Greek privatization chief's departure risks new delays

Reuters News
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Posted: Jul 20, 2012 10:13 AM
Greek privatization chief's departure risks new delays

By Lefteris Papadimas

ATHENS (Reuters) - The head of Greece's privatization agency said on Friday he was forced to resign because its new government blocked his effort to sell off assets, in the latest blow to a program central to Greek hopes of regaining credibility with lenders.

The acrimonious departure of Costas Mitropoulos risks further delays to Greece's stalled privatization drive and raises uncomfortable questions for the new administration just days before IMF, EU and ECB inspectors arrive to assess compliance with reforms.

"The newly elected government did not give the agency the support it needs," Mitropoulos, privatization chief since August 2011, wrote in his resignation letter made public on Friday.

"On the contrary, in an indirect but systematic way, it undermined the agency's authority and credibility with potential investors."

A government official denied the accusations.

Asset sales are a key condition of Greece's 130 billion euro bailout and Prime Minister Antonis Samaras's government has made kickstarting the program a key plank of its effort to restore the confidence of the troika of lenders keeping Greece afloat.

Mitropoulos' blunt criticism of the conservative-led government and the delays to the program while his replacement is found risk exacerbating the feeling among lenders that Greece lacks the will to reform, analysts said.

"Valuable time will be lost," said Takis Zamanis, chief trader at brokerage Beta Securities in Athens. "All these management changes will worry the troika."

Athens had planned to raise more than 3 billion euros this year, but Mitropoulos told Reuters last week that the government would miss the target because of administrative delays caused by repeat elections and other red tape.

In his resignation letter, Mitropoulos said the delays and gloomy market sentiment meant it was "extremely unlikely" that proceeds from sales this year would exceed 300 million euros.

BAD IMPRESSION

Earlier this month, Mitropoulos accused Greece's ruling parties of dragging their feet on permits and approvals to push through planned privatizations.

A government official denied the accusations made by Mitropoulos, saying the privatization chief was to blame for the delays and that Samaras would have dismissed him anyway.

"Mitropoulos knew that, so he submitted his resignation," the official said, speaking on condition of anonymity.

The government said his replacement and a contender for the vacant post of chairman would be found in the next week.

Even before the resignation, Greek media had speculated that the government would replace Mitropoulos since incoming administrations in Greece often change the heads of state-run companies and organizations to reward loyalists.

Board member Antonis Vartholomeos, who was appointed by the ruling New Democracy party, is among those cited in media reports as a possible replacement for Mitropoulos.

The privatization agency's chairman, Ioannis Koukiadis, a labor law expert and an appointee of former finance minister Evangelos Venizelos, stepped down last month.

Analysts said a reshuffle for political reasons risked further annoying lenders fed up of Greece's inablility to leave behind entrenched and counterproductive ways of administration.

"It doesn't give a very good impression," said Dimitris Mardas, economics professor at Thessaloniki's Aristotle University.

"In this state of war the government can't afford the luxury of an adjustment period. The officials shouldn't change whenever the government changes unless, of course, someone is not doing his job right."

Athens initially targeted privatization proceeds of 50 billion euros by 2015 but cut the target to 19 billion euros after a making very slow start on the program.

It missed its goal for last year and the privatization agency suspended operations in April as Greece readied itself for what turned out to be the first of two parliamentary elections this year.

The new government, which took power in June, has promised privatizations will be a key part of its effort to show exasperated foreign lenders that Greece has turned over a new leaf and is serious about reform.

About 90 percent of Greece's privatization program revolves around land leases and infrastructure concessions. With a huge portfolio of 70,000 real estate assets, the country is also looking for investors to develop the old Athens Hellenikon airport, Europe's biggest real estate project.

(Additional reporting by Karolina Tagaris and Harry Papachristou,; Writing by Deepa Babington, editing by Catherine Evans, John Stonestreet)