Karamanlis dismisses minister

Prime Minister Costas Karamanlis on Saturday sacked Labor and Social Security Minister Savvas Tsitouridis following revelations that one of his close aides is under judicial investigation for allegedly improper transactions on the Athens Exchange. Karamanlis asked Tsitouridis to submit his resignation during a one-hour meeting on Saturday morning. Tsitouridis will be replaced by Vassilis Magginas, leader of the ruling New Democracy party’s parliamentary group, government spokesman Theodoros Roussopoulos announced on Saturday. Magginas will be sworn in at noon today. Tsitouridis had been under fire for the past month in an affair involving the purchase of state-issued structured bonds by pension funds at inflated prices after banks and brokers had earned hundreds of millions of euros in transaction fees. Even though opposition parties and, increasingly, government deputies and fellow ministers had been calling for his removal, it had seemed as recently as Friday that his position was secure. What prompted Karamanlis to fire Tsitouridis was an article, published in Kathimerini on Saturday, reporting that a top ministry aide, Evgenios Papadopoulos, was being investigated for alleged stock market manipulation through an offshore firm in the period 1999-2001. A prosecutor had asked to look into Papadopoulos’s bank accounts, Kathimerini reported. Papadopoulos, who denies any wrongdoing, also resigned on Saturday. «It was revealed today that a close aide to the employment minister is under investigation… for past business deals, many years before New Democracy came to power, deals that have nothing to do with the bond affair, but that do not allow him to continue at his post. For this reasons I today accepted the resignation of Labor and Social Security Minister Savvas Tsitouridis. My decision is not to tolerate any kind of action or behavior that harms political life, that hurts Greeks,» Karamanlis said in a statement on Saturday. Tsitouridis’s dismissal failed however to placate opposition parties. PASOK leader George Papandreou called for immediate elections and criticised Karamanlis, speaking of the «unique case of a limited liability prime minister» who was forced to dump Tsitouridis «in order to shield himself… from the great scandal of the plundering of the pension funds.» The Communist Party said that «working people should not trust government declarations about ‘transparency’ and ‘fighting corruption.’ On the contrary, they must escalate their struggle, demanding an end to betting with (pension fund) reserves… and the return of all stolen money from 1950 onward.» In this last phrase, the Communist Party was referring to a decision by the conservative government in the early 1950s to force pension funds to deposit their reserves with the Bank of Greece at rates far below market rates, a decision which was not reversed until the 1990s. Since then, pension funds have been allowed to invest their money in bonds and stocks, although the government has placed a limit on such investments. Following the stock market collapse of 2000-2003, most funds had invested in low-yield, low-risk government bonds. It was in 2005 that pension fund managers, all appointed by the ruling party, decided to extend their investments to structured notes. These are hybrid bonds whose yield at maturity depends at least partly on an underlying measure, such as a stock index or a basket of stocks. They may or may not carry a coupon for part of the investment period. They vary enormously in complexity and, unless the principal is guaranteed, they can be quite risky for inexperienced investors. It is the second time the 52-year-old Tsitouridis, once seen as a likely candidate for his party’s leadership, has been forced to leave the government. In September 2004, he was made to resign his post as agriculture minister after asking a government colleague to arrange the transfer of his son to a university closer to home. He rejoined the government as labor minister in February 2006. His successor, 57-year-old Magginas, served as government spokesman under PM Constantine Mitsotakis in 1992-93. Elected as a deputy in 1993, he lost his seat in 2000 but bounced back in 2004. He became chairman of the parliamentary Foreign and Defense Affairs Committee before becoming head of the New Democracy parliamentary group in February 2006.

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