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Dark Side Last Updated: Jul 31, 2018 - 10:46:04 AM


A Greek Bearing Grifts
By Alexander Clapp, American Interest, 19/7/18
Jul 30, 2018 - 4:31:00 PM

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The strange saga of Victor Restis shows how Greece keeps falling prey to corrupt foreign profiteers—and just how easily the rot can spread.

It is hard to understand how the Greek state works without grasping the power held by a small circle of industrialists and financiers in Athens. These are the oligarchs. Many inherited their fortunes or first accumulated them at sea; their fleets collectively comprise the largest merchant marine in the world. Then they moved into new spheres. Some went into construction. Others set up banks. Many own a line of hotels or collect blocs of real estate. Those with ships pay the minimal tax rate in Greece owing to legislation passed by the 1967-74 military junta that allows their capital to be assessed in vessel tonnage rather than profits. Sometimes tying their holdings through Cypriot or Liberian shell companies, oligarchs nevertheless stay based in Greece, where they compound additional advantages—bailouts courtesy of Greek taxpayers, lucrative state contracts—through blackmail.

With every new government that takes power in Athens, the oligarchs threaten to take away the jobs they provide and the cash they flush into the political system should any attempt be made to audit their assets or tax them more effectively. In the past three decades not a single major party in Greece has run for election without vowing to break the power of these men; not a single party has seriously attempted to do so once in office. What is more, oligarchs are able to control the narratives told about them because there hardly exists a newspaper, television channel, or magazine in Greece that is not owned by one of them. Their power is such that press outfits within—and outside—the country have many legal and financial incentives not to call them out by name.

Victor Restis hovers at the fringes of the Greek oligarchy. At 50, he is half a generation younger than most of its members, though his holdings are at least as extensive. His rise has been swift but circuitous, punctuated by scandal and shrouded in obscurity peculiar even by the standards of a Balkan billionaire. Restis calls himself the new Aristotle Onassis but mostly shuns publicity. Shipping forms the backbone of his financial empire, but his real talent is for foraying out to untapped corners of Europe, seizing assets, extracting connections, and then sallying on to new terrain. Restis’s companies stretch across more than a dozen sectors—shipping, tourism, television, mining—and at least as many countries. Born in the Congo, educated in Belgium, in Athens he is an outsider: the Greek shipping magnate who does not descend from a Greek shipping dynasty. Restis’s mother was born into a Jewish family from the island of Rhodes that was almost entirely exterminated at Auschwitz. His father, Stamatis, fled Greece soon after the end of its Civil War and, unlike most Greeks, who headed to South Africa in the 1950s, headed instead for the Congo. In Kinshasa, Stamatis Restis built a modest fortune exporting fruits back to Europe. After Mobutu’s nationalization of businesses in the late 1960s, Stamatis left, returning to Piraeus and divesting his fruit earnings into a shipping company called Enterprises that was licensed two months before the collapse of the Colonels. Enterprises was a fleet of 83 vessels by the time a 36-year-old Victor Restis took control following Stamatis’s death in 2004.

Fourteen years later, Restis remains better known outside of Greece than within it. “He thrives on unpredictability,” I was told by his former business partner, Anastasios Pallis. “I know many ship-owners. Restis does not work like any of them.” Whereas most oligarchs in Greece encircle themselves with a clutch of political worthies and shipping scions, surrounding Restis there is something else: a remarkable constellation of transnational opportunists and drifting profiteers whose interests bear, at first glance, no apparent reason for overlapping.

