was now not sovereign bonds but concern that further losses in Greece could materialise.
"We now have a loan portfolio in Greece of about 12 billion and funding of 6 and 7 (billion euros)," he said. The gap has to be financed by Cypriot depositors.
Sarris says Marfin undertook large-scale lending to finance the purchase of MIG shares and other Greek stocks, and he wants an investigation of the deals. At issue is whether the bank executives acted improperly or just took too many risks, either by using the loans to fund the shares of affiliated companies or by failing to obtain sufficient collateral.
"Purchases of shares were made with loans, which in and of itself is not a very good practice," said Sarris. The risk was compounded by the fact that the loans were mainly secured with the very same shares. This made the collateral shaky, because stock prices can drop. "It is even less wise when (the) companies that do that are related."
Senior bankers in Cyprus, Cypriot and Greek central bank auditors, and some Greek politicians argue that Marfin became too close to MIG's shareholders, creating conflicts of interest and possible breaches of banking rules. While share loans, or margin loans, are common practice in most western markets, if the value of the shares falls, lenders typically require investors to put up more collateral or sell the stock.
Sarris said the bank may now sell the two Greek banks it owns. The extent of possible conflicted lending still needed to be pinned down. "There is a lot of smoke, which means there is some fire," he said. "But how much of it, and to what extent can it be justified, I am not sure."
"A POOR MAN WITH MONEY"
A former Greek fencing champion who competed in the 1972 Olympics, Vgenopoulos is a lawyer by training. He made his name at a shipping-law practice where he built a reputation as a persuasive salesman and dealmaker. "I am not rich," he once told a reporter. "I consider myself to be a poor man with money."
He has never shied from confrontation. He once caused outrage in the Greek parliament when he said that, while he was a servant of shareholders, "you, in your turn, are the servants of the people, therefore my servants."
He founded the Marfin group in 1998, focusing on investments in banking. In 2006, the group moved its base to Cyprus with the creation, after a merger, of Marfin Popular Bank.
In 2007 Vgenopoulos split off all the non-banking businesses and grouped them together in MIG. He then organised a 5.1 billion-euro rights issue for the Athens-listed MIG, diluting Marfin bank's stake in the company to 6.5 percent from 97 percent. As a result, MIG and Marfin became legally separate.
Vgenopoulos remained on the boards of both companies. At the Marfin bank he was chief executive and then executive vice-chairman of the bank until 2010, when he became non-executive chairman. At MIG, he was the most senior executive until becoming non-executive chairman in January. He has only small personal stakes in the companies.
"The aim of the Marfin group is to become one of the biggest European business groups with a market capitalisation of over 140 billion euros in the next five years," Vgenopoulos said in 2007, referring to MIG.
Only a year later, some in Greece started to question where the money to buy MIG shares had come from.
The trigger for those questions was a scandal over the Vatopedi Monastery on Mount Athos, on a remote peninsula in the north of the country.
Greek investigative journalist Kostas Vaxevanis showed how the Vatopedi monks had engaged political help to obtain the rights to a nature reserve in northern Greece and then, with more help, to swap it for valuable state-owned real estate across the country. The monks were also major players on the stock market and received 109 million euros in loans from Marfin bank.
The Vatopedi scandal helped push the conservative New Democracy party from government in 2009 and exposed the extent of corruption in Greek politics. Largely lost in the furore, though, were the questions the Vatopedi scandal raised about the Greek banking system.
A special inquiry on Vatopedi in 2010 heard the monks spent 30 million euros they borrowed from Marfin bank, the monastery's biggest lender, to buy shares in the MIG rights issue, plus another 42 million euros in other investment schemes with MIG or its associates.
Greek MPs went on to compel the Bank of Greece to provide details of all the loans that Marfin Popular Bank's two Greek subsidiaries at the time, Marfin-Egnatia and the Investment Bank of Greece, had made to investors to take part in the capital-raising.
George Provopoulos, the Bank of Greece's governor, revealed to MPs that Marfin-Egnatia had in 2007 loaned more than 700 million euros to finance the purchase of MIG shares in the rights issue, and the bank had been sanctioned for failing to categorise them all as "margin loans" - loans to buy a security, usually shares. This allowed them to bypass more stringent controls.
