Koskotas scandal

Koskotas scandal (Greek: Σκάνδαλο Κοσκωτά) was a corruption and financial scandal in 1989 Greece centered on George Koskotas, owner of the Bank of Crete and mass media magnate, implicating the highest-ranking members of the Greek government, including Prime Minister Andreas Papandreou.^[1] The scandal marked a turning point in Papandreou's populist government, which had tight control over the state apparatus since 1981.

Koskotas was shaken by early investigations of Greek publishers on the rapid changes in the ownership of the media landscape in the mid-1980s and left Greece to the United States to avoid justice. However, he was caught by US authorities for unrelated fraud crimes on 24 November 1988. In prison, Koskotas' alleged that the missing over US$200 million^[i] from his bank was embezzled with the support of several government ministers and Papandreou. In return, Koskotas supported Papandreou's socialist political party (PASOK) through his magazines and newspapers, some of which were bought with embezzled money, including conservative newspapers such as Kathimerini.^[2][3] The revelation attracted international attention and caused considerable political turmoil, with six ministers resigning in protest and Parliamentary investigations commenced.^[4] A judicial inquiry revealed additional scandals, ranging from illegal commissions to war profiteering,^[5][6][7] further deepening the public disillusionment with the populist government of Papandreou. However, Papandreou, having no constitutional restraints based on the 1986 constitutional amentments, abused his power by introducing legislation to prevent the advancement of Koskotas investigation,^[8] which, if convicted he would go to prison for life,^[9] and changed the electoral law to prevent the opposition from coming to power. Moreover, Papandreou, during the election campaign, promised to empty the coffers of the state to his loyal supporters,^[10][11] and over 90,000 civil service jobs were bestowed as a means to stay in power and suppress the scandal.^[12]

Papandreou lost the June 1989 Greek parliamentary election, owing much to the Koskotas scandal,^[13] but no single political party was able to form a government by itself due to Papandreou's electoral law change. Nevertheless, this led to an unexpected collaboration between conservative New Democracy and radical-left Synaspismos political parties to form a government with a limited mandate for the completion of the investigations of PASOK scandals that became known as "catharsis." This collaboration was extraordinary for Greek society since they were on opposite sides in the Greek civil war, and it was marked as a healing process.^[1][12][14] However, the political polarization had reached its climax when, on the day that the Parliament initiated procedures for the indictment of Papandreou and four of his ministers,^[ii] 17 November terrorist organization assassinated Pavlos Bakoyannis, a member of parliament and the architect of Papandreou's indictment.^[15][16] Both major political parties accused each other for the assassination.^[17] After two more parliamentary elections in less than six months, New Democracy, led by Constantine Mitsotakis, came to power in April 1990.

Koskotas was extradited to Greece in 1991 for the trial, which lasted nine months, with live broadcasts dominating the daily news cycles and public discourse. At the end of the trial, Koskotas and Papandreou's ministers were found guilty, and one of the ministers had a stroke on live TV and died a few days later. Papandreou was acquitted by one vote.^[9][1][18] The trial is considered one of the most significant trials of modern Greece.^[19]