There is Milo Đukanović, the contraband cigarette baron who has lorded over Montenegro under one title or another since 1990. There is Thaksin Shinawatra, the ex-Thai Prime Minister whose expansion of the electoral franchise (or rampant corruption, depending on your view) led to his 2006 ousting by his own army, and who three years later re-emerged as the richest Montenegrin in the world, awarded citizenship to that country by Đukanović himself. There is Wei Sang “Paul” Phua, the Malaysian card shark and serial match fixer who was taken down by an FBI sting operation in Las Vegas in 2014, only to resurface in the construction of Adriatic resort casinos this past year. There is Claudio Podeschi, former head of the tiny mountain enclave of San Marino, currently on trial for hawking off diplomatic posts to, among others, Paul Phua—appointed San Marino’s Ambassador to Montenegro in early 2011—as well as Victor Restis, appointed San Marino’s Ambassador to Poland three months earlier. Working in conjunction with one another, often taking cues from one another’s schemes, these men have invested, reaped, and transferred large sums of cash from one base of enrichment to the next. Restis is the figure most responsible for tying their operations together.

The story of Victor Restis is worth understanding for two reasons. The first is his personal demonstration of how, recurrently throughout the economic crisis, at a time when their financial arrangements have never appeared more indefensible, the most powerful men of Greece have brazenly violated its laws and walked away effectively unharmed. The second is that Restis’s saga shows how easily such corruption can spread—especially in the wake of the Greek crisis, which encouraged the easy flow of dubious foreign capital into and through the country.

Restis’s scandals within Greece are numerous. In 2013, his family bank, a 16-branch enterprise called First Business Bank, was shut down when he was caught red-handed extracting loans from the state under the names of family members, then siphoning the cash off to his offshores. Restis served four months of the five-year jail sentence after having successfully foisted First Business Bank’s toxic debt off to Greek taxpayers.

Victor Restis

At the same time came allegations from the American organization United Against Nuclear Iran. Its claim was that Restis was the undisclosed co-owner of a smuggling fleet—its GPS transmitters switched off, its engines turned down—which had been transporting hundreds of millions of euros of oil, bought with First Business Bank loans, from Iran to China. Restis denied the accusation, fought it in American court with a defamation lawsuit, and came away yielding that his ships had merely been moving humanitarian aid—soya beans—through the Persian Gulf. (An intervention by the Obama Administration asserted that American intelligence sources, probably Israeli, would be exposed should all the relevant evidence have been brought out in court; Restis’s suit was subsequently dismissed on national security grounds.) This year legal scandal struck once more, with allegations that for at least five years Restis has been cleaning up his earnings through a storefront laundering racket in Athens that links out to an array of offshores. His alleged co-conspirator, Ioannis Karouzos, is serving a 16-year jail sentence. Restis is appealing the verdict; his lawyer, Konstantinos Karagounis, was picked up off the Greek justice ministry.

This brings us to the second lesson of the Restis affair: that the Greek crisis has turned the country into an outsized depository for foreign capital flows—the result of privatizations, a tourist industry whose needs have doubled in the last decade, and the vast exodus of cash from Greek banks—even while the provenances of that foreign capital, and why it’s coming to Greece, are rarely apparent.

Much of what once seemed innocuous investment in Greece has since proved suspicious. In 2016, the China Ocean Shipping Company acquired the port of Piraeus, the largest cargo container terminal in the Eastern Mediterranean, for the equivalent of two weeks’ worth of debt relief; since then, one instance of purported smuggling or customs evasion by the nascent Chinese mafia in Greece has followed another. Four years earlier, half the Flisvos Marina, Greece’s largest marina, was sold off to Ferit Şahenk, the richest Turk in the world, who in 2016 picked up the Athens Hilton—his fortune aggrandized in the interim by the tightening of his allegiance to Erdoğan following the failed 2015 coup. A parallel array of acquisitions has come by way of a rising tier of crisis oligarchs—men like the cigarette bandit Ivan Savvidis from Georgia, or the construction magnate Christos Kalogritsas with connections to Sicily—who have stripped the state for pittances on behalf of external players.

