The plunder of pension funds is a systemic problem
The government’s decision to proceed with radical changes in the institutional framework for managing the assets of social security funds is most appropriate. Indeed, the setting of strict rules that will restrict the boards of such funds in the placement of their reserves is a major step toward averting the waste and plundering of the contributions of employers and employees. To be sure, however, no matter how strict are the rules instituted, if the administrators of these funds are not selected on merit but are members of the «underground» mechanisms of the party that happens to be in power, the risk of fraud and scandals will remain. Bank of Greece Governor Nicholas Garganas put forward a proposal which was unfortunately not endorsed for the simple reason that ministers do not wish to lose their fiefdoms, that is, the right to appoint their proteges – who may be the least qualified for the job, retired army officers or failed mayoral candidates – to these «rewarding» positions. Garganas proposed that since in the UK the selection of the administrators of social security funds is made by a department with no party affiliation whatsoever, and in the Netherlands by the central bank, an independent authority be set up in Greece to pick public pension fund managers on the basis of their CVs, qualifications and skills. The main opposition PASOK party was in power during the 1999 stock market crisis and subsequently wasted a great deal of pension fund reserves in artificially propping up the market. But this has not stopped it now from appearing as a staunch critic of the continuing malpractices. OTE telecom CEO Panagis Vourloumis wrote, in a book published in 2002, titled «The Social Security Problem Made Simple,» that «neither the insured employees who pay the contributions nor the citizens who pay taxes have the privilege of knowing what becomes of their money. The management of about 30 percent of the national product takes place in the dark. The only thing really needed is a law stipulating that social security funds are subject to controls by chartered auditors. Since this does not happen, are we wrong in supposing that there are people in high places who do not want it? Or that some people are afraid that the many irregularities may come to light?»
