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Former Minister Accused, Senior Official Jailed In Financial Scandal

March 24, 1989

ATHENS, Greece (AP) _ Premier Andreas Papandreou’s Socialist government suffered a double blow Thursday when two of its most prominent figures were accused of direct involvement in a massive financial scandal.

Yiannis Mantzouranis, former secretary to the Cabinet, told an investigating magistrate that fugitive banker George Koskotas had bribed a former minister to the premier, Agamemnon Koutsogiorgas, to help cover up financial wrongdoings at his bank.

Mantzouranis was an associate of Koskotas.

In another development, Theofanis Tobras, the Public Telephone Corporation’s general manager, was jailed after testifying before another magistrate investigating the Koskotas affair.

Koutsogiorgas, a close friend of Papandreou’s for 25 years, has strongly denied any involvement in the scandal. No judicial action has been taken against him so far. He resigned his post last week.

Koskotas, the former chairman of the Bank of Crete, fled Greece November 6 after being indicted in the $200 million fraud, forgery and embezzlement scandal. He was arrested in the United States and is awaiting an extradition hearing.

In interviews from jail in Salem, Mass., Koskotas claimed that Papandreou, Koutsogiorgas and other officials received millions of dollars in payoffs and authorized the bank fraud.

Mantzouranis, who was the banker’s lawyer, was arrested March 9 and charged with accepting stolen money from Koskotas.

Mantzouranis made the accusations during a second day of testimony before Giorgos Skarlatos, the magistrate investigating the scandal.

″The course of the investigation has shown that Koutsogiorgas bears responsibilities for this crime,″ Mantzouranis’ lawyer, Filipos Damoflis, told reporters after his client testifed for 10 hours.

He added that the judicial investigation should be finished and sent to Parliament for examination.

Under the Greek Constitution, Parliament is the only body that can appoint a special judicial panel to investigate wrongdoings perpetrated by acting or former ministers.

The scandal has prompted both Conservative and Communist opposition parties to call for Papandreou’s resignation.

In his written testimony, leaked to the press, Mantzouranis said he arranged to deposit $2 million in a Swiss bank as payment to Koutsogiorgas for a special secrecy act that stifled an audit of the Bank of Crete in July 1988.

″I opened an account ... in three names. Mine, Mr. Koutsogiorgas’ and in the name of his son Dimitris Koutsogiorgas,″ said the testimony, which included the purported bank account number.

Tobras was charged with breach of faith for depositing $12.5 million in the Bank of Crete last summer.

He became the fourth manager of a public corporation to be jailed for depositing large amounts of money in the bank at lower than normal interest rates when it was suffering from a cash-flow problem.

Among the corporations are Olympic Airways and the post office.

Tobras, a Socialist, has in the past been charged with tapping the telephones of opposition parties and using firearms to harrass journalists. He has not yet been tried on the charges.

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