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State Lottery, Sports Fraud Aiding Drug Money Launderers in Greece?

November 14, 2005

( Research Service)- Statistically speaking, your chances of winning the lottery are roughly 1 in 13,983,816.

Not in Greece- at least for some.

A leading Greek newspaper last week added to its long-time investigation of potential fraud in Greece’s national lottery. Athens’ Kathimerini suggested on November 7 that a degree of luck akin to divine providence would have had to be involved with the suspicious concurrence of winning tickets held by well-connected citizens over the past 5 years.

“Official lists of football pool winners that show about 1,200 people won amounts of over 100,000 euros between January 1, 2000 and July 21, 2004,” reported the paper.

During this period, the national lottery (OPAP) paid out 536 million euros, mostly to “a small category of minor celebrities, led by middle-rank football club (PAE) officials and some referees… over a two- or three-year period, entire families, along with their friends and relatives, broke the OPAP bank to the tune of tens of millions of euros.”

Most provocative of all was the charge that “the laundering of cocaine money is one of the main uses for OPAP lists by entire crime rackets who also launder bribes and fund football conspiracies.”

An investigation initiated by OPAP itself through the government’s financial crimes squad has centered on a few key players who have strong connections with one of the most powerful businessmen in Greece- fueling speculation that the investigation may go very high indeed.

One of these lucky winners is Stamatina Marmara, a woman who between 2002-2004 garnered some 11 million euros through the Pame Stihima (‘Let’s Bet’) lottery. However, this was technically speaking nothing to celebrate, since Marmara’s declared total wagers in that time amounted to even more than she won.

On October 27, Kathimerini also referred to the arrest of Greek businessman Alexandros Angelopoulos on drug smuggling charges. It was believed that he “had been using betting games to launder money. The probe, sources said, revealed up to 10 people who had cashed in an unusually high amount of winning coupons from all over the country.”

The arrest came after “a drug bust in July last year aboard a Belize-flagged trawler off the coast of Spain which uncovered a haul of 5.4 tons of cocaine.” Angelopoulos’ trial, which also involves 4 other alleged co-conspirators, began on November 9.

A third figure in the case is one Giorgos Salonikis – the husband of high-roller Marmara. Further, the numerous business connections between Salonikis and billionaire businessman Socrates Kokkalis led the newspaper to speculate that in the end, the investigation may go higher up.

According to the article, “Salonikis has a close professional relationship with Socrates Kokkalis, the chairman and main shareholder in Intralot, which supplies OPAP with software and runs its Pame Stoichima betting game. Salonikis has also served as vice president of the Olympiakos basketball club and held a position on the board of Olympiakos soccer club, both of which are presided over by Kokkalis. Salonikis was also on the board of Intralot in the past.”

Socrates Kokkalis: A History of Controversy

Socrates Kokkalis has long been a lightning rod for accusations of various financial crimes. The current Nea Demokratia government, when they were in opposition, repeatedly charged him of illegal collusion with the then-ruling PASOK government of Costas Simitis, and later made a compelling campaign issue out of such ties.

A Greek blog summarizes the prior charges against Kokkalis. On February 19, 2002, after relentless pressure from the ND opposition, the businessman “was charged with four felonies and two misdemeanors, including espionage against Greece; money laundering (through off-shore companies); defrauding investors in his flagship Intracom telecom company; bribing government officials; and receiving criminal proceeds in the form of “gifts.'”

Soon thereafter, on February 28, he “was additionally charged with defrauding investors to the tune of 483 million euros via sale of new stock and failure to invest proceeds in his publicly quoted companies as required by law.”

Further, Kokkalis is wanted in Russia for his role in an illicit instant lottery game that siphoned off “an undisclosed amount of Russian government money,” a scheme that apparently involved large-scale money deposits in Swiss banks.

The same article noted that the aforementioned Angelopoulos is not only linked to “a major international cocaine trafficking ring;” it further “turns out that Mr. Angelopoulos is an avid gambler like Mrs. Marmara: by his own tax declaration, he has won 9,524,042.92 euro (or, roughly, US dollars 11,425 million) between 2002 and 2004.”

