ECONOMY

Ergo Invest buy under scrutiny

Kathimerini’s revelation on Friday that the chief executive of a listed open-ended investment fund, business and stock market leader purchased a large number of shares in his company only a few days before the announcement of its absorption by its parent company has caused a sensation in stock market circles. In a letter to the Athens Stock Exchange (ASE) dated October 2, Ilias Stasinopoulos, chairman of Ergo Invest, announced he intended to purchase 500,000 shares in the fund on his own account between October 4 and December 4 through sister company EFG Eurobank Securities. In another letter dated October 9, Stasinopoulos notified the ASE of his plan to purchase 400,000 of the said shares by October 31. Last Thursday, November 7, parent company EFG Eurobank Ergasias announced plans to absorb Ergo Invest and another listed subsidiary, Investment Development Fund. The share-swap ratio was to be carried out at a hefty premium for both funds’ shares, benefiting their holders accordingly. Stasinopoulos, an industrialist by origin, is no ordinary stock market player. Besides being the chairman of Ergo Invest, he is also a member of its portfolio management committee and senior executive of the fund since it was set up in 1997. He has also been a member of the ASE’s board of directors as a representative of the Athens Chamber of Commerce and Industry since 1998. Now the Capital Market Commission (CMC) is investigating whether Stasinopoulos acted on knowledge of EFG Eurobank’s absorption plans, or if his move was just coincidental. Whichever the case, stock market circles expressed the view that given his position Stasinopoulos ought to have been more discreet and reserved, especially in transactions involving stock in his own company. So far, he has been unavailable for comment and has not responded to the report. Sources at EFG Eurobank, however, insisted that the rules of confidentiality were fully observed and that Stasinopoulos was informed of the absorption plan after declaring his intention to buy the 400,000 shares and that, indeed, he stopped buying after the plan was announced. In a letter to Kathimerini on Friday, the CMC said that Stasinopoulos’s second notice, of his intention to buy 400,000 shares by October 31, was prompted by its own demand for a clearer buying schedule. By coincidence, the CMC is also investigating another case in which Stasinopoulos seems to have been at least indirectly involved. According to a report two months ago in Kathimerini, in December 1999 Ergo Invest and Ergo Invest Consultants bought 441,700 shares in then non-listed telecoms firm Lantec for 8,800 drachmas each. A year later, senior executives of Ergo Invest and members of their families, including Stasinopoulos, bought 104,300 shares of Lantec – which was eventually listed on the ASE a few weeks ago – at prices ranging from 1,070 to 1,145 drachmas each. Ergo Invest then responded with the extremely curious answer that the share prices paid in both instances were the same, the difference being that the much lower share price for the second instance represented only the taxable value of the shares! One may deduce that from this that Ergo Invest had admitted that senior executives of the firm and their relatives had engaged in some form of tax evasion.