August 6, 2021

Greek Oligarch Arrested in Fraud Inquiry

Prosecutors charged Mr. Lavrentiadis, 40, with embezzling from a bank he helped oversee, Proton Bank, to prop up his struggling businesses. He is also accused of fraud, money laundering and membership in a criminal gang, charges that could carry a life term, a court official said.

Mr. Lavrentiadis, who built a multibillion-dollar empire only to see it stumble in the Greek crisis, is expected to face an investigating magistrate on Friday. A spokesman said he was not immediately available for comment.

The arrest coincided with the approval of the release of a $45 billion portion of aid from Greece’s European creditors, who have vigorously pressed Athens to clean up the corruption that has been a root of the country’s problems.

On Wednesday, an Athens court ordered the seizure of assets belonging to Mr. Lavrentiadis and 29 of his former associates. The ruling upheld an appeal by the shareholders of Proton Bank, once majority-owned by Mr. Lavrentiadis, who claimed to have suffered major losses after the lender allegedly issued hundreds of millions of dollars in bad loans to dormant companies.

Few figures of Mr. Lavrentiadis’s stature have been prosecuted recently in Greece. Greek news outlets on Thursday evening debated the significance of the timing of the arrest, and whether efforts were being made to make an example of Mr. Lavrentiadis.

As a relative upstart, Mr. Lavrentiadis had been working hard to gain acceptance among the small circle of Greece’s ruling families, contributing heavily to charities and buying media outlets. But in an interview recently, he raised the possibility that he was being sacrificed because he was still an outsider.

A court official said the timing was coincidental. “The investigation reached fruition and it was time for his arrest,” the official said.

The Bank of Greece and Greece’s financial prosecutor had spent over a year investigating Mr. Lavrentiadis and his associates. But a few months ago, his name resurfaced as one of more than 2,000 Greeks appearing on the so-called Lagarde list of people said to have accounts in a Geneva branch of the bank HSBC. The accounts are now the subject of an investigation into tax evasion, a charge Mr. Lavrentiadis denies.

Prime Minister Antonis Samaras has sought to make examples of some cases of suspected wrongdoing by high-profile figures. In September the government began investigating the bank accounts of more than 30 Greek politicians to determine whether they should be charged with tax evasion.

But George Katrougalos, a Greek constitutional lawyer who is a fellow at New York University, said the arrest was unlikely to represent the beginning of a sustained campaign against suspected wrongdoers.

“Quite the opposite,” he said. “He’s being made a scapegoat for the system to continue to be like it used to be, which is closed networks between government and the economic elite, which are not transparent, and no one knows what’s happening.”

Mr. Lavrentiadis has denied wrongdoing and dismissed the investigation by the Bank of Greece as not objective. In the recent interview, he said that he was “clean” and that he was being unfairly targeted.

Niki Kitsantonis contributed reporting from Athens.

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Markets Rise on Optimism Over Greek Vote

Concerns over the euro zone debt problems have been a focus of the financial markets for weeks. Investors had been bracing for the Greek Parliament’s decision on the package, which included unpopular wage cuts, tax increases and privatizations.

In Europe, the DAX index in Frankfurt closed up 1.7 percent, while the FTSE 100 in London rose 1.5 percent. National Bank of Greece slipped, closing down 1.9 percent; before the vote, it was up as much as 5.5 percent.

Although approval of the Greek plan took place shortly before the markets opened on Wall Street, the Dow Jones industrial average took some time to find its direction. By early afternoon, the Dow was up 76.40 points, or 0.6 percent. The Dow has been on a higher track for the past two days, and its 145-point gain on Tuesday was its biggest one-day increase since April 20.

The Standard Poor’s 500-stock index was up 10.59 points, or 0.8 percent, and the Nasdaq composite index was up 13.48 points, or 0.5 percent.

Analysts said that by the time the voting took place, investors had already taken positions. “This is classic ‘buy the rumor, sell the news,’ ” said Phil Orlando, chief equity market strategist at Federated Investors. “The equity market was up in anticipation. We priced it in ahead of time.”

In other news, Bank of America, which said it would set aside $14 billion to pay investors who bought securities it assembled from mortgages that later soured, was 3 percent higher. The company expected the agreement would lead to a second-quarter loss of $8.6 billion to $9.1 billion.

In Tokyo, the Nikkei 225 closed 1.5 percent higher.

Yields on benchmark 10-year Spanish, Portuguese and Greek bonds declined, while those in safer equivalents issued by Germany and France rose, indicating investors were willing to switch back into riskier securities.  The euro stood at $1.4426 in late trading in London, up slightly from $1.4371 late Tuesday.

