ECONOMY

Nagging questions over Flying Hermes bid for ELTA

The problem of the unethical triangular relationship between the body politic, economic interests and the media became increasingly clear when the privatization of public companies began being projected as an increased necessity – for fiscal or other purposes – early on in the last decade. The privatizations of companies such as Heracles Cement, OTE Telecom and the Hellenic Shipyards were dictated and tailor-made by the prevailing order determined by this relationship. But in the latest case, the «low-profile» privatization of the Hellenic Post (ELTA) and its courier subsidiary, the involvement of entangled interests has begun assuming provocative dimensions as, with government tolerance or even encouragement, media barons and suppliers to the public sector have emerged as favorites. ELTA is a public utility which largely survives on contracts with the government and subsidies from Greek taxpayers who forked out 100 billion drachmas over the last five years to cover debts and put the utility on a healthier footing. In the last 13 months, the favorite in the tender for stakes of 25 percent in ELTA and 50 percent in its subsidiary Tahymetafores is considered to be the consortium of La Poste (the French postal company) with a 51-percent interest and Flying Hermes with 49 percent. Flying Hermes is the courier company presided over by Christos Lambrakis of Lambrakis Press (DOL), which has a 42.25-percent interest, with further interests of 42.92 and 15.02 percent held respectively by Socrates Kokkalis’s Intracom Group and the National Bank. And so, a media baron and the almost exclusive supplier of the still government-controlled OTE Telecom monopoly for almost a decade – who also controls a radio station – are contesting a stake in ELTA along with a large foreign company. No one raised any issue of conflict of interest – even though it was more than obvious, until a report was published in Kathimerini on May 11, 2001 which referred to a worrying note which had arrived at the desk of then Deputy and Transport and Communications Minister Alekos Voulgaris, raising awkward questions. On June 19, 2001, these were put to the State Legal Council (SLC), which was asked for its opinion on the following: First, whether the privatization of ELTA on the basis of Act 2000/91 contradicted Article 14, Paragraph 9 of the Greek Constitution, as recently amended on the incompatibility of ownership of an enterprise undertaking public contracts by someone who is also a media owner. Second, whether Article 14, Paragraph 9 is immediately applicable or whether a law must be drafted in order to enact it. Third, whether privatizations are included in the field of application of Article 1, Paragraph 11 of Act 2328/95 on the media, according to which anyone undertaking to supply equipment, projects or service to the government can also be a shareholder in a company owning a television channel. Fourth, would there be a constitutional or legal problem in ELTA entering into contracts with the government if the consortium La Poste – Flying Hermes acquired a stake in the company? Fifth, who is deemed as a basic shareholder? SLC’s answers were damning for the government, but they were initially distorted and their meaning interpreted differently. However, now that the French company is pressing for definitive answers, government officials are having to pull back for fear of constitutional and political ridicule. SLC was quite clear: «Anyone in the capacity of owner, partner, basic shareholder or director of a media company cannot, in the process of privatization, acquire shares in companies which after their privatization undertake public projects or supplies and if the acquisition of these shares make them basic shareholders.» Of particular interest is SLC’s answer regarding the definition of «basic shareholder» (still awaited through a law that will complement constitutional Article 14, Paragraph 9), which some consider may serve as an escape route for the consortium, claiming that the respective stakes of DOL and Intracom in ELTA would amount to no more than 3 percent, with 7.9 percent in Tahymetafores. SLC pointed out that during discussion of the constitutional amendments, then Justice Minister Evangelos Venizelos defined the basic shareholder in a media company as anyone holding at least 2.5 percent of share capital and 5 percent in any other company. Already, other provisions require proper notification of any transfers of shares in TV stations in excess of 2.5 percent.