Prosecutor files charges in fund bond scandal
A prosecutor filed criminal charges against dozens of officials at state pension funds, banks and brokerages yesterday for allegedly corrupt investment practices over the past eight years, according to court officials. The suspect deals include the sale of an overpriced 280-million-euro bond to state pension funds earlier this year, which led to the resignation of the labor minister and has eroded the conservative government’s popularity only months before the next national elections. Athens prosecutor Giorgos Koliocostas formally charged some 50 people with a total of nine felony counts, including fraud, breach of trust, money laundering, tax evasion, membership of a criminal organization and concealing crimes. Unusually for cases of this type, the names of those charged have not yet been officially released. Legal sources said the decision to withhold suspects’ names is in line with the law but has not been implemented for the past 30 years. Officials from brokerage Acropolis, hedge fund North Asset Management and investment bank JP Morgan are expected to be charged. Additionally, members of the boards of the pension funds that purchased the overpriced bond are likely to be named as suspects. The charges followed two separate investigations into the investments of state pensions funds between 1999 and 2007. Koliocostas found that the funds had lost a total of more than 21 million euros from placements in bonds and stocks. Sources said that no political figures have been named as suspects other than former Labor Ministry special secretary Evgenios Papadopoulos. No officials from the Finance Ministry’s general accounting office are believed to have been charged either. A court official said the next stage in legal proceedings will involve investigating magistrates summoning witnesses for questioning and later, in the event any wrongdoing is established, the filing of charges. The case will be handled by investigating magistrate Giorgos Lekkas, appointed last week to probe the bond investments. Lekkas will also decide whether additional charges should be brought against the 50 suspects or other suspects not yet implicated. Meanwhile, a court hearing began yesterday to establish the veracity of claims that the State Portfolio Management Agency (DEKA) had purchased shares for the sole purpose of supporting share prices ahead of the 2000 national elections. The hearing is set to resume tomorrow.
