From the archives: Sickness, Sex, Scandals

Los Angeles Times Staff Writer

ATHENS -- It is the winter of the patriarch in a stunned and embittered Greece. The season is surreal. So many crazy things are happening that the bizarre has become almost routine.

“The unprecedented events occurring in our country create the impression that Greece has been turned into a boundless madhouse,” said elder statesman Constantine Caramanlis, a former Greek president, in a rare and carefully weighed written statement last week.

At the vortex is Prime Minister Andreas Papandreou, a 70-year-old autocrat who has dominated Greek political life for a decade.

Sometimes it seems that his government’s writ extends no further than that day’s lurid headlines: sickness, sex, scandals. Such are the facts of public life for Greeks to digest seven years after the charismatic Papandreou stormed to power promising a socialist New Deal.

In one blow after another, government credibility has been eroded by national furor over Papandreou’s health, his personal morality, the probity of his government and his competence to run it. Seven ministers have quit so far in the early revelations of banking and arms scandals involving hundreds of millions of dollars and high-level corruption.

Papandreou blames conspirators, foreign and domestic, for his disintegrating government. “I will remain in active politics,” he proclaimed recently as Communists to his left and conservatives to his right forged an improbable alliance to demand early elections. Opinion polls depict major damage both to Papandreou individually and to the Panhellenic Socialist Movement, called PASOK, which he led to a second-term victory in 1985 with 45% of the vote.

“We are facing the thickest-skinned government this country has ever seen. Papandreou should have quit a long time ago,” said John D. Paleocrassas, a member of the conservative New Democracy opposition in Parliament. “Let’s not kid ourselves: This is a one-man show. The situation is untenable. There is no government today, no serious day-to-day management of this country.”

For all except perhaps Papandreou himself, the unraveling of the patriarch’s rule has ended the early socialist dreams of making Greece a neutral nation bridging east and west, north and south.

Greece is the sick man of Europe today in more ways than one. Along with political malaise, the economy is stagnant and labor unrest widespread. Greek government debt, around $5 billion when PASOK took power in 1981, is now at $33 billion. At 16%, inflation is four times the average of Greece’s partners in the European Community. Direct subsidies from the community amount to 5% of Greece’s gross national product.

1989 Closure Due

Papandreou came to office demanding Greek withdrawal from both the European Community and from the North Atlantic Treaty Organization. He no longer objects to either, but still wants American bases out of Greece. One, Hellenikon Air Base adjacent to Athens’ international airport, is on notice to close next year.

Negotiations continue to decide the future of the other three, and observers expect Papandreou to resort to his old-time anti-Americanism to woo leftist support in elections now scheduled for mid-year.

The unmaking of a once highly popular prime minister began one day in August when Papandreou flew off to London without bothering to inform most members of his Cabinet.

In the retinue was Papandreou’s mistress, Dimitra Liani, 34, a former airline stewardess. London turned out to be more than a vacation.

Although government spokesmen prevaricated about the reasons for the trip and insisted that Papandreou could easily direct the country by long distance, it became clear that the former UC Berkeley economics professor was seriously ill.

He wound up having triple-bypass heart surgery and was gone two months. Pictures of the haggard-looking prime minister being led on recovery walks by a lover half his age became staples for the sensationalist Greek press while more sober editorial writers wondered who was minding the store.

No Clear Successor

Intimations of mortality sent shivers through PASOK, which has been Papandreou’s personal vehicle since he founded it 14 years ago. With party officials appointed by Papandreou and Cabinet ministers frequently shuffled, there is no clear successor to him from within the party, or any clear idea of the party’s long-range credibility as the focus of the Greek left.

By all accounts, Papandreou has made a remarkable recovery and is hard at work again, but his health remains a question mark for many Greeks.

So does his personal life, even in a society more tolerant of marital infidelity than some others in Europe. “Greeks have infidelity in their blood,” asserted Melina Mercouri, the culture minister and film star.

Still, the image of the family is important, particularly among women and rural residents, two important sources of PASOK’s electoral strength in the wake of Papandreou’s largely unfulfilled promises of a more equitable social and economic balance under a socialist government.

Papandreou has been married to his American wife, Margaret, for 37 years and has four children, but it is not the fact of a mistress that is so damaging to him. Rather, Greeks say, it is in flaunting his blonde consort--in convalescence, at Parliament, at a disco called The Myth, on the island of Rhodes during a European summit--that Papandreou crosses the line between machismo and bad taste.

Target of Satire

Recent assertions by the government’s media chief that Papandreou is “virile” and “valorous” in being open about his relationship with Liani, whom the prime minister calls “Mimi,” do not repair the damage. Papandreou says he is divorcing his wife, but leaders of PASOK have joined the opposition in criticism of a prime ministerial liaison that has also become the target of nightly satire in Athens theaters.

Papandreou’s burdens are vastly compounded by the gigantic banking and arms scandals. Amid national shock and government humiliation, investigations already show evidence of widespread government corruption.

“The whole series of developments demonstrate that Papandreou is not in control of events,” said former Economy Minister Gerassimos D. Arsenis, who now heads a breakaway socialist party. “There’s no way he can convince people that he is able to purge the party or the government of those involved in the scandals.”

In the banking scandal, a 35-year-old Greek-American named George Koskotas is accused of mismanaging or embezzling around $300 million in funds belonging to the Bank of Crete, of which he was chairman and chief shareholder.

Koskotas, who was raised in Queens, New York, where his immigrant father ran a paint shop, became an overnight sensation in Greece. Within a few years he bought the then-small private bank where he started as an office worker.

Illegal Interest Rates

Nouveau riche Koskotas quickly emerged as a high-living financial magnate and a glad-handing friend of the rich and famous.

He bought newspapers, a soccer team and a radio station. He lent money to high-ranking friends and attracted state deposits by paying illegal, extra-high interest rates. Officials in some public service ministries pocketed the difference, investigators say.

When the scandal broke, Papandreou called it “a nightmare” and shuffled his Cabinet. Investigations continue, and no one doubts that there is more to come amid charges that Koskotas may have sought to bribe and blackmail government officials to engender a cover-up. Koskotas also says he has proof that senior government officials illegally transferred money abroad.

As former President Caramanlis might say, government humiliation in the Koskotas case is boundless. In November, while allegedly under close surveillance by crack anti-terrorist police in Athens, Koskotas vanished. He turned up in Brazil and eventually went to Boston, where the FBI arrested him. He is fighting extradition requests from the Greek government.

While investigating magistrates and members of Parliament wade through the Bank of Crete case, other teams of investigators are deep in their study of a defense procurement and contraband scandal.

This one was triggered last month by Stathis Yiotas, a deputy defense minister, who said in a forthright resignation letter that he was leaving government service because he did not want to be involved “with adventurers, swindlers and embezzlers of public money.”

Non-Existent Weapons

Yiotas alleges that millions of dollars in commissions were paid for non-existent weapons to dealers hiding behind dummy companies. He also accuses an unnamed Papandreou aide of asking for his help to allow the re-export of weapons to “countries and regimes condemned by world public opinion.”

The sum of the troubles, the opposition contends, is that Papandreou is finished. Indeed, that is how it looks now.

Still, his political obituary has been written prematurely before, and PASOK retains an absolute majority in the 300-seat Parliament.

That means, minimally, that there can be no early election unless Papandreou wants one. He does not. There is nothing for him to gain by advancing elections from their scheduled date of June 18.

By then, the opposition expects, the frustrations of life in Greece’s “boundless madhouse” will lead voters to proclaim an end to the patriarch’s rule.