"Margin loans are legal, if conditions set by the law are respected," Provopoulos told MPs. "If the value of the collateral drops, then the bank is asked to increase its capital."
The most critical evidence came from a joint inspection of Marfin-Egnatia by auditors of the Bank of Greece and Central Bank of Cyprus conducted in March 2009. The report, seen by Reuters, said the bank had been undertaking risks "whose level and nature provoke concerns to the supervisory authorities regarding their correct and adequate management". Loans from Marfin to the MIG group suggested "favourable treatment" while "the relationship between MPB group and MIG group creates the impression that the close ties between the two groups played a significant role in the approval of those loans."
The Vatopedi inquiry report, finished in October 2010, stated that Marfin was improperly channelling loans to the monastery into schemes that benefited MIG. There were "serious conflicts of interest" for those who ran Vatopedi and its advisers but also for the administration of Marfin which had given "huge amounts" of cash that benefited not only the monastery but "simultaneously executive members of the administration of Marfin".
It described a "heap of violations, perjury, and possibly falsification of documents" by those directly involved with Vatopedi, as well as by Marfin's two Greek subsidiaries. The "tolerant" role of the Bank of Greece left members of the committee "particularly troubled."
In a letter to Greece's supreme court, the chairman of the committee, Dimitris Tsironis of the socialist party PASOK, asked for an investigation into allegedly illegal actions by Marfin and others. Tsironis also made wider allegations, arguing that Marfin-Egnatia had become a vehicle to pour nearly 2 billion euros into the hands of a small group of MIG investors.
Marfin loaned money "to well-known tycoons and businessmen" to buy shares in MIG.
All the loans for shares were granted, said Tsironis, on "extraordinarily advantageous terms to the borrowers thanks to the close ties between MIG and Marfin." And it created a special credit risk that should have been spelled out publicly.
Marfin and MIG, he said, were effectively inseparable, not least because they had many common executives and many common shareholders. "The lending nexus between Marfin and MIG and the other related companies creates a huge co-dependence and risk concentration."
Provopoulos, the Bank of Greece governor, disagreed and said that because MIG and Marfin were separate companies, the loans to buy MIG shares were acceptable. Provopoulos said Tsironis did not understand the data. MIG was "neither directly or indirectly" a parent of Marfin Egnatia or Marfin Popular Bank in Cyprus. MIG didn't exercise a "dominant influence" on Marfin, he said, nor were MIG and Marfin "subject to joint management."
In a statement to Reuters, the Bank of Greece said it had provided MPs with "all relevant information," but that legally it had an obligation of secrecy which means "we are not allowed to provide you with any further information on these questions."
Vgenopoulos is dismissive of Tsironis. He says the loans to MIG and its associates are secured and have generated huge income for the bank. The risk from loans secured on MIG shares was also exaggerated: it was misleading to measure risk to the bank based on the market price of those shares, since the shares are "hugely discounted," trading at a tenth of net asset value. The bank made big profits from its Greek portfolio during good times, he said, and should look to the long term.
Vgenopoulos accused the MPs on the committee of cowardice because they never summoned him to give evidence. He and his companies filed three lawsuits against Tsironis for defamation, of which one has been dismissed and two are still to be judged.
Vgenopoulos says Marfin was cleared of wrongdoing by the Bank of Greece after the 2009 audit and the MPs' report, as well as by money laundering investigators and by the Capital Market Commission (CMC), which regulates the stock exchange. "Nothing has ever been substantiated," he said.
Costas Botopoulos, chairman of the CMC, said that the commission doesn't have oversight of the Vatopedi case and hasn't conducted an inquiry.
Panayiotis Nikoloudis, the head of Greece's anti-money-laundering agency, said there was no reason to investigate Marfin's activities. "The Bank of Greece already investigated this case and found everything was all right. I have seen no strong argument that should overturn its conclusions."
Two senior prosecutors in Athens, however, said judicial investigators still had an open inquiry into the MPs' discoveries.
