Squaring the triangle of corruption

by Costas Efimeros
Giorgos Zervoudakis contributed to this report

Systemic media companies in Greece are members of groups of companies involved in construction and shipping and are in reality unsustainable businesses, financially speaking. In order to remain in operation, they receive hundreds of millions in loans from banks without any guarantees or collateral. They are the financial engine of the triangular relationship. Today ThePressProject reveals the fourth pillar of the relationship, the mechanism that undertakes the laundering and the movement of money between the state, banks and the media. And this is none other than some very odd advertising agencies.

 

The money these advertising companies manage comes from the state and the banks. Although the banks are in reality propped up by the taxpayer, both in Greece and elsewhere in Europe, in Greece banks spends millions of euros advertising their “services”, services that don’t really offer their customers anything. They do this because lavishly financing the media guarantees the silence of journalists. A typical example is the Reuters report on President of Piraeus Bank, Michael Sallas. The report was barely publicised in Greece, although Reuters is one of the most popular news outlets in the country and all media companies have access to its content, using it as a source regularly. On the contrary, Piraeus Bank’s complaint following the Reuters report was widely reported (even though the case eventualy was dismissed in court).

 

It is very difficult to investigate the network, and to track the movements of the money from the banks. Their balance sheets contain no information whatsoever, and whenever anyone has attempted to follow the trail, the banks have hidden behind privacy laws. Three months ago, the new Minister of State, Nikos Pappas, asked the Bank of Greece (BoG) to investigate the loans given to media companies, and to report what guarantees were given. The Governor of the BoG, and former finance minister in Samaras’ government, YannisStournaras, refused to provide this information citing privacy laws. But perhaps the personal data he is protecting is in fact his own, and that of his family, since as you will see below, his wife is active in advertising, and is managing millions in state funding.

 

Despite the cover-up in the private sector though, where public money is concerned, things get much easier for us because of a law that requires every public decision to be posted online. The problem is that the system is fragmented and constructed in such a way that is almost impossible to search for the exact data you want. TPP, though, has a solution: we call it Searchlab.

 

Searchlab is a piece of Software created by the team of developers at TPP, which using crawl technology managed to collect more than 11,5 million documents from different databases relating to state decisions, the index of public limited companies and the details of European financing programs . So now we have our own “google search” into the depths of the system.

 

So we already have the mechanism to investigate anything, and all we needed was a place to start. Defense Minister Panos Kammenos gave this to the public.

 

 

The head of the ANEL Party which is currently in coalition government with SYRIZA, filed a document with the Union of Journalists.  It is an official document of the Hellenic Centre for Disease Control and Prevention (KEELPNO), detailing their advertising expenditure. We know that two months a judicial review into this public body was initiated by the prosecutor of corruption, and that the evidence contained in the “Kammenos List” was proving very interesting.

 

The document details 25 million euros supposedly spent on advertising campaigns for the prevention of communicable diseases. Yet almost no Greek can seem to recall seeing any of these expensive ads. The ads also don’t seem to have reaped any results, since according to official data of the World Health Organization and KEELPNO itself, communicable diseases actually increased rapidly over the period of the campaign in Greece.

 

The names and amounts included in the list are impressive. Major television stations, all of the famous Greek newscasters, newspapers, magazines and websites seem to taken huge amounts of money. Most of those on the list have declined to comment, but there are cases of journalists, such as the famous radio producer and publisher George Tragas, who reportedly received about €300.000  and claims to have allocated the money for advertising. Others like the publisher and television station owner, George Kouris, claims that he never received the money (but without denying that he had made the deal to receive it) and others such as the renowned journalist and publisher Nikos Chatzinikolaou who responded saying “my newspaper has written about the KEELPNO scandal, and that says it all.” Allow us to interpret that statement as an admission of receipt of the €400.000. 

 

The list gets even more interesting because of the unequal distribution of the amounts involved. So the leading TV station in Greece in terms of viewers, appears to take less money than an individual journalist, whereas the list also refers to hundreds of websites that were funded, that actually have zero traffic.

And yet the bigger scandal lurks behind the third category of public money managers: advertising agencies.  

 

Take for example the case of the advertiser “Cream SA” (an unfortunate choice of name, for an English speaker), which despite its lack of website takes in 1,256,000€.“Fortune SA” on the other hand takes in 370,000€. If at first glance this seems a little unfair, hear us out – by searching through the data we discovered that these two companies have the same owner and comparable boards of directors. So we continued our search using the name of the owner, Vasileios Provelegiadis, and we discovered that he also has a share in the agencies SYN, MUST, CIAMEDIANETWORKHELLAS, GREATING, FAIRPLAY, QUTINET, PRALINE, DEGRECO, CLEMENTE, VIII, GREAT and RAHATI. All of these firms display similar characteristics: they seem to have their headquarters in the same area; they have similar Boards and no substantial market presence. Their activity consists in putting in bids for public contracts and, as we’ve already seen, they have no problem with putting in ‘bids’ for the same projects.  