The moneyed interests channeling through Victor Restis are ostensibly Thai.The moneyed interests channeling through Victor Restis are ostensibly Thai. This past winter, Pan Asia Investments, a consortium of moguls incorporated in Switzerland but originating mostly from Bangkok, began dispatching speculators to Greece. Pending acquisitions include sets of hotels in Mykonos as well as Messenia, the largest foreign investment ever in that part of the country. But Pan Asia’s most curious purchase, to be finalized next month, is its €27 million takeover of Panathinaikos: Greece’s oldest sports team and probably its last major soccer club not buttressed with dirty money.The takeover is fronted by Pairoj Piempongsant, the right-hand man of Thaksin Shinawatra, the ex-Thai Prime Minister who by 2009 had pieced his fortune back together in Montenegro not long after Restis had entered that country to expand his own. Panathinaikos is not the only European soccer club Piempongsant has bought in recent years, but its acquisition has triggered questions in the Athenian press. No foreigner has ever bought a Greek soccer team: What little value they possess comes from their fan bases, readily exploitable in moments of crisis for political influence or legal protection. Thirteen million euros in debt, incapable of paying a handful of its players last season, Panathinaikos is a straggling club in a league that has never made much effort to disprove rumors of its purchasable referees.

Restis has not admitted to any involvement in Panathinaikos’s acquisition. But neither does he counter the heightening speculation that behind Pairoj Piempongsant sits Thaksin Shinawatra, and that behind Thaksin Shinawatra sits Victor Restis—a fringe oligarch whose legal troubles may well benefit from nurturing his reputation as a man with unusually powerful connections.

How Restis forged those connections is the story of what happened after the death of his father Stamatis in 2004. Victor Restis proved a canny successor, picking up 32 bulkers off a Malaysian group that same year and becoming the fifth-largest ship owner in Greece. With the lull in the industry that came three years later, Restis began to diversify across sectors and borders. He acquired resorts in the Peloponnese and a second-tier soccer club in his Athenian suburb of Glyfada. He founded a real estate firm based out of Bulgaria. He bought castles in Umbria, began constructing cruise ships in China, swept up drilling rigs in the North Sea. He licensed MTV across the Balkans. He bought stakes in several online Greek news outlets and a minor daily in Athens. From Moldova to Romania to Turkey he became a double-digit shareholder in banks. In Germany he set up his own, New Generation Bank.

But the most consequential place for Restis would be Montenegro. The first significant Greek businessman to invest in the country had been Vassilis Sarantitis, a reputable maritime lawyer who, with help from a Montenegrin soccer star called Dragan Perovic, set up a telecommunications firm in the country shortly after the disintegration of Yugoslavia; Sarantitis was a joint shareholder of First Business Bank before Restis bought it up entirely in 2006. A year after Restis had taken full control of First Business, he would make his own pivot to Podgorica. By this time Milo Đukanović had not only secured Montenegro’s detachment from Serbia but had also embarked on the privatization of the country that has effectively made Montenegro the Đukanović family firm. The capital that Đukanović borrowed to set up his first private banking enterprise was Greek: In 2007, a London branch of Piraeus Bank lent Đukanović $2 million to buy up shares of Nikšić Bank—subsequently privatized, relocated to Podgorica, renamed First Bank, slushed with cash held by the trio of Đukanović siblings—with the shares of the yet-to-be purchased bank fronted as collateral against the Piraeus Bank loan.

Milo Đukanović in 2010, via Wikimedia Commons

Restis arrived to Montenegro just as this financial arrangement had begun to implode. Having haphazardly loaned out cash to a hoard of more distant relatives and friends, Đukanović’s First Bank found itself a hundred million euros in debt and on the brink of seizure by the state. A solution was identified in the same strip of Adriatic coast whose deep-water cigarette smuggling hubs had enriched the Đukanović machine in the first place during the 1990s. Its privatization would give way to new revenue streams through tourism. In 2008, the Montenegrin parliament pushed a law declaring the construction of five-star hotels to be in the national interest, then appointed Đukanović head of a newly-minted Montenegrin Investment Promotion Agency. After an initial stint of mismanagement by Stanko Subotić, a Serbian businessman and alleged cocaine trafficker since indicted by Belgrade on smuggling charges, development of the coastline was largely outsourced to Victor Restis.

