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The Koskotas accusations are extraordinary, though difficult to verify. In six lengthy prison interviews with TIME, the banker describes a Socialist government riddled by extortion and criminality. Koskotas charges that millions of dollars missing from his bank were actually payoffs that went directly to the head of the government, Andreas Papandreou, and PASOK officials. The Prime Minister, says the banker, personally authorized the plan to loot the Bank of Crete. Koskotas describes as well his own illegal complicity in the huge swindle, one that involves enormous sums hard to account for adequately.
The plot was an audacious one. To create the pool of crooked money, PASOK leaders had for three years ordered state-managed corporations such as the Post Office, the Organization of Urban Transportation and the State Pharmaceutical Co. to transfer large bank deposits -- the country's money, in effect -- out of the big national banks into the Bank of Crete, then the / smallest private bank in the country. There, Koskotas says, he arranged for the government deposits to draw an exceptionally low rate of interest, only 2% or 3%. Bank savings accounts in Greece routinely draw 15% interest. The excess interest earned on the government deposits was siphoned off and went straight to the politicians, he says. In addition, protected and encouraged by Papandreou, Koskotas secretly plowed Bank of Crete funds into his magazines and newspapers.
In the past year, says Koskotas, some 40 shipments of money, in blue briefcases stuffed with 5,000-drachma notes, were carted out of the Bank of Crete and taken first to his own residence. There the banker handed the money over to a Papandreou confidant, Georgios Louvaris, who Koskotas says made the deliveries to the Prime Minister. Pickups occurred weekly and amounted over the year to more than 3 billion drachmas ($20 million at today's rates). In addition, Koskotas claims he personally carried a total of half a billion drachmas ($3.3 million) to the home of a Deputy Prime Minister, Menios Koutsogiorgas. At the Bank of Crete half a dozen other PASOK leaders twice a month received briefcases filled with money totaling 1.5 billion drachmas ($10 million).
There was little danger of interference. Fifty different national audits of the Bank of Crete that might have uncovered the scheme were squelched over the years by PASOK officials, says Koskotas, twice by direct calls from Papandreou. In the summer of 1988, the government muscled through a special Secrecy Act that had the effect of guaranteeing its overdrawn banker financial confidentiality. Koskotas says he was directed to pay an additional $2 million to then Deputy Prime Minister Koutsogiorgas as a reward for managing the legislation.
The dank atmosphere that nurtured this tangle of alleged corruption began after the Socialists' re-election in 1985. Papandreou was eager to tighten his grip on the country. He found a perfect match in the ambitious young publisher and banker Koskotas, who saw in PASOK a means to build an empire.
Now, sitting in the library of the Salem prison, Koskotas recalled the beginnings of a relationship that led to his ruin. He wore a blue pullover sport shirt and blue jeans, white leather sneakers on his feet. Koskotas had squeezed his big waist into a one-armed desk chair.