Greek Land Forces and German Bribery

World Peace Foundation - November 7, 2020 (updated September 12, 2022)
Greek Soldiers participate in the multinational field training exercise, Eagle Sentinel 17, with their tanks on July 12, 2017 at Novo Selo Training Area, Bulgaria. Operation Eagle Sentinel falls under exercise Saber Guardian 17, a U.S. Army Europe-led, multinational exercise that spans across Bulgaria, Hungary, and Romania with more than 25,000 service members from 22 allied and partner nations. (Photo by Capt. Leslie Reed, 115 Mobile Public Affairs Detachment).

Introduction

scroll to contents

Greece maintains the second-largest armored corps among European NATO countries, trailing only its neighbor and rival Turkey. Over the last three decades, the Hellenic Army has acquired 353 German Leopard 2 tanks, including 140 assembled in Greece. It also received approximately 500 older second-hand Leopard 1 tanks of various configurations, sometimes as offsets associated with other deals. At the same time, the army expanded its artillery and anti-air capabilities. From December 2013 onward, a senior procurement official, Antonis Kantas, began providing evidence of a massive armaments corruption scandal. While companies from numerous countries, including Sweden and Russia, were implicated, it was German firms which accounted for most of the corrupt army deals. Kantas’ evidence detailed extensive bribery during his tenure around the turn of the millennium involving, in addition to a 2003 deal for Leopard 2 main battle tanks, two other land forces procurement projects. These were the 2000 purchase of ASRAD mobile surface-to-air (SAM) missile systems, and a 2001 deal for PzH-2000 self-propelled howitzers. Prosecutions in Greece and Germany have secured convictions of numerous individuals involved in the deals, as well as fines for the two German firms involved, Rheinmetall and Krauss-Maffei Wegmann (KMW).

Case details

scroll to contents
Seller country Germany
Seller company Rheinmetall, Krauss-Maffei Wegmann (currently part of KMW+Nexter Defense Systems)
Buyer country Greece
Goods category Missile Systems, Tanks, Artillery
Equipment sold 54 ASRAD Mobile SAM systems (Rheinmetall); 170 Leopard 2HEL main battle tanks (KMW and Rheinmetall); 24 PzH-2000 self-propelled howitzers (KMW and Rheinmetall)
Deal value USD 134 million (ASRAD SAMs); EUR 1.7 billion (Leopard tanks); USD 164 million (howitzers)
Sum involved in corruption EUR 3.3 million (ASRAD and Leopard tanks); EUR 7.9 million (howitzers)
Start year 2000
End year 2003
Outcome status Trial Closed - Some Convictions

Dramatis Personae

scroll to contents

  • Dimitris Papachristos — representative of KMW in Greece; admitted to paying a bribe to Antonis Kantas.

  • Panagiotis Efstathiou — representative of STN Atlas (a predecessor of Rheinmetall’s defense electronics division) in Greece; admitted to paying bribes to Antonis Kantas. Sentenced to a nine-year suspended prison term in connection with a separate procurement scandal.

  • Antonis Kantas — deputy armaments chief at the Greek Ministry of Defense (1997-2002); admitted to receiving bribes totaling USD 13 million in relation to a number of arms deals. In 2019, received a 10-year suspended sentence for his involvement in a separate arms procurement case, on top of a prior 25-year suspended sentence for taking bribes in a military communications procurement scandal.

  • Olaf E. — vice-president for international marketing at KMW; convicted of abetting tax evasion associated with bribery and given a fifteen-month suspended sentence.

  • Dagmar Luuk and Heinz-Alfred Steiner — retired German parliamentarians, directors of the “Büro für Südosteuropaberatung” [Bureau for Southeast Europe Consulting], an intermediary firm. Charged with abetting tax evasion associated with bribery.

  • Manfred Bode — chairman of KMW’s supervisory board; charged with tax evasion associated with bribery, died in October 2018.

Summary of Corruption Allegations

scroll to contents

In late 2013, a former ministry of defense procurement official named Antonis Kantas began cooperating with Greek anti-corruption investigators. In extensive testimony, Kantas implicated two former ministers and several arms manufacturers in a string of deals stretching from the late 1990s through the mid-2000s. According to Kantas, Panagiotis Efstathiou, a representative of German defense electronics firm STN Atlas— offered him EUR 600,000 to expedite a submarine deal and EUR 1.5 million as part of the ASRAD contract. STN Atlas split in 2003 into Rheinmetall Defense Electronics (land systems), owned by Rheinmetall, and Atlas Elektronik (naval systems), owned by Airbus and ThyssenKrupp Marine Systems. The two new organizations and their owners have each had to take responsibility for the legacy of foreign bribery conducted under the old STN Atlas structure.