Over the past year, Cypriot regulators have taken a closer look. According to senior banking officials in Cyprus, central bank governor Orphanides told his staff last autumn that Marfin Popular Bank's purchase of too many Greek bonds had resulted in a liquidity crisis.
Relations between Orphanides and Vgenopoulos deteriorated, and in November Vgenopoulos quit as Marfin's chairman, just as Orphanides was preparing to ask him to resign on the grounds that he was responsible for the cash crunch. A month later, chief executive Efthimios Bouloutas was sacked on the instruction of Orphanides, who has not publicly said why. Bouloutas, who declined to comment, now runs MIG in Athens.
The former Marfin's new management believes the bank's exposure to loans given in 2007 to buy MIG shares may be much greater than has been reported. A total of more than 510 million euros has still not been paid back. With MIG's shares trading at just 3 per cent of their 2007 level, the collateral for these loans is now valued at around 140 million euros.
Orphanides stood down in April after the government opted not to renew his five-year term. In his few public remarks on the matter, he accused Cyprus's ruling communist government of siding with Vgenopoulos and opposing more stringent banking regulations. "It saddened me to be the recipient of political interventions which in all cases were to relax the supervisory framework or meet certain interests," he told parliament.
At a press conference in Cyprus on May 4, Vgenopoulos, who said he was fighting for tougher rules, accused Orphanides of acting improperly.
"It was the theatre of the absurd. Having made life for the bank incredibly difficult, he started making extra-institutional and illegal interventions to shareholders," Vgenopoulos said. "The governor of a central bank was calling shareholders! He was meeting shareholders by appointment in his office. He called Dubai" - the Dubai Financial Group, which is Marfin's biggest shareholder and MIG's second-biggest shareholder. "They were quite shocked, and he was taking them to taverns in Cyprus."
A spokesman for the Dubai group declined to comment.
Vgenopoulos says he has nothing to hide about the relationship between MIG and Marfin. Asked about loans given to buy shares in MIG's capital-raising, he said that they were not designed to help MIG. The capital raising was so oversubscribed, all of the shares would have been sold even if no loans were issued, he said.
"These loans were given by the bank to meet demands of clientele which could not be refused, from good customers, each one of whom had a relationship to the bank, from which the bank earned a lot of money, and the bank could not say no."
There were no loans to shareholders, as Tsironis alleged, because existing bank customers only became MIG shareholders after the bank loaned them money.
Vgenopoulos supplied a copy of a note he sent on June 29, 2007, to remind bank staff that clients should not risk undue exposure and make investments with money they did not have. He said the message was followed up a week later by a letter to staff from the human resources manager.
"Also, no loans were given to my friends, to my relatives, to me," Vgenopoulos said.
Vgenopoulos, who believes the bank is now being mismanaged, thinks Cyprus should call in BlackRock, the U.S.-based investment firm that audited the loan books of major Greek banks, to do the same there. Attempts to blacken his name and the name of Marfin would only damage Cyprus, he said.
(By Stephen Grey, Michele Kambas and Nikolas Leontopoulos. (Grey reported from Nicosia and Athens; Kambas from Nicosia; Leontopoulos from Athens; additional reporting by William Waterman in London. Edited by Simon Robinson and Sara Ledwith)
[ Mislilac68 @ 14.06.2012. 20:38 ] @
Još jedan zanimljiv specijalni izveštaj Rojtersa o bankarskom sektoru u Grčkoj, ovog puta, Pireus banka, koja posluje i u Srbiji.
Special report: A Greek banker's secret property deals
By Stephen Grey
ATHENS | Mon Apr 2, 2012 10:20am BST
(Reuters) - He is the former economics professor behind an upstart bank that rode the Greek boom to become a publicly listed heavyweight with a loan book of over 35 billion euros. She is his devoted wife, who oversees the bank's sponsorship of museums and the arts, and advised it on corporate social responsibility.
Michalis Sallas, executive chairman of Piraeus Bank, Greece's fourth largest, and Sophia Staikou are a Greek power couple, symbols of the fast-growth years after the country joined the euro in 2001.
