Government hauls in Leonidas Bobolas for unpaid taxes

(The Wall Street Journal) Greek prosecutors arrested the scion of one of Greece’s most powerful families on Wednesday, in line with the left-wing government’s vows to take on the oligarchs whom many Greeks see at the root of the country’s ills.

Leonidas Bobolas, CEO of ELLAKTOR, the ‘national contractor’  whose business interests range from construction to media, was charged with tax evasion relating to a hidden Swiss bank account. He is one of the highest-profile figures to be hauled in by public prosecutors in years, and his arrest comes amid an increasingly vitriolic confrontation between the government and media owners.

Mr. Bobolas, 53 years old, was released later on Wednesday after paying €1.8 million in back taxes, and his lawyer says the issue has now been settled.

The Bobolas family, under its patriarch Gerogios Bobolas, Leonidas’s father, is among Greece’s most prominent media families. Its Pegasus publishing group comprises some two dozen media properties, ranging from the Greek language edition of Elle and financial daily Imerisia to Greece’s leading television channel, Mega.

Since coming to power in late January, Greece’s Syriza-led government has taken aim at the media magnates, who it says have abused their control of the media for years by influencing government and using that influence to enrich themselves through state contracts.

The new government has promised to hold the first-ever auction of the television frequencies that Greece’s private channels, such as Mega, use but never formally paid for when they first began operating in the late 1980s and early 1990s. It has also started investigating concessional loans that Greek banks have extended over the years to media companies, many of which are now deeply indebted.

Despite that, banks have continued to issue new loans to the media companies—including one right before the national elections Syrizas won in January, according to two government officials—even as they freeze lending to other economic sectors.

Earlier this month, the government told Greece’s private television stations they collectively owed some €24 million ($26 million) in back taxes since 2011—something the media owners deny. The association representing the country’s private television stations accused the government of attempting “a repossession of private enterprises.”

 ‘Media is an expensive hobby and whoever wants to exercise it has to be prepared to pay.’

—Nikos Pappas, Greece’s minister of state responsible for the media

The government appears unmoved. “Media is an expensive hobby and whoever wants to exercise it has to be prepared to pay,” said Nikos Pappas, Greece’s minister of state responsible for the media.

For much of modern Greece’s history, the radio and television sector was controlled by the state; until 1989 Greece had only two television channels, both state-owned. Liberalization was done in an ad hoc manner, with private channels being awarded temporary operating licenses but never paying for their broadcast frequencies.

Those temporary licenses remain in effect until today, making Greece the only European Union country that has never conducted a formal auction of public broadcast spectra.

Among the pledges the new government has made to eurozone creditors backing Greece’s €240 billion bailout is to raise €350 million from the tender of broadcast frequencies. Relevant legislation is expected to be submitted for vote in Parliament by the end of June.

The current government isn’t the first to take on the media barons or Greece’s other oligarchs. Both former Prime Minister Costas Simitis, a socialist, and former Prime Minister Costas Karamanlis, a conservative, tried to break the Bobolas family’s hold over their media empire by barring media owners from participating in lucrative government contracts in any economic sector. In addition to Pegasus, the family controls Greece’s largest construction group, Ellaktor, which is one of the country’s major beneficiaries of public works projects.

   ‘Steps in this direction are going to give the government a public-relations boost.’

—John Dimakis of Athens-based communications consultancy STR

However, both government attempts to rein in the Bobalases’ influence—the first in 2002, the second three years later—were stymied by legal objections from the European Union.

Although media owners are now being singled out, many Greeks say the control of the country’s entrenched oligarchy extends far beyond that sector to industries ranging from banking and oil refining to shipping.

Whether the current government will succeed where previous efforts have failed is unclear, but the effort alone could win it points with the public.

“Steps in this direction are going to give the government a public-relations boost,” said John Dimakis at STR, an Athens-based communications consultancy. “But it remains to be seen in practice whether it will lead to tangible results.”

Even government officials have their doubts. One of the government’s first moves after coming to power was to create a new agency for tackling corruption and appoint respected Supreme Court prosecutor Panagiotis Nikoloudis to head it.

“Corruption in Greece does not exceed the European Union average, but it is very complex,” said George Vasileiadis, Mr. Nikoloudis’s deputy. “We are not magicians. Efforts to tackle corruption and increase public revenue require time.”

The government’s recent attempts to investigate the loans given to the media companies, for example, have faced difficulties. Mr. Pappas, the minister of state for media, says Greece’s central bank has been reluctant to divulge data on past-due media loans held by the local banks.

“We hope the central bank Governor Yiannis Stournaras is more cooperative on these issues in the future,” Mr. Pappas said.

“Bank of Greece, like any other banking institution, is not allowed by law to disclose any data on loans,” a senior central bank official said. “However, this data is immediately available to the financial prosecutors and the new agency for tackling corruption”.


Photo eKathimerini