Siemens Bribery Drama Grips Greece

Prosecutors say industrial conglomerate Siemens spent over $80 million illegally in Greece to win a contract with state owned telephone operators OTE.

ATHENS, Greece (AP) -- Greeks pride themselves on having invented European drama. And their mushrooming scandal over alleged bribery by Siemens AG officials has plenty of it.

There's a South American villa allegedly bought with illicit funds, a suspect who suffered a stroke under questioning, and a fugitive executive's wife and daughter tossed in jail because they shared bank accounts with him.

What the colorful tale doesn't offer is answers about whether politicians were among those paid off.

Prosecutors say industrial conglomerate Siemens spent some euro57.5 million illegally in Greece to win a contract with then-state owned telephone operators OTE 1997-2003. Greek officials are also investigating alleged corruption in deals between Siemens and the state involving security systems for the 2004 Athens Olympics.

But the governing conservatives of Prime Minister Costas Karamanlis' government blocked an opposition move to open a parliamentary probe into whether deputies or ministers got money, saying the judicial investigation was not complete and no minister had been accused.

Dragging along for years, the investigation into the 1990s dealings between Siemens and OTE suddenly leapt onto the front pages ahead of the weekend European Parliament elections after two top suspects vanished and police arrested the family of one of the fugitives.

Karamanlis' New Democracy conservatives -- who are clinging to a tenuous one-seat majority in the Greek Parliament -- are expected to lose Sunday's vote to the opposition Socialists.

The latest twists and turns have caused an uproar -- particularly the arrest and jailing of former Siemens Hellas financial director Christos Karavellas' family, and allegations Foreign Ministry officials failed to act in time after the Greek embassy in Uruguay reported Karavellas had transferred $3 million and bought a villa there.

The daily newspaper Eleftherotypia carried a front-page headline demanding that Foreign Minister Dora Bakoyannis resign over the failure to alert law enforcment about Karavellas' apparent plans to flee.

Lawyers have reacted angrily to the jailing of Karavellas' wife, Martha, and daughter Chrysanthe, 25, on the grounds that they share bank accounts with him. His two younger daughters, Alexia, 23, and Phoebe, 22, also face imprisonment unless they can gather bail of euro1 million ($1.4 million) each by Monday -- which the family lawyer says is impossible.

Athens Bar Association vice president Dimitris Vervesos called the detention of family members "methods used by gangsters."

Seven former executives of the German industrial giant's local branch, including former Siemens Hellas head Volker Jung, are formally accused with bribery and money laundering. All deny the charges. Jung, 70, a member of Siemens AG's executive board, was released Thursday after appearing before investigating magistrate Nikos Zagorianos. He has been barred from leaving the country.

Three suspects have been jailed pending trial; one, Giorgos Skarpelis, suffered a mild stroke while testifying to Zagorianos, and two more -- Karavellas and Michalis Christoforakos -- have fled the country, reportedly to Germany.

The Siemens scandal is just the latest in Greece. Other recent ones included a land swap with an Orthodox monastery which allegedly cost the taxpayer more than euro100 million, and the revelation that the Labor Minister had built an illegal villa and employed migrant workers without paying their social security.

The Siemens case, with implications of large-scale corruption, has led to uncommon levels of outrage in a society long familiar with crooked officialdom.

Worse, Greeks may never get the whole truth. While the former Siemens executives have been charged with money laundering and giving bribes, only one person -- a former OTE executive -- has been charged with receiving a bribe.

The governing New Democracy conservatives point out the OTE scandal happened when their socialist opponents, PASOK, were in power. Nonetheless, the conservatives last month blocked a PASOK motion for a parliamentary probe into whether politicians were involved in both the OTE and the Olympic security deal.

There have been widespread media reports alleging that both main parties received cash from Siemens slush funds -- even that some politicians got free Siemens domestic or office equipment. But no politicians have been charged.

Siemens Hellas said it "fully supports" the Greek investigation, but cannot comment on the case as the investigation is still ongoing.

Spokeswoman Silke Panoriou said Siemens AG has submitted damage claims in a Munich court against two former executives in its Greek subsidiary. The company accuses the two of "dishonest assistance to fraud."

The German company, which makes products ranging from wind turbines to trams, has acknowledged making illegal payments in several countries in years past. It has since broomed top managers and conducted its own investigation that found dubious payments of more than euro1 billion ($1.41 billion).

The Munich-based company has said it is cooperating in the investigations and has introduced new transparency measures.

Associated Press Writer Elena Becatoros in Athens contributed to this report.

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