But an investigation of public documents, including financial statements and property records, shows the couple may also be emblematic of the lack of transparency and weak corporate governance that have fueled Greece's financial problems.
Greek banks will soon be recapitalized with an estimated 30 billion to 50 billion euros, part of the country's second bailout, backed by the International Monetary Fund and European taxpayers. Analysts estimate Piraeus will take about 3 billion to 3.5 billion euros.
Sallas was put in charge of Piraeus by the government 21 years ago, before the bank was privatized. He owns about 1.5 percent of the bank, whose stock price has plunged 97 percent since its peak in 2007.
But Sallas and his wife and his two children have also run a series of private investment companies that public records show have sealed millions of euros in real estate business with Piraeus, deals that were not disclosed to shareholders.
In wealthy locations in Athens and its suburbs and on at least one Greek island, these companies bought properties with loans from Piraeus and then rented at least seven of the buildings back to the bank, which used them as branches. Piraeus also bought properties from the companies and financed other buyers to buy properties from them.
Among the most unusual deals were transactions involving companies linked to Staikou, Sallas' children Giorgos and Myrto, as well as key former Piraeus executives. These centered on the sale to Piraeus in April 2006 of three different properties, via three different private businessmen. According to property records, each of the businessmen bought a property for a knock-down price from the family companies and then sold them on to Piraeus for more than double that price. On paper, they generated a 160 percent total cash profit for the men, nearly 6 million euros, within the space of three weeks.
According to real estate and legal experts in Athens, a pattern of quick sales is often used in complex tax avoidance schemes. Such deals are legal if all taxes were paid. But one businessman named in the sales documents told Reuters his name had been used without his knowledge. He had "never owned property in Athens in my life," he said.
Neither Piraeus nor Sallas would answer questions about the property deals, saying they were unable to do so because of an ongoing legal case against an ex-Piraeus employee. Matthew Saltmarsh, a UK-based spokesman for the bank, told Reuters that Greek banks had become "the most thoroughly audited financial institutions in the world," and there was no reason to question Piraeus' governance.
But property records show the deals linked to Sallas were opaque and raise questions about how cleanly the lines between his family and Piraeus Bank were drawn. They also provide a window into some of the often byzantine money-making schemes that characterized what one Athens real-estate agent calls the "crazy times" - the years between the stock market boom in 1999 and the crash in 2009, a span that included Greece's entry into the Euro and its hosting of the 2004 Olympics.
"It's nothing compared to what was happening back then," a businessman who helped run one of the Sallas' family companies said of the property deals. "It would be unfair to limit your research to Sallas and Piraeus. Everybody in the business knows that there are other banks that used similar tricks to do much worse things than buying and selling a bank branch."
"This period of time was a crazy party for some."
SUNK BY THE COUNTRY
Greek banks have long had a reputation for being conservative. In the past decade they mostly avoided the excesses - investment in sub-prime debt and complex derivatives - of U.S. and other Western banks.
In "Boomerang," his 2011 book on the European debt crisis, former Wall Street trader Michael Lewis argues that Greece's banks were laid low not by their own misbehavior but by the collapse in value of the sovereign debt they had been pushed by their government to purchase.
"In Greece the banks didn't sink the country. The country sank the banks," writes Lewis.
Still, the banks in Greece played a key part in creating the bubble that helped Athens convince the world it could afford its ever-growing pile of debt.
Piraeus was among the fastest growing of those banks. Privatized in 1991, it expanded its total assets, including loans, from less than the equivalent of 4 billion euros in 1998 to 57 billion euros in 2010. Aggressive and willing to innovate, Piraeus swallowed several smaller lenders as well as branches of foreign banks in Greece. It expanded into the Balkans and bought the Marathon National Bank of New York.
Like other Greek banks, Piraeus is now struggling to deal with a massive funding gap, the result of lost access to interbank borrowing and falling deposits as many Greeks citizens withdraw their savings.
Saltmarsh, the bank's spokesman, said the loan book of all the banks had been examined in the last few months in an independent audit commissioned by the Bank of Greece and carried out by Blackrock, a U.S.-based asset management firm. The size of the banks' bad loans and the amount of new capital they required, he said, would be "resolved in the most public of ways" when the Bank of Greece publishes capital-raising requirements across the sector sometime in the coming weeks.
