ECONOMY

Shipyard lawsuit revealing

A lawsuit filed against Piraeus Bank by German shipyard HDW over the purchase of the Skaramangas shipyard from the Greek bank shines light on a series of sideline negotiations that also took place between the Germans and the country’s previous finance and development ministers. As part of the lawsuit, HDW is disclosing detailed information regarding meetings, promises and agreements it had made with ETBA, the formerly state-owned bank from whom it bought the shipyards. ETBA has since been purchased by Piraeus Bank, a publicly traded bank and one of the country’s largest. By disclosing this information, HDW is effectively confirming that it was aware of its role in an illegal deal, which failed to meet any transparency standards. Two years after the completion of the sale, the new shareholders are essentially turning against the Greek State, from whom it bought the shipyards and which happens to be the Skaramangas shipyard’s only customer. Greece is one of HDW’s largest customers, contributing about 25 percent to its annual turnover. Recent contracts between the navy and the Skaramangas shipyard amount to 3 billion euros, 1.5 billion euros of which was awarded the day the privatization deal was signed. Defense Ministry sources say that the costs of these projects are about 30 percent above market value. The latest revelations regarding the sale of the Greek shipyard and the content of the seven lawsuits filed on June 1 include information which confirms that the contract awarded to HDW was a foregone conclusion and not the result of a tender process involving another six candidates, one of which was HDW’s main competitor in Europe. The special relationship between the Greek State and HDW goes back to 1996, when it was awarded contracts to build four submarines for a cost far higher than any other estimates given. Another noteworthy point is that the lack of information surrounding the building of these four submarines put off other European shipyards from participating in the second stage of the Skaramangas shipyard sale, therefore limiting interested companies to HDW and the Tavoularis group. The next stage aimed at deciding how the second bidder would be ruled out of the tender process, leaving the Germans to hold the only viable offer. The lawsuit also shows that HDW demanded clarification from ETBA in relation to the Skaramangas shipyard’s contractual obligations to the Hellenic Railways Organization (OSE) and the passenger shipping company Strintzis Lines, on a Greek state investment program aimed at upgrading the shipyards west of Athens, environmental and tax issues and the accuracy of some of its balance sheets. HDW claims in its lawsuit that ETBA recommended the Germans drop the claims accompanying its offer in order to keep the company alive in the tender process. «As a means of offsetting this request, ETBA promised that it will draw up a separate agreement which would guarantee a number of these claims… this would act as a way for HDW to present a bid without any accompanying terms or conditions,» according to the lawsuit. HDW accepted this recommendation, and was therefore awarded the sale. In the period which immediately followed and until the deal was initially signed, talks were then held mostly over the Skaramangas shipyard’s obligations to OSE, regarding a 120-million-euro contract. This issue was raised after HDW went through the Skaramangas shipyard’s financial records. HDW had also suggested a new time frame for the sale process; however, ETBA appeared to want to close the issue. The lawsuit goes on to say that then-Chairman Giorgos Kasmas of ETBA, along with the finance, development and transport ministers from the previous Socialist government, jointly signed a letter promising to meet the Germans’ demands but did not respect their commitments, resulting in the saga continuing in court.