Accusation against TAIPED at the anti-MIPIM popular tribunal, 12/3/2014, Cannes

The sell-off of public land and property of Greece as part of the adjustment programme for the repayment of the public debt

download pdf

Public goods and public land are not for sale

Stop trading our collective heritage

The Hellenic Republic Asset Development Fund (TAIPED) was established on 1st July 2011 (Law 3986/2011), under the mid-term fiscal strategy that was imposed by the Troika and adopted by the Greek government. It constitutes the agency responsible for implementing the Greek privatization program with the sole purpose of using its revenues for re-paying the country’s public debt. TAIPED is a “limited liability company”, whose sole shareholder is the Hellenic Republic with a share capital of €30 million. The Fund is not a public entity, and is governed by private law. Full ownership, possession and occupation of all ‘state owned assets’ (land, infrastructure and public companies) that are to be privatized are transferred to TAIPED with the provision that these assets cannot be transferred back to the Greek state.

At the same time, in order to facilitate the sell-off and subsequent development of all state owned property, the Implementation Law which established TAIPED, includes a unified planning framework providing land use and density regulations for the development of all state owned real estate property. This framework, which promotes the intensive development of mostly tourist and second-home enclaves, may by-pass statutory land use and environmental regulations and plans, as well as existing procedures and official bodies. Therefore, a key feature of the decision-making process of the entire privatization program is the lack of democratic participatory processes and, of course, of transparency.

TAIPED’s scope concerns more than 80.000 assets that are currently managed or owned by the Public Properties Company (ETAD), state organizations and ministries. Currently, its portfolio already includes several hundreds plots of land (http://www.hradf.com/en/portfolio) all over the country, a substantial portion of which consisting of environmentally sensitive and/or protected areas. Since 2011 TAIPED has launched 23 calls for the privatization of land assets, while 8 clearances have been completed. TAIPED’s destructive work is continuous, since the privatization programme constitutes the main vehicle for debt repayment. This year TAIPED presented to Troika a list of projects ‘mature’ for privatization raising the 2014 target for revenues to 3,5 billion euros.

Overall our accusation towards the Hellenic Republic Asset Development Fund is grounded on the following reasons:

–       TAIPED is a private company authorised by the state and supervised by the Troika, whose function undermines the public good.

–       TAIPED executes a huge asset clearance programme, exchanging the country’s future for immediate liquidity in order for the Greek government to comply with the fiscal targets of the adjustment programmes.

–       TAIPED is providing important ‘investment incentives’ via by-passing existing environmental, developmental and other regulations promoting intensive development schemes (touristic, logistic etc) with harmful societal and environmental consequences.

–       TAIPED is the vehicle for a massive land dispossession and land-grabbing process in Greece that sells-off state-owned property (real estate, infrastructures and companies) of vital importance for both the present and future of the whole Greek society, with the sole purpose to contribute to the repayment of a commonly acknowledged non-sustainable debt.

–       TAIPED contributes to the further impoverishment of the Greek state and local societies and communities, depriving them of common goods that are essential for their future social and economic recovery, promoting private investment and speculation, while displacing social and collective uses and excluding large parts of the population.

Public property and empty buildings to serve social needs

Encounter Athens, Committee for a Metropolitan Park in Hellinikon, Occupied theatre Empros,
Solidarity for All, Network for the protection of Saronikos bay

Background information about selected privatization cases in Athens

1. Former Hellinikon airport area and coastal front

The property of Hellinikon, a 620 Ha site which includes the former airport of Hellinikon and the Agios Kosmas beachfront area in Athens, spearheads the privatization program that is currently underway in the country and involves the transfer of the property to private investors who are going to develop and manage it for the next 99 years. The process of tender submission for the development of the site was completed in February 27, 2014 with only one competitor – the real-estate company “Lamda Development”, member of Latsis Group – submitting a final offer to TAIPED. According to information leaked to the press, «Lamda Development» is planning to build malls, a casino, hotels, luxury homes etc. with a total area of 1,7 million sq. meters, thus, creating an enclave of wealth and luxury for the selected few.

The creation of ‘tens of thousands of jobs’ is used by both the government and TAIPED as the main argument in order to gain a consensus for the promoted urban development model, while trying to hide that these jobs will mainly be temporary, precarious and low-paying . At the same time, it is estimated that the transfer price for the Hellinikon property will not exceed 0,5 billion euros which will be paid in the next 15 years in yearly instalments. Essentially, this is considered to be a free concession, since the state is obliged to cover the cost of a number of necessary infrastructure works along with the relocation cost of several public agencies currently located there, thus making the accrued cost much higher than the offered price.

In stark contrast to the government’s and TAIPED’s plan, lies the timely demand posed by local governments, the academic and research community, local movements and political parties for the development of a public metropolitan park on site; a park that will meet the real needs of the community for recreation, sports and culture and improve the environment and climate conditions of Athens.

2. Vouliagmeni peninsula and Asteras touristic complex

 This peninsula and beach-front property – owned by both the Greek state and the National Bank of Greece – has a total area of approximately 30 Ha (50 Ha including the beach) and has signified, with its three hotels and marina, an landmark of the tourism industry in Greece. The property value is estimated at approximately 2,5 billion euro (based on pre-crisis property tax valuation). Past attempts to fully privatize and intensify the development of the site had continually  failed due to constitutional provisions and the opposition of local movements. In fact, statutory local land use plans and regulations provide only for the renovation of the existing hotels, while a major portion of the property that includes forested areas and archaeological sites has been designated as a protected / conservation area.

