What Dimitris Politopoulos of “Vergina” said at the Herald Tribune Conference (20/06/2011)
During the conference, most of the urgent issues related to the stabilization of the Greek economy were introduced and discussed, such as the crucial issue of fiscal debt, the privatization program, the exploitation of state property and the sectors with a significant chance of attracting more investment from Greece and abroad.
The sessions included business representatives, international experts and academics, while Mr. Politopoulos was the only representative of the productive business world in Greece. The panel with Mr. Politopoulos on the subject of attracting investments was coordinated by Mr. Jack Ewing, International Herald Tribune’s economic correspondent in Europe, and Mr. Basson Consulting Group, partner and managing Director of The Boston Consulting Group and Mr. Nikos Konstandaras, Director of Kathimerini. Due to political developments, they were unable to attend the conference, top government officials that were also invited.
Speech by Mr. Dimitris Politopoulos, Managing Director of Macedonian Thrace Brewery SA (Vergina Beer) at the event “Greece – The Emergence from the Crisis?” of the “International Herald Tribune” and “Kathimerini”
“Ladies and gentlemen,
I am addressing you today with a sense of duty and unwavering determination, at a dangerous turning point in our country’s history.
It is the moment, for us that we have chosen to live and create in Greece and for the millions of our expatriates living around the world, to unite for this land that we love so much.
For decades our governments have made mistakes. While borrowing a lot of money, these funds were not invested in industries and productive equipment, nor were they invested in biotech parks, on-line technology, or the transformation of our cities and landscapes into the idyllic Edem that our people deserve.
Instead, this money was wasted at best, or as smooth abusers at worst. Many have ended up in a few and a few in many. Some retired while not being entitled, and others were appointed to the public sector, while there was no need for their services. Few have won large profits at the expense of many.
Cartels flourished and taking advantage of the strong demand fueled by borrowed funds, strangling domestic entrepreneurship.
Due to the size of our debt, the financial markets decided that we as a state were more irresponsible, exceeding our credit limit and have now refused to refinance us.
More specifically, they have taken this decision because the reason of our public debt to our Gross National Product is among the highest, if not the highest, in the world, while the vital indicators of our economy are very anemic.
We are in a very bad financial situation, and the global investment community has decided that it is time to stop supporting us. I cannot say I blame them. But I see this circumstance not as a dark day in our history, but as an opportunity.
If we are going to start a new page in our story, we have to repay our debt in full.
And we have to do that by producing products and services in the real economy not from the ether, this last alternative is now banned.
The Greek government has begun to cut costs and spending and has reduced the number of debt growth, but this has also shrunk our economy. He has increased VAT and other taxes and has decided to sell some government assets to reduce the debt. But I am very afraid that these assets will be sold at degrading prices. They are sold at very low prices rather than on the edge of the market and before we have the opportunity to repair our legal, tax and administrative systems.
Therefore, potential buyers today will demand additional discounts, commensurate with the perceived risks associated with the Greek economy, risks that may not exist in the future.
These government measures may, in the short term, address the debt problem, but at the same time they may hinder GDP growth, a very powerful weapon.
Our GDP is a powerful weapon in our efforts to overcome the problems we face, a weapon that can change the game as it combines the entrepreneurship and productive potential of our country. A country that is internationally recognized as the birthplace of a disproportionately high percentage of eager people.
However, in contrast to Ireland and other European Union countries facing financial problems, Greece has never made a serious effort to launch this amazing potential, and the legendary Greek entrepreneurial pride is stifled instead of being allowed to flourish.
Through their investments, honest entrepreneurs can pave the way for progress in Greece. They invest time and money in our economy, create jobs and pay taxes. They are interested in the progress and welfare of executives and their associates. Helping employees evolve. They are open to new ideas and suggestions. They usually have a broad understanding of things, and are alert to unexpected opportunities and risks.
These, “hand in hand” with the workforce, are the essential creators of the nation’s wealth.
Many people in Greece are convinced that the only purpose of a businessman is the economic wealth.
For many entrepreneurship is a channel for their creativity and a path to their evolution as people. It includes elements of social responsibility and a thirst for exploring the limits of feasibility in the world we live in. The profits of a company that has authority are according to its social contribution and this contribution is much more important than its corporate profits.
Unfortunately, a significant number of people in Greece are not very familiar with the notion of honest entrepreneur, most likely because this species has long been hard to thrive here. Nonetheless, at this difficult time in our history, entrepreneurs with authorities must be our vanguard
But in order to plant and cultivate business seed, entrepreneurial spirits need appropriate ground.
Today, and as far as I can remember, Greece cannot provide the right climate for entrepreneurship that is distinguished by ethos and principles as this concept is perceived in Europe, North America and in some other parts of the world.
It hurts me to say it … but that’s how things are.
Watching the evening news lately, we hear about the financial scandals in Greece, rumors of financial irregularities, suspicious land exchanges, illegal contracts, uncontrolled tax evasion and arbitrary buildings abound. We are shaking our heads wondering if there is a place for the honest entrepreneur in this society.