With Restis came cash and an entourage of Greek businessmen. As one investigative journalist in Podgorica told me, it was not just the miracle of Restis’s timing or his badly needed capital as it was the jolt of wherewithal—“he was an outsider who appeared to know how to get things done”—he brought to Đukanović’s flagging marketization. The first thing Restis did was put money into the Berane brown coal mine through a new shell company called Adcapital Montenegro; here the first connection to Đukanović, briefly checked out of the political scene, was made. Next he set up a bank, First Capital (not to be confused with First Business, his Greek bank shut down in 2013). Along the coast, he bought up, or leased out on decades-long terms, a string of old Yugoslav state resorts. Into the islet of Sveti Stefan, the touristic jewel of the Adriatic once owned by Subotić but taken over by Aman Resorts, Restis injected some €40 million. This flurry of investments was coupled with the arrival of one of Restis’s old business associates from Greece, a former manager of Athens’s AEK soccer club called Petros Stathis. Stathis worked the ground game, stationing himself permanently in Montenegro and picking up a Serbian top model for a wife. In parallel to Restis, he coordinated his own takeover of the Adriatic coast. He purchased an indebted state-run newspaper in Podgorica, a pair of online portals, and in addition founded his own newspaper. All have become propaganda organs for Đukanović, who reimbursed Stathis with Montenegrin citizenship in 2013, the year after Đukanović had cycled back once more into the Prime Minister’s office.

But more critical than any of these investments was the other Prime Minister whom Restis brought to the scene. This was Shinawatra, whose own saga of self-enrichment—a billion euros made in telecoms through the 1990s, at least a billion more made while in office through Olympian-scale real estate deals that landed him an in absentia jail sentence in 2008—had culminated in catastrophe. Dethroned in Thailand, Shinawatra departed for his Dubai exile with virtually all his capital still frozen in Bangkok. In 2007, with €20 million he had managed to squirrel away, Shinawatra became the majority shareholder of Manchester City Football Club. Here the partnership with Restis, who had himself bought shares in Manchester City that year, began.

Thaksin Shinawatra in 2005, via Wikimedia Commons

In 2008, officially charged with corruption and out of concerns that Manchester City had become a vehicle for laundering his recovering fortune, Shinawatra was forced to sell the club (which during his year-long tenure had become the most valuable soccer team in the world) to Sheik Mansour of Abu Dhabi. The connection was brokered on the Thai side by Piempongsant, the man currently buying Panathinaikos in Athens and who saw to it that Shinawatra fully doubled his initial investment. Restis then stayed on as the nominal manager of what shares Shinawatra still kept in Manchester City, brokering his own connection with Sheikh Mansour the next year. In 2009, Restis secured a $1.5 billion partnership with the Abu Dhabi International Petroleum Investment Company, an arrangement that in turn looped a more distant player into the scene: Mohammed Dahlan, the former Palestinian Minister of Security who, kicked out of Ramallah following the 2007 Hamas coup, had made his way to Abu Dhabi and onto the payroll of the Emirati sheikhs.

Both Dahlan and Shinawatra then re-connected with Restis in Montenegro. Dahlan established himself as the handler of Gulf state fortunes pouring into Podgorica’s real estate and banking sectors; in 2010, he was awarded Montenegrin citizenship for being “one of the most important promoters of our interests in the Middle East”—his pending charges of multimillion-euro fraud and human rights violations all but disregarded. Shinawatra began staying at Restis’s hotels in Montenegro while he brokered the terms of his own alliance with Đukanović. By 2009, the ex-Thai Prime Minister had turned into the biggest financial prop of Montenegro’s first family, cycling €15 million of his Manchester City earnings into First Bank through a Dubai intermediary. Shinawatra in turn was granted Montenegrin citizenship—this, despite legislation prohibiting citizenship from being granted to any foreigner with a pending arrest warrant.

