Greek Debt Haircut Led 15 Bondholders To Kill Themselves

ATHENS – A disastrous Greek government scheme two years ago to write down debt by imposing 74 percent losses on investors, including banks and individuals who’d put up smaller amounts, has led 15 bondholders to kill themselves and left one in three unable to pay their bills.

The so-called Private Sector Involvement (PSI) was implemented by then-Finance Minister Evangelos Venizelos, who is now the leader of the PASOK Socialists serving as Deputy Premier/Foreign Minister in the coalition government under Prime Minister and New Democracy Conservative leader Antonis Samaras.

The plan also brought the Cypriot bank industry, which held huge amounts in Greek bonds, to the edge of insolvency, and forced that country’s government to seek an international bailout from the same Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that rescued Greece.

Almost one in three of some 15,000 retail bondholders who lost around 75 percent of their savings when Greek sovereign debt underwent a haircut in 2012, known as the Private Sector Involvement (PSI), are now unable to pay their bank loans or tax bills, according to a survey carried out by the association that the investors have formed.

But to help pay the cost, the Cypriot government confiscated 47.5 percent of bank accounts of more than 100,000 euros, another crushing ripple effect from the PSI that nearly wiped out the savings of many small-time investors, including those in the Diaspora.

An association of those small-time investors, called SYFPOED, sued to recover the lost monies but Greek courts said the losses they were forced to take – and which did nothing to help reduce the country’s still staggering 349.2 billion ($430 billion) debt – were in the national interest.

The association said that trusting in their homeland led 15 investors to kill themselves since the PSI was imposed. The group has held protests, including storming into the New Democracy headquarters and vandalizing a portrait of Samaras, who promised during his campaign two years ago to hold them harmless from the losses but then ignored them after he won.

“There are many among us who have serious health problems and are not in a position to deal with them,” said SYFPOED’s Vice President Yiannis Tsolias. “Why? Simply because they trusted their homeland.”

Ironically, he said the same people who were ruined financially by the government now are being pressed by the state to pay taxes that were increased dramatically along with big pay cuts, slashed pensions and worker firings on orders of the Troika.

He said about 33 percent of them can’t pay their state debts or bank loans but are being hounded while the banks are not chasing New Democracy and PASOK, which together owe 250 million euros, aren’t paying, and don’t have to disclose how they spent the money even while both parties have financial problems and haven’t been paying their staff or rent in some cases.

According to the group’s survey 88 percent of its members said they were not advised of the risks when investing in Greek bonds, which were restructured ago in an effort to reduce Greek public debt.

MPs from most political parties attended a news conference in support of the bondholders, with Dora Bakoyannis of New Democracy and PASOK’s Dimitris Kremastinos among those who expressed support for the bondholders’ efforts to seek compensation for their losses but didn’t offer to do anything else about it as they both support the government which has gone along with the scheme.

“The government wants to just let the issue be forgotten by refusing to find a solution,” protesters said in a statement in October when they were pressing again to be repaid. “[The government] hopes that we too will give up our efforts to take back what was stolen from us,” they said.

Bakoyannis said that despite the various pledges made to the victims of PSI over the last couple of years, none of these have been implemented as the government lied to the bondholders they would be helped.