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Greek inspectors eye German sub deal

March 28, 2011 at 9:34 AM   |   Comments

ATHENS, Greece, March 28 (UPI) -- Greek financial investigators have ascertained that more than $140 million in bribes were paid by a German submarine maker to local politicians and officials to facilitate a lucrative defense contract.

The deal focused on the purchase of four submarines, a $1.5 billion controversial contract that had drawn heated political debate.

Sources told the Greek Kathimerini newspaper that "numerous bribes were paid before the contract was signed," alleging that some of the ways in which the final bill was inflated involved requests by the Greek navy and Defense Ministry for extra equipment on the submarines.

The first submarine, named Papanikolis, was commissioned for development by Howaldtswerke-Deutsche Werft in Kiel, Germany, with the remaining three scheduled for construction at Greece's Hellenic Shipyards, west of Athens.

Shortly after the Papanikolis was built in 2001 and launched three years later, Greek navy experts determined a host of technical problems with the T-214 diesel-electric submarine. The most severe: excessive rolling in bad weather conditions when the submarine surfaced for sea keeping in high seas.

The hydraulic system was also flawed and the AIP system that supplements the submarine's diesel engines for long underwater operations faced defects.

HDW proceeded with adjustments and necessary modifications but the Greek government repeatedly refused to take delivery of the submarine, docked in Kiel since 2006.

The vessel's manufacturer accused Greece of intentionally dragging out its dispute in a bid to renegotiate the initial purchase price. The dispute triggered ThyssenKrupp to threaten cancellation of the so-called Archimedes Project.

The group also threatened to quit its involvement in Hellenic Shipyards, a move that would spell as many as 1,400 job losses and further social discontent to austerity measures enacted this month by the new socialist government in a bid to claw out of its worst financial crisis in the country's contemporary history.

Last year and after a string of negotiations, Greek Defense Minister Evangelos Venizelos announced that a resolution to the controversial deal had been found. The settlement included that Greece would take delivery of the submarine and then sell it to a third party.

Last week, a prosecutor called 37 people to answer questions in connection with the bribery claims.

Greece's purchase of 214 diesel-electric submarines was dogged with problems from the start of the deal in 2001.

Greece has been struggling through a devastating financial crisis, escaping bankruptcy after the European Union and the International Monetary Fund put together a $146 billion bailout in exchange for sweeping reforms and budget cut backs.

Opposition conservatives are demanding Parliament launch an inquiry into the bribery claims.

"The continuous revelations confirm the widespread pillaging of public money but the government does not dare to take the initiative to ensure that this scandal is investigated by parliament," the New Democracy party said in a statement over the weekend.

The sale was sealed while rival socialists were in power.

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