ECONOMY

Construction firms’ riches

«The governments of the last 10 years and EU investment subsidies for public projects created big-time contractors but failed to leave adequate infrastructure behind,» an engineer with long experience said recently. Despite the bonanza of EU subsidies that began in the early 1990s, shoddy workmanship is a recurrent phenomenon. The government’s protestations to the contrary notwithstanding, everyone in the industry acknowledges that «the selection and planning of public projects in our country are based on a ‘patronage’ mentality, even within the tight conditions imposed by the European Union,» as a recent statement by the Technical Chamber of Greece (TEE) said. In 1991, Greece’s six largest construction companies reported a combined turnover equivalent to about 75 million euros; in 2002, this is estimated to have reached 1.7 billion euros, with the group of Hellenic Technodomiki and Aktor attracting about half this amount. The group is said to head a powerful lobby which determines the allocation of projects among contractors through the so-called mathematical formula. This was approved by the European Commission in 1998 and was designed to limit the excessive (and unrealistic) discounts of 70-90 percent offered by bidders in order to win contracts, who would then blow up the costs through various methods. According to sources in Brussels, the Commission consented to the adoption of the mathematical formula in order to staunch the bleeding of Community funds, but is now considering taking Greece to the European Court after allegations that the formula is being mismanaged. «The mathematical formula restricted corruption in government departments but caused the intertwining of interests among contractors,» engineers say. Companies participating in a tender allegedly know the winner in advance, as in most cases those controlling the racket have fixed the bids to be submitted beforehand. The method was employed to share out the large pie of Olympic projects and it is well known that a similar list is currently being drafted for the remaining segments of Egnatia, budgeted at 750 million euros. A cursory look at the results of construction companies for the five years that the formula has been applied shows that those who managed to align themselves with the dominant group, such as GEK and Sarantopoulos, have seen their profits shoot up, while those of rivals like Michaniki and Ergas have stagnated. «With the exception of the Egnatia Highway across northern Greece and to some degree the main highway from Patras to the border north of Thessaloniki, Greek roads are not up to the standards prescribed by modern engineering. As inconceivable as it may sound, the standards applying in road-making are those of 1966, with only one directive that was introduced in 1986 for the addition of hard materials to the tarmac mixture,» said University of Thessaloniki Professor Athanassios Nikolaidis recently.