An example of all this is an article I read in the Wall Street Journal last April. According to the article, Johnson & Johnson, a pharmaceutical company, has set up a number of charges against it, related to violations of US law on offshore corruption, with the United States Department of Justice and the United States Securities and Exchange Commission.
Johnson & Johnson paid a fine of 75 million dollars to the United States for engaging in an extensive bribe scheme for doctors primarily in Greece.
In a related article, the New York Times wrote that this was a complex and elaborate payment plan of 20% on the sale price of the company’s products to Greek surgeons.
Continuing on this, the Johnson & Johnson administration voluntarily revealed the case to the US Department of Justice. This has contributed to a reduction in the relevant penalties and fines. Johnson & Johnson’s employees said that if they had not bribed Greek doctors, they would have lost most of their turnover in Greece.
As I finished reading the article, I wondered if there was ever a case of a company that voluntarily revealed bribery on behalf of its executives to the Hellenic Competition Commission, which is the competent authority for these issues here, or if the Hellenic Competition Commission had even begun to investigate it the case.
Based on past experience, it may take them unacceptably too long to issue a conclusion, since of course they have focused on the subject. So, it is understandable why bribery, crime and illegal transactions are a safe haven in Greece.
Similarly, it takes a long time to settle a commercial case in the Greek Courts. This problem needs to be corrected. It takes so much time, that it may be preferable not to proceed with a commercial transaction that interests you, if there is the slightest risk that it will end up in the courts.
In Greece, laws often change without cause or warning and sometimes have retroactive effect.
There are so many contradictory, obsolete and complex laws, that full compliance and compliance, pure interpretation and enforcement, become almost impossible.
These are dissuasive for serious business planning, but great for those who are interested in defrauding the law.
If we Greeks find this atmosphere complex, obstructive and slow, imagine how our European fellow citizens see it.
Michael Diekmann, Managing Director of Allianz, recently said:
“We need a plan to industrialize Greece, a new Marshal project. European labor force and production must be relocated to the Country.”
I interpret this as follows:
1. Greece is considered an underdeveloped country.
2. Our European fellow citizens are willing to come here and invest … but.
3. So far, European entrepreneurs and funds have not come here to serious numbers.
The purpose of our European Union, in its best expression, is the free flow of people, products and capital between the Member States. However, there is a small influx of products in our country, but a low export in return.
The willingness to invest in Greece exists in Europe and around the world. But despite the status of Greece as a Member State of the European Union, the willingness to invest here is suppressed by a cautious and justified reluctance to enter an economic-commercial context that is considered rough, rugged and dangerous.
Even when you are active in a country with a very strong legal framework and developed and stable institutions, there are many obstacles to success, many unpredictable dangers and unknown parameters. Competitors can import better products at lower prices on the market. The market for your product may be shrinking due to a medical directive, a leap in technology, or a change in fashion. Interest rates may surge unexpectedly while you owe a large variable-rate loan, and so on. So, why an honest and law-abiding man invest in a country with a weak legal framework where will he face these additional obstacles to success?
Let’s get back to the Johnson & Johnson case for a moment and I quote the statement by William C. Weldon, Managing Director of the company:
“We are very disappointed by the unacceptable conduct that has led to these violations of the Law. We have undertaken to implement many changes since then, in order to become a more law-obiding company, and we commit ourselves to doing what we can to ensure that it does not happen again. ”
I believe that Johnson & Johnson, which generally has an excellent reputation as a company, betrayed its corporate principles operating in Greece. Would it ever have acted like that in the United States?
I cannot imagine the reason why Johnson & Johnson erred so greavly in Greece, it is because this behavior here is considered to be normal.
This behavior is the RULE … not the exception.
Those who should be fined are not required, and those who should be in prison are free to walk. There are many stories like Johnson & Johnson in Greece, the majority of whom are not prosecuted. And for what?
Investors our own citizens and now the entire world is skeptical about our ability to function as an economy.
Ladies and gentlemen,
This environment is an obstacle to initial investment and is the main reason why few new businesses are being created here. This, in turn, penalizes the workforce and turns our economy into ruins.
If few new companies are created, who will offer fair remuneration for honest work to our people? And who will educate him? If companies with international reach are not established here, who will cultivate the great administrative talent through the ranks of our workforce?
This poor economic and moral climate does not allow remuneration equal to the capacity, productivity, loyalty to work a worker has. Its alternatives are an open-ended position in the public sector, or the risk of a low-paid job in the private sector, or the Unemployment Fund.
Appropriate employees are condemned in this way to mediocrity, and the entire workforce is held hostage to this counter-productive, anti-business climate.
Even worse, this situation over the years has eroded the moral fabric and the principles of our society: That is happening in a society where serious work and creativity are not rewarded.
I can only think of Ayn Rand’s famous paragraph about money, which summarizes what happened here in Greece:
“Money is the barometer of the virtue of a society. When you see transactions being carried out by coercion rather than prudently – when you see that in order to produce you need to get permission from people who do not produce anything – when you see money flowing not to those who trade goods but to those who trade favors – when you see people getting wealthier by bribe rather than labor and your laws no longer protect you from them but they protect you from you when you see corruption being paid and honesty becoming self-sacrifice – then you will know that your society has been destroyed. ”
However, I remain optimistic. We are still standing and breathing. Phoenix must be regenerated from the ash.
