Cassandra’s ‘golden deal’

When Hellas Gold purchased Cassandra gold mines in Halkidiki, northern Greece, in early 2004 without a tender, it paid no more than 11 million euros. A few months later, their acquisition, thanks partly to the rapid rise in the price of gold, is evaluated by the buyers at half a billion dollars (388.3 million euros). The partners in the Hellas Gold consortium are even selling and buying shares based on this appraisal, reaping capital gains worth millions of euros without making a single move. It seems they were in the right place at the right time, with the right government. The region’s «saviors» from unemployment – as they were portrayed at the time – disproved the overoptimistic prognoses of foreign funds and pompous declarations in Parliament by then-Deputy Economy Deputy Minister Christos Pachtas. No foreign funds appeared, while the local community was left out of the purchasing consortium, as were other construction companies Pachtas had mentioned in Parliament. He then dropped the names of well-known credit institutions to persuade the opposition about the PASOK government’s correctness of choice. But the truth has unfolded in another way. According to the website of construction company Aktor, the majority stake of Hellas Gold belongs to Aktor (44.3 percent) and its chairman Dimitris Koutras (17.72 percent). Only 37.97 percent is controlled by European Goldfields, owned by controversial Romanian-Australian businessman Frank Timis. But European Goldfields’ reports to Canadian and British stockmarkets where the company is listed show the share composition has changed: Aktor controls 35 percent, European Goldfields 30 percent, Koutras 14 percent and various companies owned by Timis the remaining 21 percent. Pachtas told Parliament on January 8: «The majority stake, at 51 percent, has two units: First there is European Goldfields with 30 percent; a financing scheme, whose main shareholders are international investment banks such as Rothschild of Australia, Deutsche Bank, Dundee Bank, Royal Bank of Canada… Secondly there is Global Mineral Resources with 21 percent, a private firm specializing in mining.» According to the then-deputy minister, «the Greek consortium consists of Greek construction companies, led by Aktor. There also are Themeliodomi and Olympic Technical, as well as private Greek funds. Mining engineer Dimitris Koutras participates with his own additional private funds. A 9 percent interest is held by the local community, through shares granted for free to the three municipalities of the region and the local prefecture so that the community monitors and takes part in the whole development of all these initiatives.» In the end, there are only Aktor, Koutras and Timis left. In a barely noticed press release, European Goldfields announced a few days ago it was to increase its stake at Hellas Gold to 65 percent, acquiring the 14 percent of Koutras and the 21 percent of Timis’s «various companies,» to become Hellas Gold’s major shareholder. A little earlier it had publicized consultancy Behre Dolbear’s evaluation of the gold mines, at 388.3 million euros. Golden capital gains European Goldfields investors were informed that Koutras and Timis would sell their Hellas Gold shares below the appraisal price. The transaction would be made both in cash and new European Goldfields shares issued, which Koutras and Timis will acquire pending approval by the former’s general meeting of shareholders on November 26. Official reports also say that after the transaction Koutras will control 12.68 percent of European Goldfields. This stake, based on the latter’s data, is worth about 20 million euros; not bad, considering that all Hellas Gold shareholders paid 11 million euros to purchase 317 square kilometers in Halkidiki. Further, Aktor’s chairman will participate in a company which controls not only Cassandra gold mines, but also five gold mines in Romania. During examination of the amendment-contract, the General Accounting Office stated that the Greek state’s loss of revenue after the transfer of the goldmines to Hellas Gold was indeterminate. Yet the latter’s shareholders are clearly reaping gains just a few months after the goldmines were acquired almost like a gift. Besides the capital gains and the 317 with 34 certified mining spots and layers of gold and other metals of unknown value, the company also owns plus 1.5 of farms, 11,000 land plots, 320 houses at Stratoni village, wells, tunnels and stored layers of metals. Pachtas had concluded in Parliament during the debate on the contract, «The government is once again proving how it works, how much it works, for whom it works and that it has a proper sense of its obligations.»