Kantas also alleged that a KMW representative, Dimitris Papachristos, paid him 0.5% of the value of the PzH-2000 deal (approximately EUR 820,000), while a third representative, Thomas Liakounakos, left EUR 600,000 on his couch to smooth over his concerns about the Leopard 2 program. Kantas claimed he originally believed the tank program was unnecessary, but Defence Minister Yiannos Papantoniou felt obliged to continue the program because the army demanded parity in re-capitalization spending with the other services.

In the case of the submarine deal, Kantas’ testimony merely confirmed and expanded an investigation that was already several years in the making. With regards to the army’s procurement programs, however, the new evidence opened up multiple avenues of investigation in both Germany and Greece. Prosecutors eventually determined that Rheinmetall Defense Electronics (RDE) had paid out at least EUR 3.3 million in bribes associated with the ASRAD and Leopard 2 deals, while KMW paid as much as EUR 7.9 million to secure the PzH-2000 contract. These figures are both significantly larger than the bribes Kantas has attested to taking, which suggests that other corrupt officials or middlemen also benefited.

Timeline

scroll to contents
  • 2000

    Purchase of 54 mobile anti-air systems—a package put together by STN Atlas consisting of Stinger surface-to-air missiles paired with cameras and range-finders, mounted on Greek-built HMMWVs.

  • 2001

    Deal for 24 PzH-2000 self-propelled howitzers. As part of the arrangement, the Bundeswehr also gave 114 second-hand M-109A3GEA self-propelled guns.

  • 2003

    Deal for 170 Leopard 2 main battle tanks with 140 assembled in Greece was signed.

  • Dec 2013

    A former Ministry of Defense procurement official Antonis Kantas began cooperating with Greek anti-corruption investigators implicating two former ministers and several arms manufacturers in a string of deals stretching from the late 1990s through the mid-2000s.

Investigation Outcomes

scroll to contents
  • Oct 2013

    Akis Tsochatzopoulos was convicted on corruption charges related to the submarine deal and spent five years in prison before being released for health reasons. (Greece)

  • May 2014

    A leaked copy of the audit report revealed that two former German Social Democratic Party (SPD) parliamentarians, Dagmar Luuk and Heinz Alfred Steiner, had inexplicably received EUR 5.6 million in payments from KMW during the early 2000s through their consulting firm, called the Büro für Südosteuropaberatung (Bureau for Southeast Europe Consulting).

  • Dec 2014

    Bremen Public Prosecutor’s Office (BPPO) announced a settlement with RDE under which the firm agree to pay a EUR 37 million fine and back taxes of EUR 6.4 million. (Germany)

  • Dec 2015

    Olaf E. - KMW's manager - was given an 11-month suspended prison sentence, while KMW was fined EUR 175,000 for tax evasion. (Germany)

  • Feb 2017

    BPPO decided in February 2017 to charge at least five former employees—including one Greek employee—for personal liability in relation to the corrupt payments. The prosecutor’s office confirmed that the charges implicate a total of EUR 3.3 million in bribes for two separate sales: the ASRAD deal and the Leopard 2 contracts. (Germany)

  • May 2017

    Prosecutors appealed the sentence and the fine as too lenient, and the Federal Court of Justice in Karlsruhe agreed.

  • May 2018

    Agent Thomas Liakounakos was given a 16-year prison sentence for his part in a separate arms deal involving the sale of Ericsson Airborne Early Warning and Control Systems. (Greece)

  • Oct 2018

    Former minister Yiannos Papantoniou was jailed while awaiting trial for taking bribes to support a 2003 contract to upgrade six naval frigates. (Greece)

  • Jan 2019

    Efstathiou was sentenced to a nine-year suspended prison term for his part in the submarine deal. (Greece)

  • Jun 2019

    After the prosecutors' appeal on Olaf E.'s sentence and KMW's fine, Munich court ruled that KMW was liable for EUR 500,000 in fines, and confirmed a one year and three months sentence for Olaf E.

References

scroll to contents