Greece’s dangerous war on its oligarchs

This week the Greek opposition party Syriza, which leads polls ahead of a January 25 election, declared war on the group known as the “oligarchs”, a group of family-owned companies that they blame for stifling Greece.

“The oligarchs are high on our agenda. They will be a priority for action,” said a senior party member.

On the face of it, this is a good thing. The oligarchs he refers to are a bunch of very unpopular tycoons whose mainly first or second-generation family firms have profited massively from Greece’s state.

They include George Bobolas whose family construction business has built power-stations, railways, motorways and most of the Olympic stadiums – work which was all dependent on government licenses or contracts.

Among the others are Vardis Vardinoyannis, a shipping tycoon who controls two petroleum companies and a big chunk of one of Greece’s biggest banks, Piraeus; and Stavros Psycharis, whose business interests range from printing to real estate to tourism. Again, both have grown wealthy from government work.

Most of the oligarchs also own TV stations and newspapers which are seen as little more than press agencies for their owners and rarely mention the endless flow of scandals involving them. There have been many, such as shady deals around the sale of Eurofighters to Greece, the opening of a controversial gold-mine and a mind-boggling scandal when the chairman of Piraeus Bank sold properties to the bank at huge profit for his family business without telling shareholders. (Even more mind-bogglingly, he still has his job.)

Curtailing the oligarchs would be good for Greece. Things such as licensing broadcasters could only improve the country. (Amazingly, the country’s private television channels simply started broadcasting without obtaining permission.) However, while Greece might be better off if the oligarchs’ power was checked, Syriza’s general anti-business language threatens to also demonise another class of family-owned firms, the older, multi-generational ones which are not involved in the shady world of government contracts.

There are many of these. For example, the Canellopoulos and Papalexopoulos families behind Titan Cement, which was founded in 1902 and employs over 5,000 people in 13 countries. And Viohalco, a metals mining and trading business run by brothers Nikos and Evangelos Stasinopoulos and founded in 1937 as Hellenic Copper Industry. Or the Mytilineos family’s group of businesses, which have been in metals since 1908.

These are sustainable, stable businesses which create jobs and could form the base of a functioning Greek economy. And yet Syriza’s anti-oligarch rhetoric is quickly becoming a generalised howl of anti-rich sentiment that could damage them.

It’s understandable that Greeks who are suffering would buy into policies that would damage business, like high taxes, leaving the Eurozone and even expropriation. But, says Professor Michael Jacobides of London Business School, “The problem with Syriza is that although it says it is against the oligarchs, they will profit the most if Greece leaves the euro.”

Those who already known how to play the system will continue to do so, and the honest, above-board businesses will suffer, he thinks. “A win by Syriza is more likely to strengthen the oligarchs and also punish the businesses that are more law-abiding,” Jacobides adds. Raising taxes will hit those who already pay, and do nothing to catch evaders.

The current backlash is part of an older problem in Greece, which began with the hard-left governments of the 80s, which “demonised profit”, says Jacobides. “People see private company profit as bad, and yet profiting from the government is somehow okay. We need a more honest relationship to profit,” he adds.  Understanding that they have some world-class family-owned businesses would be a start.

It is hard to take Syriza seriously when they defend the large taxpayer-funded pensions of people who forged certificates to land their government jobs. But people are so angry that they are listening. It would be crazy and sad it the Greek people let their hatred of a few sleazy oligarchs damage their tottering economy even further.