At the time of the original charges against Kokkalis, the Socialist PASOK party was in power. But leaders soon began seeking to distance themselves from the tainted businessmen, as they started falling under the withering fire of opposition leader (and current Prime Minister) Kostas Karamanlis of Nea Demokratia. Karamanlis was successfully able to use such examples of Shady PASOK dealings to defeat the Simitis government in March 2004 elections.

On February 20, 2002, the BBC also reported that Kokkalis was under scrutiny for alleged ties to the Stasi, East Germany’s feared secret service during Soviet times. According to the BBC, he was “the first Greek citizen to face a formal probe for spying against his own state.” The businessman was born in the Soviet statelet to Communist parents, and was educated later in Moscow before returning to Greece. His subsequent fortune ($1.2 billion) came through the creation of telecoms suppliers Intracom in Greece, as well as through dodgy lottery schemes in both Greece and Russia.

Kokkalis protested the charges, according to the BBC accusing “well-known circles, through the same political personalities and newspapers, that have specialised in a war against me… all those who publicly slander my name will take responsibility when the charges collapse.”

The Kokkalis-Simitis Communist Connection and Philanthropic Pursuits

As is so often the case in dynasty-prone Greek politics, the relationship between Kokkalis and leftist leader Costas Simitis can be traced back to their ancestors. According to an Athens News article, their links were forged early on:

“Simitis and Kokkalis have a close relationship which goes back to their parents. Simitis’ mother, Fani, was a leader of the feminist movement of the communist resistance during World War Two. Those who knew her describe her as a powerful personality and fiercely intelligent Marxist ideologue. Simitis’ father, George, was a leader of the communist youth movement during the same period.

Both were close friends of Kokkalis’ father, Petros, a venerated surgeon who abandoned a lucrative practice in Athens to cater to wounded communist guerrillas during the War and during the Civil War that followed. Fani, the more devoutly ideological of the couple, is said to have been especially close to Kokkalis.”

Today, the firmly capitalistic Kokkalis has long departed from his Communist upbringing. He presides over a philanthropic educational foundation based in Boston, USA.

Unsurprisingly enough called the Kokkalis Foundation, the group was established in September 1997 and resides at the John F. Kennedy School of Government at Harvard. It offers scholarships to students from Balkan countries, ostensibly with “the aim of building bridges and networks for peace across Southeastern and East-Central Europe and between the region and the rest of the world,” through “educational and research activities that aim to support the transition to democracy and market economy now underway in the Balkans by bringing together senior policy-makers, scholars and students.”

Lectures and seminars on a range of political and economic topics organized by the foundation at Harvard and its Athens branch regularly feature respected academics and current and former government officials of countries such as Turkey, Bulgaria, Greece and even from Israel.

Perhaps most ironic of all, all things considered, was the foundation’s September 23, 2002 conference in Athens titled, “Sports as a dynamic industry of the new economy.”

The conference’s keynote speaker was then-Minister of Culture Evangelos Venizelos. Other notable speakers included Greek Development Minister Akis Tsochatzopoulos and Undersecretary of State for Sports Giorgos Lianis, as well as foreign luminaries such as Norwegian lottery czar Reidar Nordby Jr., president of the World Lottery Association, and Sergio Henriquez Diaz of CIBELAE, the official Latin American lottery organization which “currently comprises 39 State Lotteries from 19 countries, as well as 12 Lottery supplier companies.” Other delegates included “ambassadors, official state representatives and lottery directors from Europe.”

What really put the event over the top, however, was that it was designed to coincide with “the celebration of Intralot’s 10th anniversary as a leading cooperation in the gaming industry.

