ATHENS – Bank of Greece Gov. Yannis Stournaras brought top officials of Attica Bank in to explain why a 100,000 euro ($112,987) loan was given provocative Alternate Health Minister Pavlos Polakis, who responded by calling him and recording and leaking the conversation, tearing into bank chief.
Polakis, who has been a kind of attack dog for the ruling Radical Left SYRIZA and Prime Minister Alexis Tsipras, assailing rival politicians and party enemies, got a fast-track loan secured as a second mortgage on a home on Crete which already had a 300,000 euro mortgage ($338,960) that hasn’t been paid off.
The dubious circumstances were being probed to see if there was any favoritism given at a time when the country’s banks are finding it difficult to give loans because they are buried under a mountain of bad loans, including those held by political parties.
Stournaras – whom Tsipras, without a shred of evidence, claimed is one of 10 rival politicians and officials who took bribes from the Swiss pharmaceutical company Novartis – is one of SYRIZA’s prime ideological enemies and targets.
He brought in the Attica Bank officials, who defended the loan, media reports from multiple outlets said, after the newspaper Proto Thema first reported what appeared to be a kind of sweetheart deal although the details haven’t been fully revealed.
Responding to criticism on social media, Polakis admitted to having applied for the loans in order to “cope with” family and professional demands after experiencing a significant reduction in earnings as a result of having to give up his job as a surgeon.
The major rival New Democracy demanded an answer too although it didn’t mention it has bad loans with banks and gave loan officers immunity from prosecution for approving them without sufficient collateral.
New Democracy also said there should now be an inquiry into Polakis’ declaration of wealth, a document required of public officials, to review his listed income and assets against the loan and his financial standing.
Attica, which is not among Greece’s four systemic banks and not under the supervision of the European Central Bank, is under the purview of the Bank of Greece, which pits Polakis against one of his party’s main antagonists as Stournaras has consistently questioned rosy economic estimates being made by Tsipras, who claimed he’s brought the country to recovery from a more than 8 ½ year-long crisis without mentioning, if so, it’s largely because he reneged on anti-austerity pledges.
Proto Thema, Greece’s best-selling Sunday weekly, said Polakis got the loan under “favorable” terms that weren’t explained and that it was rushed through procedures as a personal loan so he could get the money as soon as possible. His first mortgage reportedly is with one of the country’s four big banks which wasn’t named.
It’s common in Greece for businesses and other favored people to get loans and not pay them back, critics have said and with several bank scandals seeing some institutions shut down over bad loans with no major prosecutions.
On his Facebook page, Polakis, a physician by training who said flu deaths in Greece weren’t a “disaster,”, said he needed the loan to meet “the needs of his family and political life,” which many others can’t get during brutal austerity measures perpetuated by SYRIZA.
Attica’s Deputy CEO and Managing Director were called on the carpet by Stournaras to give an explanation as their institution is subject to review by the Bank of Greece. Attica’s main shareholder is the state’s state-run unified social security fund (EFKA.)
Attica Bank said all internal criteria, practices and prerequisites were met, including sufficient guarantees but didn’t explain why the loan was given so fast and whether other applicants could have the same privileges if they weren’t connected to the government.
A bank press release also said an “ample” number of similar loans, including the size, have been issued in 2018 and up to now and that the four big systemic banks have given similar loans to other politicians.
YOU TALKING TO ME?
Angered Angered by the Bank of Greece inquiry, Polakis telephoned Stournaras earlier later confirmed that he recorded the conversation, the business newspaper Naftemporiki said. He didn’t reveal whether Stournaras knew if it was being recorded and said legal experts said if not then it was unlawful.
While first praising Stournaras for the high-profile review of his loan, he then accused the Bank of Greece for releasing information about the loan, which Stournaras denied, the paper also said.
Polakis then reportedly pushed Stournaras to have the bank review loans and borrowings from political rivals of SYRIZA, including a newspaper on Crete controlled by the family of main opposition leader Kyriakos Mitsotakis, as well as Proto Thema’s financial dealings.
When told that Greece’s central bank cannot audit the country’s four systemic banks without Single Supervisory Mechanism (SS) notification, Polakis, according to the leaked conversation he disseminated, replied:
“What are you telling me, Mr. Stournaras? That you can’t check the banks that provided the loans that bankrupt the country, and brought the memorandums, and that you can only check the cooperative banks? What kind of central banker are you?” Polakis said, confusing “cooperative banks”, in this case, with “non-systemic” banks, which is what Attica Bank is.
He also accused Stournaras of leaking the loan details to the press after being informed by his “associates” in Attica Bank, something that the central banker again flatly denied.
New Democracy also said, that, “There are no words left for anyone to describe the devastation that the Tsipras government is leading the country towards.”
The Conservatives said that Polakis was trying to squeeze Stournaras by recording the call. “Envious of the practices of Yanis ‘Clouseau’ Varoufakis, Pavlos Polakis today attempted to blackmail Greece’s central banker by recording a telephone conversation,” New Democracy also added.
That was in reference to SYRIZA’s former finance chief Yanis Varoufakis and Peter Seller’s comedic fictional film detective Inspector Clouseau in the Pink Panther movies that presented a bumbling character.
Polakis said if Stournaras didn’t investigate rivals of SYRIZA that, “I will come down there and will not leave if you do not order an inquiry,” the recording transcripts said.
Sources who weren’t named later told Kathimerini that that while Attica had not violated banking rules by granting Polakis the loans, it is not customary for consumer loans secured against an indebted asset to surpass half that amount in most cases.