The agreement by Greek lawmakers on the austerity measures was a crucial step in the international rescue of the crippled economy, but the relatively muted market reaction to the vote showed that investors know that the country’s financial troubles are far from over.

“Today’s vote will certainly give some short-term relief to markets, but concerns about the long-term feasibility of Greece’s fiscal plans still remain in place,” said Diego Iscaro, an IHS Global Insight senior economist, in a research note after the vote.

A second vote was scheduled for Thursday on enabling legislation to set the timing of the privatizations, especially of the state-owned electric utility.

“What’s really important is not the vote itself,” said George Magnus, senior economic adviser at UBS in London, “but the implementation of what they’re voting on, and that’s where the programs will come unstuck.”

The vote was critical to unlocking near-term financing, specifically the disbursement of the fifth installment of the original 110 billion euro, or $140 billion, bailout for Athens agreed last year. That installment would be worth 12 billion euros and would enable Greece to meet obligations like bond coupon payments in July, while paving the way for a new international lending program to provide financing through 2014. Details of that program is expected to be provided by euro area ministers on July 3.

Regardless of the votes, some analysts cautioned that the problems for Greece and the euro zone remained far from resolved. Private creditors were still discussing their involvement in a second bailout and many investors thought Greece would still have to default.

“It’s like a terrible form of torture,” Mr. Magnus said. “Everyone knows Greece will default  —  it’s just a question of whether it’s orderly or disorderly.”

In a research report released Tuesday, Citigroup analysts said: “Despite the aid package, eventual Greek haircuts may be inevitable, with estimated private sector haircuts of 65 to 77 percent,” referring to the write-downs that bond holders will be required to accept.

“In other words, a bailout package addresses the liquidity issue much more than the solvency issue,” Citigroup said.

Two Commerzbank analysts, Benjamin Schröder and Peggy Jäger, said early Wednesday that “even if the bills are passed, worries could still linger on for longer, if no broader consensus across Greek political parties forms.”

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U.S. Markets Calm as Greece Weighs on Europe

Markets were lower in Europe, pressured by financials, as investors sold riskier assets after talks on a revised bailout package for Greece highlighted the fragile debt situation in peripheral euro zone countries.

In the United States, the major averages rose slightly in the first half-hour of trading. The Dow Jones industrials were up 23.31, or 0.2 percent, to 12,662.05. The Standard Poor’s 500-stock index showed a similar gain, and the Nasdaq composite was marginally higher.

Commodities bounced some way back on Monday from their biggest weekly drop since 2008, revived by a weaker dollar and strong United States jobs data, which helped restore some confidence to a shaken investment community.

Brent crude oil broke above $111 a barrel and United States silver leapt by more than 5 percent after data from Washington on Friday showed private employers added jobs at the fastest pace in five years in April.

The dollar slipped against a basket of currencies as as heartened investors turned to higher-yielding, riskier assets, to the benefit of commodities.

In Europe, the FTSEurofirst 300 index of top European shares was down 0.8 percent after rising 1.2 percent on Friday. The index has fallen in four out of five sessions and is up just 1.4 percent this year.

Financials were among the top decliners, with the STOXX Europe 600 banking index falling 1.5 percent and Bank of Ireland down 3.7 percent. The National Bank of Greece fell as much as 5.7 percent after Standard Poor’s cut the rating on Greece’s sovereign debt to B from BB- and said that may hurt the creditworthiness of the country’s four biggest banks.

After an unannounced meeting of top euro zone finance officials in Luxembourg on Friday night, Jean-Claude Juncker, chairman of the euro zone’s finance ministers, said there was consensus that Greece needed a new plan.

A 110 billion euro, or $157 billion, rescue of Greece was negotiated last May.

“This has potential to disrupt the market in the near term as it looks increasingly likely that we will see another adjustment package for Greece,” said Klaus Wiener, chief economist at Generali Investments.

“The credit crisis is unlikely to be over for quite a while,” Mr. Wiener said. “We need to see first that those countries which are not so much under market pressure right now stick to their consolidation path, otherwise they will not be able to regain the necessary market trust. And rebuilding trust takes time.”

The Euro STOXX 50, the euro zone’s blue chip index, fell 1.9 percent.

Among individual movers, Barclays and HSBC fell 1.2 percent and 1.5 percent respectively after Barclays said it would make a £1 billion, or $1.6 billion, provision in the second quarter of 2011 to cover the costs related to sales of payment protection insurance, with HSBC setting aside $440 million.

MAN was up 3.2 percent after Volkswagen said it was making an offer for the company. The truck maker Scania jumped 6.9 percent because the company is in talks with MAN over a potential tie-up.

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