The Full Catastrophe

by James Angelos

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  The case of the politician Apostolos Tsochatzopoulos demonstrates why, in the eyes of many Greeks, the government lacked the moral authority to tax them. Tsochatzopoulos had attained great wealth through great treachery; he had “eaten” public money ravenously and came to personify the misconduct and avarice of the political elite and their oligarchical peers. He was one of the few powerful people to be punished for such wrongdoing, which made him an unwilling representative of the whole class of corrupt big ones. Utter the five syllables of his last name in an Athens taxi—pronounced Tso-ha-dzo-pou-los—and you will invariably hear a tirade against him. Tsochatzopoulos, who sat in a prison cell in an Athens suburb during my time in Greece, is probably the most hated man in the country.

  In order to understand the story of how he made himself wealthy at great cost to the nation, one must go back to a late December day in 1995, when a Turkish cargo ship ran into an islet—in essence, a large rock—jutting from the sea some miles off the Anatolian coast. The accident triggered a dispute over whether the rock in question—about ten acres of crag inhabited by wild goats but not people—and another outcrop next to it belonged to Greece or Turkey. Greek authorities, certain of the islet’s Greek proprietorship, offered to tug the cargo ship, but the Turkish captain initially demurred, arguing the rock was in fact Turkish, and therefore a Turkish boat should detach it instead. The countries, of course, had a long and famous history of antagonism; they sparred incessantly over the fate of the divided island nation of Cyprus, and feuded over Aegean territorial waters and airspace. At first, this dispute seemed somewhat mundane. The Turkish ship eventually accepted a Greek tug, and later, the Greek and Turkish foreign ministries quietly exchanged notes expressing their competing claims over the islet, known as Imia to Greeks and Kardak to Turks. But the matter was by no means finished.

  At the time, Tsochatzopoulos was the acting prime minister, serving in place of his ailing mentor, Andreas Papandreou, PASOK’s populist founder. Tsochatzopoulos’s PASOK roots stretched back to the late 1960s, when he was a student studying civil engineering in Munich, and an American-backed, military dictatorship known as the Regime of the Colonels ruled Greece. In Germany, Tsochatzopoulos joined Papandreou’s antidictatorial Panhellenic Liberation Movement, which operated in exile. The organization’s aims would later become PASOK’s stated agenda: the reduction of American Cold War influence over Greek affairs, and a socialist economic transformation. The dictatorship crumbled in 1974, and the Panhellenic Socialist Movement, or PASOK, was officially born. Seven years later, Papandreou was elected prime minister and set about increasing government spending and socializing indebted private companies, though he backtracked on pledges to withdraw from NATO and close U.S. bases in Greece. The victory ushered in more than two decades of nearly continuous PASOK rule. The party’s triumph also commenced a long ministerial career for Tsochatzopoulos, who came to be known by the diminutive “Akis.” Tsochatzopoulos was first appointed minister of public works, and over the duration of PASOK’s reign, he remained minister of something or other. Tsochatzopoulos, a dapper man with dark, shrewd eyes and an angular face carved with deep lines, was a smooth talker and maintained a somewhat genteel demeanor. Papandreou was said to have referred to him as “Beau Brummel,” after the extravagant nineteenth-century English dandy. Tsochatzopoulos’s fealty to the party leader was condensed into a joke: “What time is it, Akis?” Papandreou asked Tsochatzopoulos. “Whatever time you want it to be,” replied his devotee.

  A few weeks after the boat hit the rock, the aging Papandreou resigned from the premiership due to his rapidly deteriorating health. The loyal Tsochatzopoulos, already acting in his place, was considered a likely replacement. The PASOK faction, however, narrowly elected Tsochatzopoulos’s rival, Costas Simitis, to take over the premiership instead. Simitis, whose main goal was to lead Greece into the eurozone, was an unassuming, mild-mannered former professor, seen as a pro-European “modernizer.” He had none of the bombast of his predecessor—with whom he often clashed—and, for his technocratic disposition, was derided by his detractors as “the accountant.” Two days before Simitis’s inauguration, a Greek magazine published a story concerning the “sudden uprising” of a severe provocation from Turkey—the month-old Imia territorial dispute. Soon, Greek newspapers devoted themselves to covering the story, writing things like: “The Turks, who are betting on the weakness of the government, want our island.” The abrupt emergence of Imia press coverage following Simitis’s victory was not entirely accidental. Simitis’s political adversaries relished the opportunity to make him look weak, and employed their vassals in the media to do so.

