At a press conference yesterday further details were given about the development of the site of the former airport in the Hellinikon suburb on the coast of Athens. The controversial sale of the approximately 1,500 acre site of prime real-estate has come under renewed criticism over the terms under which the development is due to move forward.
According to the HRADF, construction on the site will begin sometime in 2015. However a number of hurdles remain, including planning approval for the development, a positive ruling by the Council of State and approval by Parliament. “The road until the first bulldozer will be painful,” the president of the HRADF Konstantinos Maniatopoulos is reportedly admitted.
Only after this process is completed will the final agreement be signed and then the first 300 million euros be transferred to the HRADF which the Fund admitted may take up to two years. This period will only be covered by a 30 million euro down-payment (10% of the first installment). This means that the state effectively won’t receive a penny from the sale towards paying down the debt for over a year. It is reminded that all profits from HRADF privatizations are required by law to go towards the debt.
Furthermore the entire sum of 915 million euros will take not be paid to the HRADF for almost a decade - even assuming there are no significant road-blocks. It is reminded that the 915 million euros offered by Lamda Development (the sole bidder) was far below the to 1.239 billion euro baseline that was established by an independent evaluation of the site on behalf of Hellinikon S.A. Meanwhile the HRADF was also forced to revise down its estimate of revenues from privatizations for 2014 by almost 60% from the target of 3.56 billion euros to 1.5 billion.
The Casino
The plans submitted by Lamda Development include the development of a casino on the site, yet the state has not committed to granting such a license, which is to be given in a separate tender. However the pressure to do so may prove irresistible as under the terms of the initial tender the consortium has the right to walk away entirely from the project if it deems that failure to grant such a license seriously harms its business plan.
Given that the consortium was the only bidder, such an event would effectively send the HRADF back to square one and be a major embarrassment both to the Fund and the government.
Offshore in the heart of Athens
Meanwhile Independent MEP Kriton Arsenis in a question submitted to the European Commission condemned the ‘illegal tax exemptions’ he says were granted to Lamda Development that he says violate both Greek and European law and which if true, are shocking. Specifically according to the MEP the consortium will be exempt from any tax related to the exploitation of the site - i.e. that it will be exempt from any tax on revenue, property transfers or capital accumulation.
“We discovered that in article 42, paragraph 7 of the law 3943/2011 there is a complete and shocking exemption from taxes for the new owner both in terms of the ownership and exploitation of the Hellinikon site,” he said. “For the first time an offshore company is being created in the heart of Athens.”
He also questioned why the HRADF had sold 100% of its shares in the company Hellinikon SA when it had earlier pledged to keep a minority share in order to preserve the right to veto significant deviations from initial plans to develop the site, claiming that the process was characterized by a lack of transparency and reminiscent of a ‘banana republic’.
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