 

If it seems odd that just one advertiser has, in recent years, had as take in 12 companies, you’ll be shocked to learn how this ‘tree’ of corruption extends even further. Our research has uncovered that many member of the Boards of the above-named advertising agencies also participate in other agencies independently of Provelegiadi, and the branches of the tree spread even further the more you pursue these names.

 

Everything that you’ve read thus far has to do only with two companies (which in reality were just one). But the other companies that appear on “Kammenos’ list” have similar features. In fact, one of these is owned by the wife of Yanis Stournaras, the Governor of the Bank of Greece and non-elected former Minister of Finance in the Samaras administration. 

 

But this isn’t the first time that Stavroula Nikolopoulou’s company has been mentioned by ThePressProject. Last year we published an exposé on her involvement in a health-related advertising program, which her company undertook in collaboration with the agency V+O – itself owned by another member of a New Democracy minister’s immediate family. The nearly half-million euro program was for television spots, which our research has been unable to locate. This time Mindwork Ltd fared better, with 1.6 million euros. Of further interest is the company’s status: the company remains Ltd rather than SA, even though this means that it has to pay nearly double the taxes. Nevertheless, by retaining Ltd status the company ensures that its movements are difficult to trace via state provisions for transparency. 

 

 

In 2007 the Ministry of Education started the “Education and Lifelong Learning” program with 85% European funding (the program is still ongoing today). Theprogram’sentirebudgetisnearly 1.7 billion euros, which includes 15 million earmarked for advertising.

 

The advertising agencies that we saw on “Kammenou’slist” also show up here, and take in between 200,000€ and 1,000,000€ for communications studies (but not for actual advertisements for the program, which have appeared in Greek mass media outlets). 

 

We’ve long known that banks have spent millions of euros advertising services that they don’t actually provide, but now we are confronted with a different situation: the spending of millions of euros on not advertising services which they do actually offer. Nevertheless, and although the advertising done by banks (even today, in a country with capital controls in place) might appear a little bit odd, our research has identified yet another relationship between the banks and advertising agencies. In some case they take out many and large loans without collateral guarantees (or with overvalued collateral); in other cases they convert receivables from government contracts into working capital. 

 

Communication Effect SA is among the advertising agencies included on the list and which undertake shares of these projects. This company is of especial interest because of its complicated history. In recent years its owner appears to have also been involved in a series of similar advertising agencies which open, merge with each other, close and are transferred amongst themselves – such that we have found at least two cases in which payment orders were issued with the tax information of companies other those responsible for carrying them out. 

 

And this isn’t the only problem presented by the documents which we obtained through the Transparency Program Initiative (Diavgeia). In many cases we find the -usually very slow- system acting with lightning speed so that a contract can be awarded to an advertising agency.

For example, on 13 December 2012 “invitations for expressions of interest” were issued for the project “Secondary Advertising Actions”. Five days later Cream SA made an offer which in less than a day was evaluated, passed through committee, approved, filed with the Transparency Program Initiative, given a protocol number, and discussed at a meeting of the ministry’s Special Secretariat of European Resources, which agreed to approve the funding. The Secretariat’s second decision was then to give the order for the contract to be signed. The project was delivered within 10 days(!), and compensation to the tune of 70,000€ immediately deposited.

 

Perhaps in the end our creditors have been unfair to accuse us of bureaucracy?

 

 

Our research has uncovered a complex network of advertising businesses, many of which do not exist on the real market. They are supposed to operate in the field of communications, but do not even have email addresses -they exist only as signatures. 

 

In most cases we can not find evenone mention of their owners on the Internet, and none of them seems to use social media. 

 

What we have revealed is thus a mechanism for money laundering, or at least another mechanism for transferring money within the triangle of corruption, from the government and banks to mass media outlets and well-known journalists.  

 

It is well known that in Greece advertising is often used as a way of keeping mouths shut. It seems that mouths do indeed stay shut when they’re stuffed with millions of euros. 

This publication has been produced within the partnership with Osservatorio Balcani e Caucaso for the European Centre for Press and Media Freedom (ECPMF), co-funded by the European Commission. The contents of this publication are the sole responsibility of IPS Communication Foundation and can in no way be taken to reflect the views of the European Union.