  The conflict with Turkey rapidly escalated. At one point, in order to underscore the islet’s Greek nature, a boatload of patriotic visitors from a nearby Greek island visited it. The seafarers consisted of a few men, a priest wearing black vestments, two young boys, and a Greek television journalist with his cameraman. By the time they arrived on the rock, tensions between the two nations had escalated. Fighter jets zoomed overhead and naval boats from both countries navigated aggressively close to one another in the surrounding waters. As this went on, the Greek television camera filmed the visitors holding Greek flags and singing the national anthem. “We place the country above all, and our souls are here, always on the Greek islands, and we’re up here now at this moment, and we claim what is ours,” the priest told the camera. He and his companions were “Akritai,” the priest added, a term for the warriors that defended the Byzantine Empire’s eastern frontier from Muslim invaders. “Whoever comes here must first pass over my dead body.”

  At another point, journalists from the major Turkish newspaper Hürriyet, demonstrating an acutely excessive vision of advocacy journalism, landed on the rock with a helicopter, removed a Greek flag earlier visitors had put up, and replaced it with a Turkish one. Hürriyet then splashed a large photo of the action on its front page with the headline “Battle Flag.” In response to the Turkish journalists’ action, the Greek government sent special forces to the rock, and the Greek flag was restored. The Turks responded by sending their own commandos to the adjacent rock. A score of warships raced to the scene. A Greek helicopter at some point crashed into the sea, killing three crew members. This pageant of human folly might have resulted in a full-scale armed conflict had not U.S. diplomats and President Bill Clinton made some last-minute calls and brokered an agreement for both sides to forgo putting flags on the rocks, and back down from the brink of war.

  The Imia episode traumatized the many Greeks who considered their nation’s sovereignty over the islets irrefutable, and the American-brokered withdrawal a kind of national chickening-out. (Greece in fact had a far better legal claim over Imia, an American diplomat later determined.) When the newly inaugurated Simitis, during a speech in parliament, thanked the United States for its help during the Imia crisis, he was roundly jeered. Simitis was widely criticized for his handling of the dispute, including from the traditionalist, more nationalist wing of PASOK represented by Tsochatzopoulos, who continued over the following months to challenge Simitis for control of the party. In what was seen as an effort to mend the party rift and mollify his rival, Simitis later made Tsochatzopoulos minister of defense. This was an influential post, particularly at the time.

  Greece, due to its interminable rivalry with Turkey, had long been an avid weapons buyer, and as a percent of its GDP, it spent far more than most other European Union nations on its military. But the sense of humiliation among Greeks over the Imia incident led to calls for a new and very large weapons purchasing program. This provided Tsochatzopoulos with potentially monumental job perks. Graft was not an uncommon aspect of Greek governance, but the scale of armaments contracts at the defense ministry provided officials with superior, albeit illicit, possibilities for financial gain. A prominent Greek investigate reporter, Tasos Telloglou, once put it to me like this: “Look, you must be very naive to believe that anybody in this country that g
oes to the ministry of defense and would have a budget would not become rich.”