To mark the anniversary, Kokkalis’ company “decided to donate to the Ministry of Culture and Sports of Greece a special tailor-made report published by the Kokkalis Foundation in cooperation with IOBE, the Greek Institute of Economic and Industrial Research, on the economic impact of sports. The study stresses that sports, apart from a physical activity and entertainment, are a dynamic and expanding industry with a significant contribution to economic growth.”

A Lotto Kingpin

The same piece narrates Kokkalis’ rise to prominence through lottery schemes carried out under different regimes. In 1993, he won from the government the first private license for lottery tickets, during the reign of Prime Minister Constantine Mitsotakis. The former’s innovation was to produce instant scratch tickets as are common in many countries. The tickets proved very popular and “business flourished” throughout the last tenure of Andreas Papandreou– like Mitsotakis, another scion of an old dynasty.

But it was under Simitis when Kokkalis truly branched out: “Intracom became [national telecom operator] OTE’s exclusive supplier, not just in Greece but also in OTE’s acquisitions abroad, and a major defence contractor. In the popular imagination, Kokkalis epitomises special interests.”

He thus became a popular target for the conservative opposition, which scuppered a 2000 initiative to fund the coming Olympics through “videolotto” fruit machines. Soon thereafter, Nea Demokratia began a personal attack on “Socialist weak spot” Kokkalis, an attack that reached a crescendo with the February 2002 charges.

More than a Sporting Chance?

The recent Kathimerini allegations about the sordid Greek sports world are not new. In a June 2002 report by Alexander Kitroeff, it was recounted that “the domestic club tournaments have become deeply mired in suspicions of corruption and allegations that the championship is rigged. Assumptions that referees have accepted bribes have led to ugly scenes of violence in games between the top teams over the past few years.”

The existence of a “soccer Mafia” was conceded in the fall of 2000, Kitroeff adds, when then-undersecretary for sports George Florides admitted that a criminal group had been “bribing or blackmailing referees and club officials in order to obtain favorable outcomes.”

“A few days later, a popular television talk-show host, Makis Triantafyllopoulos, played tapes of secretly recorded telephone conversations that included explicit references to game-fixing and bribes to referees. The dramatis personae of the tapes included Thomas “Uncle Tom’ Mitropoulos, a board member of Olympiakos and later a major shareholder of Egaleo, an Athens soccer team. In the most frequently quoted phrase since the tapes were made public, Mitropoulos apparently tells a referee, “Hey, don’t you worry about a thing! We want Olympiakos and Egaleo to win, the others can go fuck themselves.'”

Once again it was Kathimerini, the report continues, that implied (if not directly) that football fraud was being directed by Olympiakos owner Kokkalis. “If Mitropoulos’s machinations were meant to benefit Olympiakos, then one would assume that the team’s powerful owner, Socrates Kokkalis, had to have been in the know.”

Three years later, in its recent article of November 7, Kathimerini added that the logic of the lottery fraud scheme, which has been surmised to exist on a national level, seems to also involve the purchase of winning tickets at “premium prices” by criminals who thus add another legal “revenue stream” to their coffers.

The natural question that arises from all of these murky activities is how widespread they may be. Do similar lottery and sports fraud schemes exist in neighboring Balkan countries, and even elsewhere in Europe? The Greek case will no doubt inspire regional investigators, politicians and journalists to dig under some very big rocks in their own countries.

Intralot Continues Expansion, Driven by Growth Abroad and At Home

However, all the controversy has not stopped the growth of Kokkalis’ flagship gaming company. In recent months, Intralot either acquired or made contracts with numerous lotteries in far-flung nations, including Poland, Nigeria, Cyprus (where it owns a subsidiary), Egypt, the United States and Israel.

A press release of November 10, 2005 said that the company is “in the pleasant position” of being able to “revise upward its FY 2005 guidance to revenues of 500m euros and EBT of 150m euros from 500m euros and 120m euros, respectively, as it was provided during the Annual General Meeting of our shareholders in late April 2005. The reasons for this change is the robust performance of international operation, especially Turkey, Romania and Bulgaria and the stronger than expected profitability of Stihima in Greece.”

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