Beiersdorf Hellas firm’s suspect practices with investment grants

Rania Iosifidou kept speaking up for five years but few would listen. And those were not Greeks but her colleagues in the European Labor Council of the cosmetics and personal care products firm, Beiersdorf (BDF), and the management of the German multinational firm. Her compatriot union colleagues in Beiersdorf Hellas generally followed the «I do not see, I do not hear, I do not speak» attitude, before recalling her from the post of workers’ representative on the company’s board of directors and from BDF’s European labor council. Her recall, supposedly for «anti-union» activities, took place in March 2002. The same union that recalled her had assigned to her the task, three months earlier, of finding evidence of the commitments which the company had entered into with the Ministry of Industry and Development in 1996 as regards level of production, maintaining jobs and the hiring of more specialized staff, in order to obtain European Union investment subsidies. Iosifidou made the results of her research available to the parent company in Germany. Her Greek boss, having been chastised by headquarters, initially reprimanded her. Then, taking advantage of the recalling of her trade union capacity, fired her. The Development Ministry, which was notified by the trade union umbrella group GSEE, took about a year to conclude that something was wrong. The matter recently reached Parliament. The issue seems to be only a drop in the ocean of investment incentives. But it may just provide the start for broader checks on those enterprises which obtained huge subsidies to create jobs, only to do the exact opposite later. Such checks, however, to be effective, would have to be extended to the criteria used in the setting up of the relevant appropriation committees and, more importantly, to the inspection mechanisms. Today, the Development Ministry monitors such enterprises only on a sample basis. The firms that have received subsidies only have to file statements in January every year and for periods of either five or 10 years, confirming that there has been no change in the initial criteria. The forgotten plan Beiersdorf Hellas in July 1996 gained approval for an investment subsidy for a 2.8-billion-drachma (8.3-million-euro) investment scheme, which was completed in 1999. During implementation of the scheme and in violation of the terms of contract, BDF Hellas made significant changes. Deputy Development Minister Alekos Kalafatis told Parliament that inspectors last year found: first, a significant fall in production; second, a reduction in the number of staff, about 80 to 90 people, between 1998 and 2001; and, third, the withdrawal of a series of products after 1998 – despite the contents of the feasibility study. What was worse, the company was also reported as «intending to completely cease production within 2003.» The company was asked to furnish explanations within 15 days. The issue was then referred to a higher level for a consideration of sanctions which, according to law, provide for the partial or total return of investment subsidies received. However, the committee that considered the sanctions did not find the changes BDF Hellas had effected to be serious enough and opined that «according to law, sanctions are usually imposed during the phase of implementation of the investment.» But the relevant laws, 1892/90 and 2601/98, stipulate that the firms whose investment plans have been subsidized are obliged to keep (for 10 and five years respectively) the fixed capital for which they have been subsidized, to maintain their production levels and generally to observe the original terms under which subsidies were granted, including jobs, shareholder composition and location of operations. Kalafatis did not accept the decision of the inspection committee and informed questioning deputy Panagiotis Lafazanis that the issue will be looked at anew. Note: As attested by the press reports about 20 days before the subsidy was approved back in 1996, BDF Hellas mounted a successful public relations exercise to promise increases in production and jobs. But it seems to have underestimated one factor: the possibilities for consultation among worker councils instituted by the parent company and their effective participation in its European labor council.

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