  Following the Imia conflict, Greece launched a massive military modernization program, amounting to nearly 17 billion dollars. Over the next decade, Greece bought American fighter jets, German submarines, Russian surface-to-air missiles, Slovak artillery guns, and later on, German panzers, among many other weapons. The splurge meant that between 2002 and 2006, small Greece became the world’s fourth largest arms importer, according to the Stockholm International Peace Research Institute. Suspicions that Tsochatzopoulos had seized the opportunity to enrich himself off this excess arose in 2004, a few years after he left the defense ministry. That year, he married his second wife, Vasiliki Stamati, who was later described by her family as a humble, smalltown girl, a former employee for the public electric company who would often return to her parents’ village in central Greece to help with chores around the house. The wedding with Tsochatzopoulos that year, though, did not seem a humble affair to most Greeks. It took place in Paris, and the former defense minister arrived at the ceremony in a “shimmering blue Jaguar,” according to media reports. The party was held at the Four Seasons, where the pair also stayed, while other guests complained of having been put up in less luxurious accommodations. This all seemed rather expensive, and Greeks wondered how Tsochatzopoulos could afford such luxuries on a minister’s salary, which alone would make one affluent but not that wealthy. “How did you get rich, Mr. Tsochatzopoulos?” read the headline of an article in the newspaper Kathimerini at the time. People were especially bothered by the fact that Tsochatzopoulos was an ostensible socialist who had spoken out against “big capital,” and in favor of social justice and solidarity. Now, some reports contended that he and his wife had stayed in the Four Seasons’ 2,630-square-foot, antique-furnished Royal Suite, which according to some rankings was among the top ten or fifteen most expensive hotel rooms in the world. Tsochatzopoulos later said the pair did not stay in an expensive room, and that the media reports were part of an effort to defame him. There were “normal rooms for all people” at the hotel, he said.

  Shortly after the wedding, a Greek prosecutor sent parliament case files concerning a couple of Tsochatzopoulos-era armaments purchases, citing information that may have implicated the former minister in wrongdoing. The prosecutor was obliged to submit the files to parliament because, under Greek law, he could not investigate the matter himself. The Greek constitution protects ministers, current and former, from prosecution or investigation on matters relating to the exercise of their duties unless parliament votes to allow it. A special parliamentary committee was therefore formed to carry out a preliminary examination of the deals in question—one for American radar systems critics considered useless and unsuitable for the military’s needs, and the other for Russian surface-to-air missile systems deemed too expensive and marginally functional. The committee released a report on its findings, though its members arrived at widely disparate conclusions—split along political lines—on their significance. Those committee members belonging to the then ruling New Democracy party raised some seemingly pertinent questions. With regard to the Russian missile systems in particular, why had the defense ministry awarded a direct contract to buy twenty-one of them for some 800 million dollars when a Greek military review panel had determined the weapons did not meet the necessary specifications, whereas missile systems from other manufacturers did? Also, what was the role of three companies—Drumilan International Hellas A.E., based in Athens; Drumilan Offset Programme Ltd., based in Cyprus; and Drumilan International Ltd., which owned 99 percent of the shares of the other two companies and was based in the British Virgin Islands—in the transfer of large sums of money related to the deal? The companies, a Greek court decided years later, were involved in laundering some 25 million dollars in kickbacks related to the deal, money that ended up in various international bank accounts connected to Tsochatzopoulos.

  PASOK members of the parliamentary committee determined that Tsochatzopoulos had been “unjustly offended and scorned.” One PASOK committee member, a heavy man named Evangelos Venizelos—later to become the party leader—told parliament that the committee was “an excellent forum for the disclosure of reality.” Reality, according to him, was that New Democracy was trying to create a baseless scandal in order to damage his party, and that no wrongdoing had been proven. The matter, Venizelos said, had “evaporated.” To a large extent, it seemed that way. The Greek parliament did not vote to prosecute Tsochatzopoulos, though questions about the deals persisted. A few months after the parliamentary committee submitted its findings, a Russian court sentenced two former executives of the JSC concern Almaz-Antey, the manufacturer of the surface-to-air missiles, to four-year jail terms for abuse of power. The Russian court determined the company had bestowed monetary “benefits to third parties” in connection with the Greek deal. The bribers had been caught. The question of who was apparently bribed, however, remained unresolved.