A spokesman for Blackrock said they had examined all "Greek domestic debt assets held onshore or in foreign branches", but they declined to discuss their conclusions. The Bank of Greece, which regulates the country's banking system, said Blackrock's terms of reference were confidential. The Bank failed to respond to repeated separate requests to identify what rules of disclosure and conflicts of interest applied to Greek banks, or to questions about the Piraeus property deals.
Last year, with attention focused on Greek banks and their role in the country's crisis, several Greek newspapers and blogs reported on the existence of a series of private companies, some offshore, that were allegedly loaned up to 250 million euros by Piraeus and whose debts appeared to have been written off. The reports included articles in a widely-read anonymous blog called WikiGreeks.org and Kathimerini, a newspaper.
The origin of the reports appears to be a vague one-page document, of unproven provenance, listing 21 companies. This is now at the centre of a criminal complaint filed in the Greek courts by Piraeus against a former employee, Angeliki Agoulou, a one-time branch official. The bank accuses her of embezzling money from savings accounts and spreading false information.
"Piraeus believes this to be a falsified document distributed to entities including WikiGreeks by a disgruntled ex-employee as part of that employee's continuing attempt to intimidate Piraeus Bank into dropping legal action against that ex-employee related to an alleged serious fraud perpetrated against Piraeus Bank," the bank said, referring to Agoulou's case.
Agoulou denies any wrongdoing and insists the document is genuine.
Agoulou and the contents of the document are now under official investigation by both Greece's financial police and national anti-money laundering department, the Financial Intelligence Unit, according to one senior Greek official.
Reuters examined publicly available data to try to establish independently if the companies linked to Piraeus existed and, if they did, what business they were in.
Greek companies, whether public or private, are not required to publicly register all their shareholders and there is no public register of directorships. But an inspection of the Greek government's official gazette, where company announcements and financial results are published, showed an extensive network of private interests connected both to Sallas and his family, and to several former senior executives at Piraeus.
In all, Reuters identified 11 companies in which members of the Sallas family have served on the board of directors, including four mentioned on the disputed document allegedly leaked by Agoulou. Sallas' wife Staikou served as a director on nine of them, including at least six as chairman, while Sallas' children Giorgos and Myrto each served on four. Sallas himself was not a director of any of them.
As well as the family, Konstantinos Liapis was just one of many former Piraeus executives who served on the companies' boards. Liapis, who was financial director of the bank from 2004 until 2006 before becoming vice-general manager until 2009, served on the boards of eight of the companies in all. Stylianos Niotis, a manager of the shipping department until 2009, served on four.
An examination of Piraeus' public declarations since 1999 appears to acknowledge only two of the companies, both property management firms: Erechtheas Investment and Holdings SA, which was bought by the bank at the end of 2009 and listed as a new subsidiary; and a 2004 mention of MGS (which happen to be Sallas' initials), in which Sallas held 73.76 percent of shares.
Reuters was unable to locate any disclosures by the bank of any property purchases, rents or sales involving the private companies, despite the apparent links with the chairman and despite public documents showing the companies regularly did business with Piraeus.
Several accounting experts said deals such as rental agreements or the sale of real estate between the companies and the bank should have been defined as "related party transactions." Under the International Financial Reporting Standards (IFRS), adopted by Piraeus in 2005, such transactions should have been disclosed publicly in the bank's financial statements so as to highlight any potential conflicts of interest.
The accounts do show, as required by the IFRS, a global declaration of loans to directors and executives and their families, peaking at 244 million euros in 2008, 0.64 percent of the bank's then total loans and advances to customers. Several Greek banks show high levels of such loans to executives.
But outside the global declaration of loans, Piraeus accounts do not mention any property transactions between the bank and any companies related to its directors, including MGS.
Brian Creighton, a UK-based director at BDO, a leading accounting firm, declined to comment on any specific case. But under the version of the IFRS rules that applied until last year, he said, loans or any case where a company director or close family member had a "significant influence" over another entity should have been disclosed. "Property sales, leases, loans and rent are among transactions that should be disclosed if they are between related parties," he said.
