State-guaranteed loans scandal going to trial

6 December 2015
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Prosecutors have indicted 57 businessmen who received state-guaranteed loans worth 94 million euros in total but failed to keep up their repayments, forcing taxpayers to foot the bill.

Kathimerini understands that this is part of a broader investigation into an alleged ring within the public sector that ensured businesses could qualify for such loans even if they had no intention of paying back the money.

The handing out of such loans has been under scrutiny since late 2012, when then alternate finance minister Christos Staikouras referred two cases to judicial authorities, who in turn asked the General Accounting Office (GAO) to provide prosecutors with the details of all the firms that had received such loans since 2000.

Staikouras told Kathimerini that in 2014 the government had prepared legislation to change the process for issuing state-backed loans but that the snap elections in January 2015 prevented it from being submitted to Parliament.

More than 10,000 companies in total have received state-backed loans amounting to almost 1.6 billion euros.

In order for a company to receive a loan that is guaranteed by Greek taxpayers, its application has to be approved by an 11-member committee that includes representatives of the GAO, the private sector and chambers of commerce. There is also a separate process in which the state can decide not to seek to recover the money from a business that fails to meet its repayments, meaning the debt is transferred to the state.

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