However, the recent national legislation regulating the development of state-owned properties allowed the bypassing of existing land use regulations. Thus, the terms of the bid for the site allowed, at first, the construction of up to 8.600 sq.m. of residences. Yet these new terms were apparently deemed not profitable enough for the candidates and therefore, just before the submission of the second – phase bids, it became publicly known that new planning terms provided for the construction of luxury residences of up to  39.500 sq.m., the demolition of two of the hotels, as well as for controlled access to the beach and the archaeological sites by the investor (via the transformation of the existing public road into a private one). In sum, the new masterplan for the property provides for the construction, in a forest area, of a high-income beach-front enclave, catering solely for foreign investors and buyers, which apart from housing will also include shopping, restaurants, entertainment, anchorage, etc.

The complete abolition of applicable planning terms which allows the intense residential development of the coastal area of Athens is not, however, contingent with any planning or public gain. Instead, the 4 candidates that have submitted a binding offer (Colony Capital Acquisitions LLC, a California based investment fund; AGC, an Arab-interest investment company; Plepi Holdings LTD, a company formed by Greek and Saudi Arabian entrepreneurs; and Lamda Development) seem to pursue buying off the property at a price that does not reflect either its real value or the surplus value it can generate, since their offers are only a bit higher than the current stock value of the property (which has dropped, because of the crisis, to around 270 million Euro). In fact, the bidding price is expected not to exceed the amount of 350 million euro!

Even though the Greek state owns 40% of the property, it will only collect 20% of this amount, that is, around 70 million euro. However, this is not the net amount that will be attributed to the payment of public debt, since from this amount must be deducted all accrued costs for the payment of consulting services provided to TAIPED for the selling of the property as well as the mandatory provision by the state of any required infrastructure. Therefore, a real financial loss to the Greek state is a very plausible prospect of the sell out of this property which is further substantiated  by the significant reductions in future tax revenues that will be generated by this development due to tax breaks provided by recent legislation pertaining to the attraction of strategic investors.

3. Eviction of Occupied Theatre EMPROS

EMPROS theatre is located in downtown Athens in a historic listed / conservation building that functioned first as a printing house of the former newspaper ‘EMPROS’ and then as a theatre, under the same name, until 2005. Even though the property was transferred to the state in 1950 by Law (L.1530/50), the legal status of its ownership is still in limbo since there is no certificate of transfer and ownership, while there is a pending lawsuit for the annulment of this transfer submitted by 6 citizens since 1951! Despite this legal uncertainty, TAIPED reassures prospective investors that there is no risk involved regarding the ownership of the property since the pending lawsuit is not valid due to the time lapsed.

In November 2011, the building was occupied by a group of artists who are using it as a free, self-managed space for artistic and social activities. Since then, the ‘EMPROS’ theatre is managed by an open assembly and a great number of cultural events, performances, concerts, discussions etc have been organized with big participation.

At the end of 2013, the property was put for sale through the electronic auction and since then, TAIPED is systematically pursuing the evacuation of the building so that to ensure its availability to prospective owners. In October 30th 2013, the police evacuated and sealed off the building and arrested two actors who were rehearsing there. Strong support and solidarity was expressed for the continuation of the self-managed cultural and political activities taking place there and against the eviction of the assembly managing the building.

4. Sale and lease-back of 28 public buildings

Twenty eight state owned buildings (of 320.000sq. m. total surface) were privatized, with the sale and lease-back method, at the price of 261 million euro to two recently created Real estate investment companies (REIT) companies:  the National Pangaia* (portfolio of 14 buildings at a price of 115,5 million euro), and Eurobank Properties** (the rest of the buildings at a price of 145,810 million euro). These were state buildings which housed five ministries (i.e., Culture, Internal Affairs, Justice, Health and Education), thirteen public tax agencies, the general laboratory of the state and police headquarters in Athens, Thessaloniki and Serres, for which the Greek state guarantees a lease-back period of 20 years (estimated at 600.000 mil. euro).

The Court of Audit has suspended the deal (until it receives further clarifications) based on the argument that there was lack of transparency and impartiality in the tendering process, since the two nominated companies are subsidiaries of the two business groups (NBG Securities SA and Eurobank Equities Investment Firm S.A, respectively) which acted as financial consultants to TAIPED for the privatization of these 28 buildings. In its decision, the Court has also expressed reservations regarding the bidding process because it was not sufficiently justified whether the concession is profitable and advantageous to the Greek state compared to other public lending options and because of binding clauses in the deal.

Both REIT companies have managed to increase significantly the value of their asset portfolio because of this deal, being actually endowed by the Greek state to boost their profitability.  National Pangaia REIC: after this privatisation deal holds a real estate portfolio worth more than 1 billion euro, and was immediately sold (66%) to the Dutch company Invel Real Estate. In order to buy Pangaia, Invel took a loan from the National Bank of Greece corresponding to 60% of the price (580mil of which only 160 mil is own share and 418 mil. is from the loan, plus 74 mil from the transfer of asset value).  Eurobank Properties SA: after the acquisition of this second ‘package’ of public buildings was sold to the Canadian fund ‘Fairfax’.