Complicit in Corruption: How German Companies Bribed Their Way to Greek Deals

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A prime example of such transactions is the sale of 170 tanks that Krauss-Maffei Wegmann (KMW) recently delivered to Greece. In exchange, the company was to receive €1.7 billion.

Such deals normally involve paying millions for consulting services. Exactly what kind of consulting is provided and why the companies are often located in tax havens remains largely a mystery. The secret firms generally belong to Greek "intermediaries" -- industrialists working on commission. In many cases, so investigators suspect, these intermediaries then distribute the money to decision-makers.

In the case of KMW, right about the time when companies were invited to bid on the contract, a Greek tycoon established a shell corporation on the Caribbean island of Nevis in the fall of 1999. The firm then concluded two contracts: a negotiating agreement with KMW and one with a firm called Evanston Group Ltd. on the British Virgin Islands, which was supposed to receive $60 million in exchange for the "acquisition of offset options."

Top Secret

How, exactly, is a shell corporation in the Caribbean supposed to provide services in Athens? When these agreements -- which were classified as top secret due to their "political nature" -- became public, officials in Munich launched an investigation. But they have made no headway because the Virgin Islands refuse to cooperate.

In Greece the Athens chief public prosecutor and an investigative committee looked into the role that politicians played in the deal. But these investigations have also come to nothing. That's hardly surprising in a country where not a single one of the 450 most important corruption cases in recent years has been concluded before a court of law.

Both KMW and Ferrostaal explicitly deny ever having paid bribes for the respective deals.

Payment Overdue

By now the defense contractor has delivered all 170 Leopard tanks to Greece -- but Greece still owes the company €180 million on the order.

The German submarine consortium reports that payments have only trickled in since 2005. Here the Greek state currently still owes €321 million. And Siemens is still waiting on an additional €20 million from the security technology deal for the Olympic Games.

This has prompted a number of defense companies to turn to the German government. Their demand: If Germany is helping Greece, then the Greeks should at least pay their debts.

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• Part 1: How German Companies Bribed Their Way to Greek Deals
• Part 2: Millions Paid to 'Consultants'