Greek privatisation chief quits after graft charges filed

ATHENS, March 9 | Sat Mar 9, 2013 1:00pm EST

(Reuters) - Greece's privatisation chief and a senior finance ministry official resigned on Saturday after they were charged with breach of duty over their former role as board members of a state utility.

The resignations are a setback to Greece's efforts to push through an ambitious reform and privatisations programme in a bid to turn around the debt-laden country, which relies on aid from foreign lenders to keep afloat.

Takis Athanasopoulos, a former chief executive of state utility PPC who later took over Greece's privatisation agency, was among former board members charged on Friday for commissioning a loss-making power plant in central Greece in 2007, according to court officials. The charges came under a public embezzlement law.

In his letter of resignation to Finance Minister Yannis Stournaras, Athanasopoulos said he welcomed the opportunity to prove that he was wrongly charged.

"It gives me the chance to prove that the interest of PPC and the state were fully served," Athanasopoulos said, adding he did not want the case to affect Greece's privatisation plan.

George Mergos, a general secretary in the finance ministry, was also a board member when PPC commissioned the 250-million euro natural-gas-fired plant at Aliveri. He has denied any wrongdoing. The company incurred losses over 100 million euros from the plant, court officials said.

The finance ministry said Stournaras had accepted both resignations and that a new privatisations chief would be named by Monday. A parliamentary committee will need to approve the government's proposed candidate.

Breach of duty against the state carries a maximum sentence of life in prison. The charges are against PPC's entire 11-member board which approved the decision, including the current leader of Greece's biggest labour union, GSEE.

As part of standard practice under Greek law, court officials will investigate before a decision is made on whether the case should come to court, a court official said.

Greece has stepped up prosecutions of politicians and businessmen in recent months amid rising public anger against a wealthy elite partly blamed for dragging the country to the brink of bankruptcy.

A prominent former mayor was sentenced to life in prison last month for embezzling funds while a former defence minister was sentenced to eight years for falsely declaring his income. (Reporting by Renee Maltezou; Editing by Rosalind Russell)