GUNS, DEBT AND CORRUPTION
The debts caused by arms sales were often a result of corrupt deals between government officials but are being paid for by ordinary people facing savage cuts in social services.
Investigations of an arms deal signed by Portugal in 2004 to buy two submarines for one billion euros, agreed by then-prime minister Manuel Barroso (now President of the EU Commission) have identified more than a dozen suspicious brokerage and consulting agreements that cost Portugal at least €34 million. Up to eight arms deals signed by the Greek government since the late 1990s are being investigated by judicial authorities for possible illegal bribes and kickbacks to state officials and politicians.
According to the Economist, German businesses were reckoned in 1999 to pay “more than $3 billion a year all told to win contracts abroad”. In the international arms trade, “probably the world’s dirtiest legitimate business, one estimate reckons that roughly $2.5 billion a year is paid in bribes, nearly a tenth of turnover”.
In 2011, German prosecutors succeeded in convicting two former managers of Ferrostaal for paying €62 million in bribes to key Greek and Portuguese officials in connection with the submarine deals.142 At the time Ferrostaal explicitly denied ever having paid bribes for the deals.143 The two former Ferrostaal managers were given quite lenient sentences, while Ferrostaal itself was fined €140 million for ‘obtaining an economic advantage’ through its two employees.
Up to eight arms deals signed by the Greek government since
the late 1990s are being investigated by judicial authorities
for possible illegal bribes and kickbacks to state officials and
politicians, according to the Greek newspaper Kathimerini.
Among these is the purchase of US-made Patriot missiles and
the German submarine deal. “Investigators are probing bank
accounts and offshore companies in a bid to trace millions of
euros received by senior state officials as sweeteners for the
arms deals. Kathimerini understands that two cases involve
possible offenses committed by two defense ministers who
served before 2006.” Suspicious payments were reportedly
made via Austria, the Caribbean, Liberia and Cyprus.
Former defence minister Akis Tsochatzopoulos, his wife and
17 others are to stand trial, from April 2013, for kickbacks
from arms purchases. Tsochatzopoulos, a founding member
of the PASOK socialist party, is alleged to have pocketed €20
million in kickbacks between 1998 and 2001, including €8 million from Ferrostaal in the submarine deal.
The submarine corruption scandals are not limited to Greece
and Portugal. Questionable payments were also involved
in the sale of German submarines to South Korea....
Another case under scrutiny has been the €1.7 billion sale of
170 Leopard tanks to Greece by Kassel-based KMW, which
denied having paid bribes for the deal.161 The refusal of cooperation from the Virgin Islands, a key link in the money trail,
has stymied this investigation however.
Corruption in Greece is frequently singled out as a cause
for waste but at the same time companies like Ferrostaal
and Siemens are pioneers in the practice. A big part of our
defence spending is bound up with bribes, black money
that funds the [mainstream] political class in a nation
where governments have got away with it by long playing
on peoples’ fears.”16