  Tsochatzopoulos came under scrutiny again in 2010 for his unexplained apparent wealth. The newspaper Kathimerini wrote that his wife had purchased a three-story neoclassical house on Greece’s most prime strip of residential real estate, the street of Dionysiou Areopagitou, a pedestrian road opposite the Acropolis, with a clear view of the Parthenon. She had bought it for 1.1 million euros, a lot of it paid in cash, from Nobilis International LLC, a company based in Cheyenne, Wyoming. Nobilis had earlier bought the house from another offshore company, Torcaso Investment Ltd., based in Cyprus, which happened, as it turned out, to be held by Tsochatzopoulos’s cousin, a man who later admitted to laundering a lot of money for the defense minister. Living in a house owned by an offshore firm appeared to be a way for the former minister and his wife to enjoy the asset while avoiding tax liability. Their decision to buy the house from Nobilis was motivated by the impending passage of a new law on “the restoration of tax justice and the tackling of tax evasion,” which was going to quintuple levies on properties in Greece owned by offshore companies, Kathimerini reported.

  By this time, the political climate in Greece was far different than it had been five years earlier, when the parliamentary committee examined a few Tsochatzopoulos-era armaments deals. The country was on the verge of bankruptcy. The government was cutting wages and pensions. People were angry. Comedians joked bitterly about the many thousands of euros Tsochatzopoulos’s wife was said to have spent on curtains for the bedroom. For all this, a big one finally had to be sacrificed. A leading prosecutor ordered a preliminary investigation into whether there were tax violations or other offenses involving Tsochatzopoulos’s house. PASOK suspended Tsochatzopoulos from the party pending the results of the inquiry. This time, his colleagues were not going to defend him.

  From that point on, things started going very badly for Tsochatzopoulos. Prosecutors in Munich had begun an investigation of the Germany-based company Ferrostaal, an “industrial service provider with industrial expertise and financing competence,” in its own words. One particular financing competence prosecutors were interested in involved the suspected payout of bribes, largely pertaining to submarine deals with Greece struck during Tsochatzopoulos’s defense ministry tenure. By this point, the submarine deals in question were already infamous in Greece. A decade earlier, the defense ministry had agreed to buy some state-of-the-art German submarines from a consortium of Ferrostaal and Howaldtswerke-Deutsche Werft, or HDW, a shipbuilding company based in the Baltic Sea port city of Kiel. HDW at the time had developed new “Type 214” diesel-electric submarines and was looking for its first international buyer. In order to win over the Greeks, German prosecutors later found, Ferrostaal managers solicited the services of a group of people they called the “prayer circle.” The circle had connections in Greece and could convince Greek defense officials of the benefits of choosing the German vessels. The German companies’ prayers apparently came true. The Greeks decided to buy four of the new submarines as part of a program dubbed Archimedes, after the a
ncient mathematician and scientist. In addition, the two sides signed a second deal for the modernization of three old German submarines already in the Greek navy’s possession. Greece paid out some two billion euros, most of the initial cost of both programs.

  The deals did not work out very well. The first new submarine, built in Kiel, had troubles during trial runs, at least according to Greek naval officers, who said it tilted at a precariously severe angle under certain conditions. HDW representatives said some initial problems were fixed and that the tilt was normal. “No big deal except taking care of your coffee cup,” one retired German naval captain told a Greek television program. The two sides fell into a long dispute. The German manufacturer accused the Greek side of failing to honor the contract and of complaining about the sub in order to delay further payments. Whatever the case, the dispute meant that a decade after the Imia incident inspired the urgent purchase of expensive submarines, Greece still didn’t have any new or refurbished subs to show for it. In 2010, months after the Greek government agreed to the first bailout, it reached a complex agreement with HDW to supplant the disputed deals with a new one. Greece decided to finally take the “leaning submarine,” as it had become known among Greeks, fairly or not, in addition to five more vessels of the same type. One of Greece’s old subs would also be refurbished. The agreement came at an additional cost to the Greek government of over one billion euros. By this point, however, bankruptcy posed a far more imminent threat to Greece than did the Turks, and buying subs did not seem like a wise expenditure. Even as its creditors were compelling it to deeply slash social spending, the Greek government was still buying German subs and other weapons. This fact wasn’t well received by a lot of Greeks.