In its annual accounts, Piraeus often asserted that "the terms of the Bank's transactions with related parties are those that prevail in arm's length transactions and according to the financial procedures and policies of the Bank."
Grant Kirkpatrick, deputy head of corporate affairs at the Paris-based Organization for Economic Cooperation and Development, said that banks had a particular duty to be transparent about lending activities.
"The fact there are family members on the board of a company doing business with a bank is enough to suggest a potential conflict of interest," he said. "The board of directors of the bank should have a very clear process to deal with such cases, and that process, and the details of any transactions, should be disclosed."
Former Piraeus financial director Liapis said he was confident Sallas and his family had declared everything they should. "A businessman has his own private activities or assets that he has to handle," Liapis said. "He only has to declare his so-called related interests and respect the ‘arms-length principle.' Everything was declared in the bank's statements. Otherwise, (do) you think that Price Waterhouse (the bank's external auditors) would sign Piraeus Bank accounts?"
PricewaterhouseCoopers declined to comment.
Piraeus and Sallas did not respond to repeated requests to identify any public declarations about the firms linked to Sallas.
Property is the foundation of almost all personal wealth in Greece, a country with one of the highest rates of home ownership in Europe. Land records are officially public, but routine access is restricted to practicing lawyers. Reuters worked with an Athens-based lawyer who searched for transactions recorded by the firms linked to Sallas' family.
Land records found by the lawyer and examined by Reuters show that six of the companies had bought at least 11 properties between 1998 and 2012 for a total of 14 million euros. Eight of the properties were subsequently sold.
The documents show that more than 28 million euros in loans, all from Piraeus, were secured on the buildings. One senior official at the Greek ministry of finance said that such a high ratio of loan to purchase price could indicate the loans were issued by Piraeus without sufficient collateral in place.
In all, seven of the 11 properties have been or are still used as Piraeus branches or offices. The rent the bank paid or pays for these properties couldn't be determined. But deeds found in the land registries show three references to rental contracts with Piraeus, one for 24,000 euros a month, another 11,400 euros a month, and the other unspecified.
Sallas declined to comment on the rental agreements.
Myrto Sallas, who sat on the boards of four of the private companies and heads the family's wine company, Semeli, referred all questions to her father and said she had no knowledge of any of the property deals.
"I can't help you with that; you can talk maybe better with my father," she said. "All the other companies are totally different from Piraeus Bank. They have nothing to do with that."
Giorgos Sallas could not be reached for comment.
Liapis, who now teaches at the Panteion University of Athens, said he had been a director of thousands of companies because "that's what accountants do."
Asked specifically about some of the companies he helped run - including Erechtheas, MS Investing, and MGS - Liapis confirmed he had been a director at each. "It is not a secret to whom they belong. You can even tell by the names sometimes."
Asked if that meant Sallas and his family, he confirmed: "Of course. There is nothing wrong with that."
Liapis said he had no conflict of interest since he had not worked at Piraeus between 2000 and 2004, the period in which he was a director on the boards of those companies.
When told records showed that he had remained a director of at least two family companies until at least 2006, after he returned to Piraeus, Liapis conceded that might be possible. "Yes, maybe," he said. "But still I didn't sign any transactions with Piraeus Bank. During my tenure as financial director, I had nothing to do with holding companies or real estate."
Liapis described his role as an agent of Sallas. "It is very simple," he said. In his position running Piraeus, Sallas could not be the director of another company "so he appointed me."
Liapis said many Greeks in high-profile positions were not honest in their declarations of assets; Sallas, in contrast, had been sincere and honest.
Niotis, the former Piraeus shipping adviser, said he retired from the bank in 2009. "During my career I accepted, at times, a number of, mostly, non-executive directorships in various companies of different remit. In none of these have I had ever any beneficial shareholding."
Of all the transactions that involved the Sallas companies, perhaps the strangest were three prime properties in central Athens that Piraeus bought in April 2006 for a combined cost of 9.4 million euros.
