Raid on office of central banker’s wife raises concerns in Greece

16/9/2016

By Kerin Hope

Lina Nicolopoulou was getting ready to go to work on Thursday morning when she took a call from her office in the leafy Athens suburb of Kifissia.

“It was the cleaner . . . She told me there was a public prosecutor and half a dozen police officers on the doorstep,” recalled the communications consultant, who is married to Yannis Stournaras, Greece’s central bank governor.

The raid on Mindwork Business Solutions, Ms Nicolopoulou’s company, was part of a probe by anti-corruption prosecutors into alleged kickbacks involving an EU-funded contract for a cancer awareness campaign. It had been organised by Greece’s health ministry and Mindwork was part of a consortium that won the tender.

But Ms Nicolopoulou, who strongly denies wrongdoing, believes there were other motives behind a 12-hour search of her offices in which authorities removed data and files from Mindwork’s server.

“I was quite aware the real target wasn’t my company,” she said. “It was my husband.”

Mr Stournaras has clashed frequently over issues of bank governance with the leftwing Syriza-led government of Alexis Tsipras, the prime minister. Hours before the raid on Mindwork, the central bank rejected the appointment of a new chairman and chief executive at Attica Bank, a struggling small lender with close ties to the ruling party. It also banned new lending by Attica until their replacements were named.

To many in Athens, the raid on Mindwork illustrated how Syriza tries to intimidate its political foes, including making use of judicial officials sympathetic to the party.

“Syriza is showing its authoritarian streak,” said Stavros Theodorakis, leader of the centre-left To Potami (The River) party.

A senior Athens judge pointed to a larger problem in Greece of politicians and the judiciary colluding on sensitive cases linked with public figures.

“There is no effective separation of powers in Greece — whatever may be said about the independence of the justice system, prosecutors and judges are under the influence of politicians and sometimes under their direct control,” said the judge, who declined to be identified.

A Syriza spokesperson declined to comment, instead referring a reporter to comments made in parliament on Friday by deputy finance minister Tryfon Alexiadis, who is in charge of the financial police. He denied that the government had ordered the raid, saying: “Everyone must respect the independence of the justice system.”

Attica Bank is controlled by the Greek union of civil engineers (known as Tsmede). The country’s seven-year recession wiped out a once-flourishing construction industry, leaving the bank in dire straits. More than 70 per cent of its loan portfolio consists of bad debt, mostly owed by bankrupt, family-owned construction businesses and hotels.

Attica was unable to cover a €67m shortfall in a €500m capital-raising last year, triggering a special audit by the EU’s banking watchdog, known as the Single Supervisory Mechanism, and the Greek central bank.

The audit revealed “serious flaws”, according to a central bank official, yet some Syriza officials still called for Attica to become a state development bank that would steer future public and private investment, reviving a banking model that was dismantled in Greece more than 20 years ago.

While Mr Stournaras was away in Frankfurt attending a regular meeting of European Central Bank governors, Constantinos Mekados, Tsmede’s representative on Attica’s board arranged a vote on the appointment of two Syriza-backed candidates to the posts of chairman and chief executive.

“It was an attempted coup,” said a senior central bank official. “We were concerned the new appointees would immediately use their powers to hand out loans to pro-Syriza businesses without sufficient collateral, so we slapped a ban on lending.”

On his return from the ECB meeting Mr Stournaras had the two appointees removed based on SSM criteria specifying that only “fit and proper persons” run the bank.

Mr Stournaras, who was finance minister in a centre-right led administration before becoming head of the central bank, has been a target of hardline Syriza cabinet ministers and party extremists seeking his removal.

Still, the raid on his wife’s offices sent shockwaves through the Athens business and political elite.

“This sequence of events tells us something important about Syriza’s mentality and their willingness to manipulate the levers of state to send messages to their political adversaries,” said Mujtaba Rahman, managing director of Eurasia Group, a risk consultancy.

“It also highlights the difficult relationship between the government and central bank, who need each other and should be working together to grow Greece’s struggling economy.”

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