Glamorized in travel columns as the “future Monaco” and “land of fairy tales,” the coast around Budva that once brought $700 million into Montenegro annually through cigarette smuggling was gussied up into a glitzy riviera. (The near-eradication of the illegal tobacco trade and broader marketization of Montenegro helped push the country into NATO in 2016.) Visit the bay bounded by Budva and Sveti Stefan today—ten kilometers of seafront widely considered the most picturesque stretch of the Adriatic—and one encounters a revealing succession of hotels. Heading south from Budva, Petros Stathis owns four resorts. Eight hotels are owned by the Montenegrin state—that is to say, by Milo Đukanović. The island of St. Nikola—formerly owned by Stanko Subotić, the disgraced associate of Đukanović—is owned by Shinawatra, who paid €21 million for the property, no larger than four soccer fields, and who has now outsourced its conversion into a 500-room hotel-marina to a construction firm owned by Aco Đukanović. Further down the coast, Victor Restis owns the island of Sveti Stefan, which now hosts everything from conferences for citizenship commodification firms to celebrity weddings to Restis’s rendezvous with Thai entrepreneurs in lobbies roving with bouncers and fuming with cigar smoke.

The next player to buy into the scene was Paul Phua, the Malaysian czar of a sprawling gambling empire stretching from Hong Kong to London to Melbourne. His turn to Montenegro also followed legal fiasco. In 2014, Phua was caught by the FBI handling $400 million in illegal wagers during the Brazil World Cup, a gig he ran out of Villa 8888 at Las Vegas’s Caesars Palace, decked out by unknowing hotel staff into a wiring room packed with big screen televisions and banks of computer monitors.

Three months later Phua was handed back his $48 million private jet and walked, evidence in his case botched by the FBI and a fumbled search warrant. He headed to Montenegro, where his credit was still good, and where he found a business partner in-waiting in Victor Restis. As he had with Shinawatra, Restis brought in Phua as a joint investor in the Aman Resort on Sveti Stefan; Phua joined Stathis as a partner in Maestral Resort and Casino, where Phua now presides over poker tournaments in which the world’s highest rollers—and the occasional Calabrian gangster—are flown in by chartered jets for weeks at a time. Like Shinawatra, in return for the cash he divested into the country, Phua was afforded legal sanctuary by Đukanović in the form of a Montenegrin passport. (Phua, unlike Shinawatra, was not pending arrest at the time; the FBI’s claim that Phua was head of Hong Kong’s 14K Triad at the time he met Restis in Montenegro has proved unfounded.)

It would take years for investigative journalists in Montenegro to untangle the interconnectedness of these dealings and the piles of cash sluicing from one bank account into another. But by the time these schemes had been registered in full, the circle surrounding Restis had moved the bulk of its operations west. The microstate of San Marino is a strange relic of the world of medieval Italian city-states; the fifth-smallest country on earth, it has claims on being its oldest functioning republic. It also sits confoundingly close to Montenegro: From the coast of Budva, across the same stretch of Adriatic coursing with cigarette runners and yachting tycoons, it can be reached overnight by boat and a brief drive up the Marche. For decades its banking system has been terra benedetta for Italian tax-evaders; more recently it has become a financial haven for Eastern European elites from, among other places, Montenegro.

San Marino proved a redux of Montenegro, albeit in more concentrated form.San Marino proved a redux of Montenegro, albeit in more concentrated form. Shock troops of Greek businessmen, several of whom had arranged Stathis and Restis’s takeovers in Montenegro, brought their know-how to a San Marinese ruling elite which have long acted as a bridge between Italian and Balkan interests. If in Montenegro Shinawatra had been the major provider of capital, in San Marino it proved to be Phua: Throughout 2011, millions of euros were transferred from a Swiss bank account into his company, Black Sea Pearl, for the construction of a seven-star Aman Resort in San Marino, a sister complex to the one which had been built in Sveti Stefan. Construction never began; the money remains unaccounted for.