One of the properties was the ground floor of an office building; the other two were townhouses. Each had belonged to one of three companies: MGS, Agallon, and Erechtheas. According to company accounts, Staikou then chaired MGS and has previously been a director of the other two.
In each case, the companies sold their properties to individuals who then sold them on within days. In all, the three Sallas family-connected companies declared a total of 4 million euros for their property sales. The new owners sold them for 2.05 million, 2.65 million and 4.7 million respectively. The buyer in each case? Piraeus Bank.
The properties were sold at what would prove to be the height of the property boom, according to Athens real estate experts, and the price paid by Piraeus was close, if not a little above, what was then the market price. "The bank would have lost money later when the price of property fell, but I am not sure it was cheated at the time," said one experienced agent, who advises the Bank of Greece.
Real estate agents, lawyers, and officials said that the deals could have been a complex attempt to buy properties indirectly from the family-connected companies. Others suggested it was simply a legal tax dodge.
In Greece, explained one senior tax official, most property is typically sold with part of the real price left undeclared and paid in cash. "The problem is when you want to sell the property again, if you declare the real price, then you are left with a huge capital gain to declare," he said.
One solution, he said, was to make use of an individual who, in return for a cut of profits, operated as a so-called "strawman" who could buy on the gray market, paying both the declared price and an extra portion in cash, and then selling on at the real price.
Piraeus would not comment on these three deals.
Stefanos Vasilakis, a public notary who said he helped draw up the purchase contracts for all three sales for Piraeus, said the reasons behind the complex arrangement "have to do with taxation."
"When a company sells a property, it has to pay capital gains tax, which is the difference between the property bought and the property sold. Maybe two sales would be more profitable than one because my capital gains tax would be smaller," he said.
Another tax official said that, under laws that applied briefly in 2006, capital gains tax for such deals was much lower, explaining the timing.
The businessmen who acted as intermediaries in two of the deals confirmed by email and phone that they took part.
The third case - the ground floor of an office block at 157 Mihalakopoulou Street in central Athens - is less straight forward.
MGS bought the property in 2003 for a declared total of 1.05 million euros. At the same time, Piraeus approved a loan to MGS of 2.4 million euros, secured on the property. MGS then got further cash from Piraeus by renting the property back as a bank branch for a monthly sum of 11,454 euros, according to later sale documents.
When it eventually sold the property in April 2006, MGS declared the sale price at 975,000 euros. According to the Athens real estate agent, this was "an extremely low price for those times. About two million euros would be a normal price."
The buyer listed in the sale documents was a Lebanese-born businessman based in London called Philip Moufarrige. Nine days after buying the building, Moufarrige sold it to Piraeus for 2.65 million euros, according to a contract in the land registry. A lawyer involved in the case confirmed to Reuters he had represented Moufarrige in his absence.
Moufarrige, who lives in London, expressed bafflement when reached for comment. The passport and family details recorded in the sales documents were accurate, he said, but the London address the documents listed was wrong.
"I have never owned property in Athens in my life," he said. "This was done without my knowledge."
(Additional reporting: Nikolas Leontopoulos and Karolina Tagaris in Athens and Yeganeh Torbati in London; Editing by Simon Robinson and Sara Ledwith)
[ Igor Gajic @ 14.06.2012. 21:07 ] @
Daleko ozbiljnije su igre u Londonu.
U sustini, onaj kome je dozvoljeno, moze da na osnovu jedne jedine nekretnine da digne hipoteku, pa opet hipoteku, ad infinitum, bez ikakve provere...
[ Dexic @ 14.06.2012. 21:10 ] @
Jbt koliko neki ljudi imaju viska vremena, da procitaju ovako nepotrebne i dugacke clanke to je neverovatno.... da se to iskoristi da se zamisli ideja za neki posao ili trazi posao, gde bi bili!
[ Java Beograd @ 15.06.2012. 08:55 ] @
Ma nije to, nego se pitam da li na ovom forumu postoji 1 (jedan) forumaš koji bi bio voljan da čita tuđi copy-paste u bledo-sivoj varijanti, na engleskom jeziku, preko 3-4 ekrana, da bi kao shvatio, kako su grčke banke zasrale stvar.
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