By LANDON THOMAS Jr.
Published: October 16, 2013
ATHENS — In an era when central bankers like Ben S. Bernanke dominate the global economic stage, few hold as much power within their own country as Georgios A. Provopoulos, the governor of the Bank of Greece, who has played a crucial role in keeping Greece out of bankruptcy and in the euro zone.
“My actions will be judged in the future after the dust has settled and people are in a better position to assess the results.” GEORGIOS A. PROVOPOULOS, governor of the Bank of Greece But now Mr. Provopoulos faces one of the bigger challenges of his tumultuous reign: an investigation into whether he abused his position by clearing a banking deal involving his former employer and a business magnate who was subsequently charged with embezzlement and fraud.
In a confidential report issued last May, a senior Greek prosecutor said that Mr. Provopoulos approved the 71 million euro ($96 million) deal despite warnings from his staff regarding the buyer’s finances. The report, parts of which were reviewed by The New York Times, hints at the scope of the investigation, about which little has been previously disclosed.
There is no evidence that Mr. Provopoulos profited personally from the transaction, which was ultimately approved. But his role — and the chance, however remote, that he might face criminal charges — could have ramifications beyond Greece. Other countries in the euro zone have invested more than 40 billion euros to shore up the Greek banking system. In the process, they have pressed Athens to clean up the corruption and crony capitalism that have been at the root of the country’s problems.
According to the report, Mr. Provopoulos allowed the businessman, Lavrentis Lavrentiadis, to enter into a deal with Mr. Provopoulos’s former employer, Piraeus Bank, at a vastly inflated price. The transaction enabled Mr. Lavrentiadis to gain control of another bank, Proton, and, in the process, benefited Piraeus, which was struggling.
“The position of the governor has become very strong, and I do not think that he has been subjected to proper scrutiny,” said Pavlos Eleftheriadis, a law professor at Oxford University who has been critical of how special interest groups in Greece have expanded their influence and power in recent years. “There was the spectacular failure of Proton, and there are questions about the Piraeus deal in Cyprus. We need root and branch reform of all our institutions — including the Bank of Greece.”
It is not hard to see why Mr. Provopoulos has become a lightning rod. He has done little to disguise his low regard for the political establishment, openly criticizing its fiscal policies and privately upbraiding both the conservative New Democracy party and the left-leaning Pasok party for not attacking Greece’s economic problems with more force and speed.
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