If Montenegro had granted legal charlatans like Shinawatra, Dahlan, and Phua the protection of its passport, San Marino was able to offer something grander. Because its population is so small at just over 30,000 residents, its ruling council has historically staffed its diplomatic corps with non-citizens, who in turn get the privilege of polishing their biographies with a credibly officious title—“Ambassador of San Marino”—that often grants its bearer the benefit of the doubt when it comes to legal speculation: How could a man with a trail of suspect acquisitions have been entrusted with the diplomatic relations of a foreign state? And yet in the case of San Marino, it turns out that its corps of non-resident diplomats is a roll call of dubious non-diplomats. An Italian national and Berlusconi sprig called Ubaldo Livolsi was caught up in two major money laundering scandals while serving as San Marino’s Ambassador to Serbia; another Italian national, Enrico Maria Pasquini, was the microstate’s Ambassador to Spain when he was overwhelmed by his own laundering scandal. Claims made by Achilleas Kallakis that he had served the Republic as its Ambassador to Brunei were considered so preposterous, they were waved off by the Guardian as just another con typical of the man now serving an 11-year prison sentence for the largest mortgage fraud in UK history. But the Greek shipping scion did indeed serve San Marino as Ambassador to Brunei—later to Greece, later to Thailand.

Restis was the next Greek to take up an ambassadorial post on behalf of San Marino. Within a year of Kallakis’s dismissal, in December 2010, Restis was offered a posting in Poland. A source in San Marino’s judiciary told me that following the appointment two cash installments (€240,00 in late 2012; €500,000 in early 2013) were deposited by First Capital—Restis’s Montenegro bank, later re-christened Universal Bank, with Petros Stathis platooned in as majority shareholder—into a coffee company held in the name of Biljana Baruca, the Slovenia-born fiancée of Claudio Podeschi. Tacked to a handful of Restis-related companies in Montenegro, in San Marino Podeschi has orbited from ministry to ministry, overseeing the dishing out of its diplomatic posts since at least 2004; a trial into his habitual solicitation of kickbacks remains ongoing, the centerpiece of which is his awarding of the Montenegrin ambassadorship to Paul Phua in February 2011, three months after Restis’s appointment.

Both Phua and Restis have since been stripped of their posts. But their dealings in San Marino have proven much too extensive to disband so quickly. Phua remains a major real estate mogul with considerable clout at the highest levels of the state; after the arrest of his son in Macau for working the phones of his father’s betting ring, Petros Stathis offered to “activate” its Prime Minister—San Marino does not have one—to intervene on Phua’s behalf. (Phua did eventually manage his son’s release, allegedly with $500,000 in bribes to Macau police.) And despite being unceremoniously bounced out of its diplomatic corps, Restis now stands poised to become the inaugural head of San Marino’s newly-minted maritime registry, an enterprise—handing out shipping licenses on behalf of a landlocked tax haven—he will purportedly run out of an office in Athens. His saga has swung full circle back to Greece, bringing with it the Montengrin, San Marinese and Thai interests he accrued during his decade spent pin-balling around the Adriatic.

It is worth recalling that the man Victor Restis aspires to become—Aristotle Onassis, who functioned within the group of godfather magnates that included Stavros Niarchos and Stratis Andreadis—was one of the postwar pioneers of tax avoidance. It is for good reason that what is now a globalized phenomenon can trace much of its origins back to the Greek ship-owners who in turn laid the foundations for the Greek oligarchy. The machinery of their profit was offshore and mobile. They grasped ports of call and flags of convenience. Their shipping lanes were inherently borderless.

Restis is the roguish outgrowth of that rotten system. The heirs to men like Onassis contented themselves with slyly ramifying their interests through the Greek state. But Restis is shrewd enough to realize that Greece is distractingly small game. He feels no compulsion to succor its elites or jostle in the operetta of its politics. He has mustered around himself a circle of floating oligarchs who can move from one hub of self-enrichment to another. They co-opt not just the financial structures of each—state tenders, real estate markets, LLCs—but the privileges of their taxpayers—passports, ambassadorial posts—even while they flaunt the laws of each in succession.

The failure of one member of Europe to reign in men like this anywhere only leads to the proliferation of their corruption everywhere: From Montenegro to San Marino to Greece to wherever they set their sights next. Like vipers, oligarchs are better cut off at the head or not at all.


Source:Ocnus.net 2018

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