European contractors at gunpoint : Part II

EPA/LOUISA GULIAMAKI

Works at the Olympic Complex and the main Olympic Stadium in Athens are underway just 101 days before the start of the Olympic Games, Tuesday 04 May 2004.

European contractors at gunpoint : Part II


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Only a few days after the commencement of the newly introduced arrangement/procedure of the Greek Competition Commission, New Europe continues its coverage of the issue of the alleged construction bid rigging ring, which may shake the European construction market by brandishing considerable fines (and by having other implications).

Following the information release (leak) about the investigation being conducted by the Greek Competition Commission, which we had pointed out in our previous issue, there was a leak of the Commission’s report – first to the press and then through anonymous statements. In parallel, a storm of press releases and statements has led to a significant shake-up of the market.

Indeed, in his recent TV appearance, the President of the Greek Competition Commission, Dimitrios Kiritsakis, discounted the Commission’s finding, which is yet to be published. With the procedure still pending, Kiritsakis made reference to a company that has cooperated in the investigation, but failed to explain how this company slams projects for which it did not take part in the tendering procedure. Furthermore, he avoided to discuss the hottest topics: the Olympic Works or to the venues of the Summit Meeting, which were constructed or even purchased by that same company.

New Europe considers that this to be the biggest weakness of the alleged infringement: the fact that it examines only a few works in comparison to those that have been financed in Europe throughout those years. In fact, these are so few that some people are asking themselves whether the specific report exists merely for the purpose of improving the performance of the Greek Competition Commission and so that it becomes likeable to its evaluator or maybe to the European Commission, which is accusing it of major failures. As an independent authority, garnering favour should not be its aim.

If indeed projects worth billions of Euros were tendered to a small country, how could it be possible that coordinated bid rigging took place, which refers to the less important ones in relation to their turnover? And if this actually happened, what is the logic behind the fact that the Olympic Works (let us not forget that Greece hosted the Olympic Games in the critical period of 2004) or the concessions of airports, ports, highways and bridges were left out from the blameworthy deal?

According to the leaks and based on the report of the Greek Competition Commission, companies of the following groups took part in the communications in certain periods or in relation to specific tender procedures: FCC, VINCI, HOCHTIEF, ALSTOM TRANSPORT, ARCHIRODON CONSTRUCTION, SALINI, SELI, MAIRE TECNIMONT, VAN OORD, TADEI, IMPRESA, RIZZANI SOMAGUE ENGENHARIA and SIEMENS. Same goes for the companies ΒΙΟΤΕR, ΕΚΤΕR, THEMELI, THEMELIODOMI, CHRISTOFOROS D. KONSTANTINIDIS, IACOVOU BROTHERS, DOMIKI KRITIS, AGRICULTURAL BANK, ΕRΕΤΒΟ, ALEXANDROS TECHNIKI, NEMESIS, ELLAKTOR AEGEK etc.

According to the same leak, all the illegal coordinations between the European and international giants were organised and controlled by three Greek companies.

This seems funny, if one considers the size of the Greek companies in comparison to the European, but also their experience in such relationships. Furthermore, in Greece few scientific publications exist concerning the relation of public works to competition provisions. Even if the Greek contractors had read all of them, it is unlikely that they would consider they were proceeding in illegal actions given the fact that the scientific view that was prevailing and adopted by the Greek Administration was that, provided a tender procedure and a public tender exists, competition is secured pursuant to the application of European public procurement law. This was proven by the Greek Administration, which imposed rules that allowed understandings between tenderers under specific conditions, one of which was the approval by the awarding authority.

Thus, the Greek Competition Commission was convinced and leaked that some Greek companies proceeded to absorb abuse community and national funds over a time period of 20 years by coordinating the awarding of works between the participating European giants.

Most strangely, the companies under attack, who are said to have orchestrated the affair entirely, seem to have kept only a small percentage of the works for themselves. They offered to their competitors a bigger share of the market of the critical works and altruistically kept a few projects for themselves.

While this whole story seems incredible, its consequences appear tragic for the branch.

In February 2013, in the middle of the conclusion of the Memorandum of Understanding between Greece and its lenders, the work of the Greek Competition Commission was ineffective. Functionaries of the Competition Commission, following complaints of persistent competitive companies, carried out a raid on the offices of a least five construction companies and confiscated documents, correspondence and computer hard discs. This raid had very poor results. Those are limited to two or three draft agreements, one or two emails of unknown origin with joint venture draft agreements and some other minor data.

The on-site controls held a “surprise” for the Competition Commission, which was meant to be crucial as publications relating to the course of the investigation mention. During the control in the offices of Techniki Olimpiaki on 12th and 13th February, the diary of businessman Constantinos Steggos – or to be more precise the diaries and the notes of many years of Steggos – fell into the hands of the Competition Commission. According to the leaks, this is “an inexhaustible source of information” for the Competition Commission. It is said that Competition Commission’s executives found notes, which covered an extensive time period, from 1994 to 2012. In a few words, Steggos’ notes were enough to characterise and summarise the entire history of the sector. A history however, which has been studied by significant institutional bodies and studiers except the specific contractor from Patras, who also filed a request for… immunity. The fact remains that in the place where the Dutch authorities demanded false invoices, contracts, bank accounts and proven money laundering, the Greek authority was impressed by the personal diary of the snitch and leaked the specific information to the press.

For the people who know the construction market, however, this is fool’s gold, given the fact that between 1994 and 2012 works of huge and significant value, which determine the relevant market, were executed in Greece, many of which were awarded to Mr. Steggos’ company. It is strange, that, while his company had a leading role in significant sections of works, he takes notes for the insignificant ones and furthermore excludes the big projects from the evil negotiations. There are two possibilities in relation to this: either the notes have been selected and important information has been deleted or they are fabricated.

The specific case is considered by the Competition Commission as the “most sensitive” in its history. The conclusions of its executives, whose position as well the whole structure of the authority, is still pending because of the legislative developments. The Greek case would be worthy to be put before the OECD, which has regulated bid rigging thoroughly:

1. Small Greek companies control international giants and lead them to blameworthy collaborations.

2. Unsigned thoughts and “oral confessions” constitute proof of a cartel that exceeds a period of 20 years.

3. A Greek independent authority for competition of questionable efficiency is being rescued through the “usual suspect” following complaints that have seen the light since more than 10 years and have been closed by the European Commission.

4. Works that have been successfully executed are being questioned after completion of their funding by EIB, which leads to a risk that funds will have to be returned.

5. The funds expected by Greece for its recovery lead to suspension.

6. If Greece is called upon to return the amounts of Community grants, it will be totally bankrupt.

What would the OECD tell us?

Since the matter touches distortion for works that have been co-funded by the European Union, many reasonably fear that a request will be formulated by Brussels for the return of the subsidies to the EU cashiers. Unless, of course, this is yet another tsunami of insanity that will lead us nowhere.

We reserve significant data, which has to be reviewed carefully, for the last part of our exposé.  

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