Ladies and gentlemen,
We are urged to bring our country back to a rate of economic growth by producing attractive products and services for the global market, while keeping public debt under control. The solution is not the hunger diet with which we are currently experimenting in Greece. This is self-defeating. Our goal must be to develop muscles as we eliminate fat and build a lean and competitive country.
To achieve this goal, we must empower our entrepreneurs and our workforce: This is our army in this war.
This requires us to revise and effectively re-establish our tax and legal framework.
I know it, it’s a monumental, Herculean project. But it is never easy to try the big, important things that will lead your country forward.
Now we have no choice but to bow for this mission.
Permanent discussions and often repeated remarks about the competitive advantages of specific sectors of the Greek economy are meaningless at this time. It’s just words. Entrepreneurs will decide this through their investments only when the country’s fiscal, legal and administrative framework has been restructured.
The government should focus on creating, implementing and enforcing this framework.
I’m an engineer and a businessman. I’m not a constitutionalist. But I know the following:
• To achieve anything important, first of all, you need to have a vision,
• Then you need a strategic and functional plan.
• And finally you need passion for performance, without which nothing great is implemented.
The vision must be clear:
A PRODUCTIVE SUCCESSFUL GREECE, A GREECE WITH AUTHORIZATION, WHICH WOULD BE AN EXPRESSION FOR OUR AREA AND THE WORLD.
The strategic plan must restructure the tax and administrative frameworks in a way that serves this clear vision. This will be achieved by formulating and specifying the individual areas of our frameworks for restructuring by expert groups.
Such specialized impact groups should focus on the following areas:
• The Corporate Tax Code
• The Private Tax Code
• Labor legislation
• Commercial legislation
• The efficiency and transparency of the courts
• The tax collection system
• Free markets and competition
• Real estate taxation
• Financial corruption
• The effectiveness of the principles of prosecution of financial crime
And several more. A total of about 20 counts.
The operational plan should ensure of staffing these groups with the right number of people and trust them to find solutions and empower them to realize their purpose.
We can and must acquire an international talent to staff these groups, to apportion and equip them with the necessary resources and authority.
Does it sound like a lot of work? As I said earlier, this is a monumental project. Therefore, it requires correspondingly serious strategic and operational plans. We definitely have to do it. With it or on it.
And now, the magic ingredient:
IT IS CALLED IMPLEMENTATION
Inspired implementation requires inspired visionary leadership. We expect this and we demand it from our leadership. We want our government to succeed, but we want to see an executive dynamism on its part to free our markets and write our own epic.
We ask the Prime Minister to start the project by expressing and imparting enthusiasm for the vision. We believe he can do it. We ask him to address the nation with a clear schematic diagram of the government’s strategic and operational plan.
In order to fight we must hear these words articulate with reverence, sincerity, imposing and passionate:
1. We have a vision of a productive, prosperous Greece, a Greece with confidence, which will be an example for our region and the world.
2. We will realize this vision by re-establishing strong and independent legal, fiscal and administrative frameworks.
3. We will restructure our institutions to a particular project, employing the best people at the lowest possible cost with a realistic and a specific timetable, and the nation will be informed at regular intervals about the progress of our work.
4. Each of our social groups will be called upon to make the following sacrifices. We will collide frontiers with those who do not intend to voluntarily abandon bad habits and corruption of the past … and
5. We start now!
There will be representatives and pilgrims of the Ancient Regime who will oppose the vision I am presenting to you today.
There are always those who embrace the status quo, in so that only these benefit from it, even to ruin our country.
We invite them to review their positions. We ask them to embrace our vision. The monumental work is mostly due to division between us. This is not a time for small-political, but time for national unity. It is not time to conflict the small interests of our individual branches. Besides, choosing to sell your homeland for a handful of euros is a cheap and miserable way to get through this life.
The historic moment requires a United National effort. The time to unite has arrived.
Good implementation of the project requires us to build a bridge between us and bring our lawyers with us. It means researching what has not worked in the past and what systems work well in other parts of the world that we may adopt.
It will promote self-criticism by our judges, our auditors and our entrepreneurs. At the end of the day, our own judges will be called upon to cut off their own legal girdle that strangles us.
We ask our government to implement the project by forging unity and driving the citizens by giving the example itself.
And I am telling you: If we unite, we have already won. Never forget: A united Greece never has and will never be defeated.
I dream that we will wake up in a not so distant morning, surprised by what we have managed with the feeling that we have migrated to a new beautiful land of promise without having moved an inch from where we stand. This Greece we owe to ourselves, our future and our children who will inherit this beautiful land.
European fellow citizens have supported us in this crisis. I do not even want to imagine how worse it would be if they were not standing by our side.
And I am sure that with breath-taking and the look we are looking at, they are waiting to see us take the brave step forward, the step towards the light.