Scandals The Looting of Greece

For the first time, a fallen tycoon tells how he embezzled millions

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Soon Koskotas found the requests from Papandreou and Koutsogiorgas bolder -- and more personal. Papandreou wanted to squelch a critical memoir by his first wife, Christine, a psychiatrist. Through foreign book agents, Koskotas paid out $90,000 and tied up world rights to the book. Papandreou raised another problem. The Prime Minister, then 69, was keeping company with Dimitra Liani, a buxom airline hostess half his age. The weekly newspaper Evdomi, Papandreou complained, kept turning up nude photographs of Dimitra. Within a month Koskotas had bought Evdomi, and three months later he shut it down. Then there was Margaret, the second wife Papandreou wanted to divorce. He said that Margaret, absurdly, wanted a settlement of $100 million. Koskotas heard himself say he could over a period of time put together $10 million to $20 million as a start.

In August 1988 the Prime Minister suddenly flew to London for triple-bypass heart surgery. The day before Papandreou left, Koskotas says, Louvaris came to pick up the customary cash, a suitcase of 90 million drachmas ($600,000). After the surgery, Papandreou for the first time made public what many already knew: his relationship with Liani. That further undermined his slipping political standing. Rumors of the Koskotas money connection were also circulating; now opponents called for a reckoning.

The governor of the Bank of Greece started to press for a special audit of the Bank of Crete. Koutsogiorgas told Koskotas that the investigation could not be stopped. Fearing abandonment, Koskotas made a last threat. "If I am destroyed," he says he told Koutsogiorgas, "we'll all be destroyed. You know what they will find at the bank."

Soon 40 secret service agents were keeping a discreet surveillance over Koskotas. He began to think he might be killed. One day a friend in Greek intelligence told him he would be arrested by 6:30 that evening; Koskotas fled. He slipped out of his printing plant unseen, hidden in the back of one of his newspaper delivery trucks, to start a desperate journey across three continents. Three weeks later he fetched up in the U.S., where he was apprehended.

Locked in the Salem prison and fighting extradition, George Koskotas started to get advice to keep quiet from old accomplices. One of them, Yannis Mantzouranis, former secretary to the Greek Cabinet, sounded especially anxious to learn if the prisoner was going to talk. Mantzouranis, Koskotas says, was still holding a $2 million payoff to Koutsogiorgas in a Swiss bank account. The existence of the account would implicate him.

Hoping to entrap Mantzouranis, Koskotas instructed his wife to make tape recordings of the phone calls from Athens. The objective was to goad the unwitting Cabinet secretary into telling more about PASOK corruption. Mantzouranis warns of the consequences of saying too much. "I know them better than George," he says of his PASOK colleagues. "They wouldn't hesitate to do anything."

Mantzouranis relates how his own life has changed drastically. "You must understand that I am in danger," he says. "I do not circulate at night. I no longer live at my house."

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