ELVO defense deals under fire

Talk of preferential deals between the state and military vehicle firm ELVO has surfaced a second time in the last few days after fresh evidence indicates that the government has been supporting the company at the cost of its competitors. Sources told Sunday’s Kathimerini that the Defense Ministry recently awarded ELVO a 200-million-euro contract for the purchase of different military vehicles without holding a tender process. Sources alleged that Finance Minister Giorgos Alogoskoufis and Defense Minister Spilios Spiliotopoulos came under pressure during a joint ministerial meeting in March to award the contract to the company because it would otherwise be forced to lay off staff. ELVO employs about 750 workers and is the army’s main supplier of tanks and armored vehicles. The government owns 51 percent of the company, while businessman Evangelos Mytilineos holds a 47.5 percent stake and is responsible for the firm’s management. Sources said that shortly before the ministerial meeting, Mytilineos had told journalists that if ELVO did not get any Greek military contracts it would be forced to slash labor costs and cut some 400 jobs to stay afloat financially. The ruling New Democracy party had staunchly objected to companies being assigned public contracts directly during its days as the main opposition party. But it has now submitted a draft bill to Parliament formally paving the way for the Defense Ministry to sidestep tender offers. The news comes just days after European Union regulators said they will investigate a 3.5-million-euro bailout of ELVO. The EU state aid watchdog has questioned the Greek government’s decision to write off debts ELVO owes to the state, accrued between 1988-1998. Governments are allowed to subsidize military production but EU rules restrict the amount of public money they can give companies, in order to prevent one firm from gaining an unfair competitive advantage over others.