Letter from Thessaloniki

We elect politicians and political parties with the expectation that they will act in the public interest. In addition, we provide them with access to public resources and the power to make decisions that affect our lives. Given their privileged position, immense damage can be inflicted by politicians or parties acting out of what might be described as ignorance, to say the least. Kathimerini’s financial commentator Nikos Nikolaou in yesterday’s edition of the paper estimated a loss of 35-40 million euros for various pension fund assets that were improperly purchased. Others calculate that the principal issue revolves around the management of pension fund assets with a value of approximately 30 billion euros. «The scandal points to inexperienced ministers» was the title Nikolaou chose for his article. The debacle, which has shaken the Greek political scene so hard of late, has shed light on a number of issues. The main problem revolves around who actually manages the assets of pension funds. The selection process for the heads of pension funds – who make decisions involving the investment of hundreds of millions of euros – is a sorry affair. As a rule, they come from the ranks of the party that happens to be in power and, at best, have only minimal qualifications. When the alleged scandal of the mismanagement of the Civil Servants’ Auxiliary Pension Fund first broke in mid-March, part of the controversy centered on whether the qualifications of its head, Agapios Simaioforidis, a retired army officer, could really be considered equivalent to a university degree (the implication being that this was an acceptable minimum). No one would dispute that politicians have obligations. They are expected to repay their supporters – in one way or another. Political parties have obligations too. They are expected to reward the leaders of groups who voted for them: union leaders, heads of soccer clubs, church leaders, even bankers. Now all this reminds me of the broad satire of «The Golden Calf» – a hilarious story of various aspects of Soviet society during the era of the New Economic Policy (NEP). This best seller written in the 1920s was a tremendous success. The novel achieved virtual cult status. Readers memorized whole chapters of the work, and many expressions from the novel – as well its main character Ostap Bender – passed into common parlance, where they remain to the present day. In this amusing book, by Ilya Ilf and Yevgeny Petrov, a coarse partisan must be rewarded after the establishment of Soviet power. So the party gives him the lucrative position of director of an old people’s home. Acting out of greed and being obnoxious to the aged residents of the home, he ends up being detested. As a result, the party officials must transfer him to some other job. However, the position must again be that of «director,» so they make him director of an orchestra. The same phenomenon is constantly being repeated in Greece. And not just in the field of the economy. It is a virtual law in this country for the wrong man to find himself in the right position. And as far as the recent bond scandal is concerned, well, there are other countries – not necessarily in the European Union – that take even greater risks with world-beating pension funds: Norway. According to reports from Oslo last week, the world’s biggest pension fund – with 200 billion euros in assets – would probably increase its exposure in equities from 40 percent to 60 percent. And if that wasn’t enough, it was also rumored that the Norwegian government pension fund would consider investing in even riskier placements with potentially higher returns. Yet in a country like ours, where that old dictum «if it ain’t broke, don’t fix it» still applies, and where we often have the impression that all our spending is done from a coffee jar on the mantelpiece, such Norwegian management sounds preposterous. Sure enough, we are more familiar with heroes like that Russian Ostap Bender.

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