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EC to freeze funds to Greece “due to alleged cartel of major constructor companies”

The European Commission will freeze all payments of  the European Regional Development Fund/Cohesion fund to Greece for the 2014-2020 programs, due to activities of an alleged cartel of major construction companies and large foreign companies present in Greece. These companies have been involved in public works for over 27 years since 1989.

This becomes public on the day that European Commission President Jean-Claude Juncker is in Athens and has meetings with President Prokopis Pavlopoulos and Prime Minister Alexis Tsipras.

According to New Europe that has obtained an internal EC letter signed  by Walter Deffaa, Director-General for Regional Development:

“The reason for the Commission’s pause is an investigation of the Greek competition authority, which concerns possible manipulation of tendering procedures for major infrastructure projects.”

New Europe notes that the letter was circulated internally on June 17, and

“it is expected that the decision will not be announced until after the European Commission President, Jean-Claude Juncker, has concluded his trip to the Greek capital, but before the competition authority will examine the case on July 21.”

Juncker arrived on Monday, shared a nice meal with EU Commissioner Dimitris Avramopoulos and former Prime Minister Antonis Samaras and meet the President and the Prime Minister on Tuesday. His lips sealed, he said no word. Didn’t he really? Or did Juncker just talked with PM Tsipras and both decided to stick to a gentlemen agreement of noble discretion. Odd, then Prime Minister Alexis Tsipras spoke of a 5-something billion investment plan during the joint press conference with Juncker.

In his letter Deffaa writes that

“the Greek authorities [The Hellenic Competition Commission] working on the case have “already identified companies participating in the cartel as all major constructions companies and large foreign companies present in Greece.” The cartel was allegedly active for over 27 years from 1989, to this year, in the domain of road construction, railroads, metro, and concession projects. The Director-General confirms that some of these projects “will certainly have been co-financed by EU funds”.

The technical assistance programme is the only element that will not see its funding frozen. Further payment claims will not be processed, Deffaa writes, “unless there is assurance on the legality and regularity of the certified expenditure.”

According to New Europe “A source in the Greek Prime Minister’s office described the document signed by the Director-General as “one of the thousands of internal documents that circulate”, and said that high ranking European Commission officials have reassured the Greek government that they do not intend to “handle the matter in this way”.

Which are these companies?

In a statement issued on 18. May 2016, the Hellenic Competition Commission notes:

Following the issuing of a statement of objections, the Hellenic Competition Commission (HCC) will convene on 21 July 2016 to hear a case concerning an alleged infringement of Article 1 Law 703/1977 (now article 1 Law 3959/2011) and article 101 TFEU, by undertakings active in the construction sector in Greece.

The ex officio investigation at issue focuses on alleged collusion regarding tenders for public works of infrastructure, notably road construction, rail transport, metro rail and concession projects (public-private partnerships).

According to the statement of objections, the ELLAKTOR, J&P-AVAX, GEK TERNA, AEGEK, TECHNICAL OLYMPIC and INTRAKAT* groups of companies participated, with varying starting points, in bid-rigging for public construction works that spanned from 1989 to 2016. Based on the evidence gathered in the investigation, the implicated construction companies coordinated their business conduct on responses to invitations to tender, particularly by:
• Submitting cover bids and/or agreeing amongst themselves who will submit the winning bid;
• Fixing the level of bids (rebated granted)
• Suppressing bids in return for monetary compensation;
• Agreeing to execute sub-contracts before submitting their respective bids; or
• Withdrawing from bidding in return for jointly executing the respective works.

The HCC lists also other Greek and foreign companies and the two famous Germans HOCHTIEF (Athens Airport) and SIEMENS (endless projects).

Something rotten in the Kingdom of Brussels?

It is not clear how much money would be affected by this decision and what will happen with the investigation result.

Will hourly-hired EU workers come to Greece and dismantle every EU co-funded road and bridge and railroad construction, the Metro and the Tram and all possible and impossible  projects? or Fine the alleged cartel companies?

The issue is that the majority of the companies listed by HCC are well-known to the Greek public for winning bid and bid and the public attached the by-name “the national constructor” to at least one of them.

Another issue is that the famous Juncker €35-billion investment package provided that EC-Funded projects are of such big volume that only r-e-a-l-ly big companies would submit bids.

No, do not ask me. I have no idea whether the OECD competitiveness tool kit foresees  also “the opening of the closed profession of construction in Greece.”

But before the EC applies for one more time double-standards, Brussels should look into EU-funded programs and alleged cartels also in other member-states from North to the Soouth and form East to the West. Otherwise, some mean Greeks might think that there is something rotten in the Kingdom of Brussels – for the obvious reasons.

*INTRAKAT is reported as INTRACOM in the Greek version statement issued a day earlier, that is on 17. May 2016.

PS I assume, Juncker had this small bomb in his pocket but not time to take it out as he was shaking hands with Greece’s political leadership.


    Dong! Dong! Any cartel around?

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