Appeal to the European Public Prosecutor over the agreement between Hellenic Defense Systems and Slovakia

- Serious allegations have been made against the government, accusing it of handing over key defense production facilities without compensation for 25 to 30 years. The facilities involved include the Lavrio production lines, the Hymettus factory network, and the Dervenochoria facilities.
  Defense Systems (EAS) holds a 51% stake in the joint venture, control of the board of directors is reportedly being ceded to MSM EXPORT.
- “There has been a complete disregard for the transparent and public procedures required by EU directives,” workers have said, raising concerns about the legitimacy of the deal.
- In 2022, MSM EXPORT caused significant damage to EAS’s reputation by cancelling three critical contracts to supply ammunition to Egypt and other countries.
- The controversy has sparked parliamentary inquiries from PASOK and SYRIZA, but the Ministries of Defense, Economy and Finance have refrained from providing any substantive answers.

By Vangelis Triantis

The agreement between the Greek Defense Systems (EAS) and the Slovakian MSM EXPORT on the creation of a joint venture aimed at the production of defense material and its export to foreign countries, such as Ukraine, is taking on criminal dimensions. According to information obtained by Data Journalists, the Federation of Chemical Industry Workers (OEXVE) has filed a complaint with the European Public Prosecutor’s Office, the First Instance Prosecutor’s Office and the National Transparency Agency, accusing them of “lack of transparency”, “non-compliance with national and EU legislation”, as well as possible damage to the state and the EU from this agreement and the processes that followed. These are very serious allegations that require immediate investigation as they concern a highly sensitive issue of national importance. According to the same sources, workers have reported that in 2022, EAS again contracted with the same company for the supply of ammunition to be exported abroad. However, the three export contracts were canceled, resulting in losses for EAS. So what happened to the EAS-MSM EXPORT contract? Let’s see what the workers are demanding on an issue that has also taken on a political dimension.

Greek Defense Systems (EAS) is a state-owned company active in the production of defense products and systems in Greece. The company was established in 2014 after the merger of the Hellenic Arms Industry (EBO) and the Hellenic Powder and Cartridge Company (PYRKAL). According to EAS’s official website, its purpose is “the production and development of weapons and missile systems, firearms for portable equipment, etc.,” the upgrading and modernization of weapons and defense systems, and the maintenance of weapons and missile systems. EAS operates four factories. Three of them are located in Attica, while the fourth is in Aigio. The main shareholder of EAS is the Ministry of Finance, and the company is supervised by the Ministry of National Defense.

In recent months, the management of EAS has signed an agreement with the Slovak company MSM EXPORT to establish a joint venture. The purpose of the joint venture is the production of military equipment in Lavrio and its subsequent export to the EU, Ukraine, NATO and the Middle East. However, as reported to the Prosecutor’s Office, “in order to implement the above agreement, EAS will transfer a number of public infrastructure assets of the country without any compensation”. Specifically, the transfer includes “the production lines in Lavrio, the factory system in Ymittos and the facilities in Derbenochoria for a long period of at least 25 to 30 years”. Furthermore, although EAS will hold a 51% stake in the joint venture, but the board of directors will include only two EAS members out of five, and the CEO will come from the Slovakian MSM EXPORT.

Lack of transparency and possible damage to EU and Greek public finances

According to the claims of the OEXVE workers, behind the creation of the joint venture lies “a web of procedures that require investigation and raise reasonable suspicions of a lack of transparency and non-compliance with the law (both EU and national) in the highly critical operation of EAS”.

Specifically, OEXVE alleges that the controversial joint venture “has not followed a public-transparent process as required by EU directives,” while at the same time “attempts are being made to claim substantial European funding.”

In particular, it emphasizes that the process followed by the management of the EAS “does not guarantee that the most advantageous offer for the public interest – or the most suitable for the absorption of the related European funds – has been chosen”. In particular, throughout the entire process, no open public tender was held, “despite the fact that the primary element of this process is a financial-commercial agreement aimed at the production and sale of military material to third parties, whether states or economic entities”. In fact, it is pointed out that such agreements “fall squarely within the scope of European directives and must therefore comply with the substantive and procedural guarantees of transparency and competition”. The workers have raised serious questions about the legality of the financing of this joint venture before the European Public Prosecutor’s Office, and they are asking the European Public Prosecutor to investigate whether “crimes have been committed against the financial interests of the EU” and to identify those responsible for these crimes.

The workers have also raised another issue. In 2022, EAS again contracted the same company to supply ammunition for export to Egypt and other countries. However, all three export contracts were canceled, causing not only “financial damage, but also an immeasurable moral blow to the credibility and reputation of EAS”.

Certain loss of millions of euros

As far as the Greek prosecutor’s office is concerned, the demands of the workers require immediate investigation. In particular, they stress that the operation of the controversial joint venture “through which the country’s defense production activities are being transferred and mortgaged” will result in “a certain loss of millions of euros. At the same time, they argue that “no public-transparent process has been followed,” raising serious questions about the legality and compliance with national legislation of such a joint venture, which involves the sensitive area of the country’s defense production activities.

For these reasons, they call on the Greek prosecution authorities to investigate whether crimes such as dereliction of duty, breach of trust against the state and obstruction of competition have been committed, as well as any other criminal offenses that may be discovered during the preliminary investigation.

The Question in Parliament by SYRIZA

Apart from the criminal dimension, the case has also taken on a political significance. Specifically, in August last year, 11 members of Parliament, some of whom were part of the SYRIZA parliamentary group at the time, submitted a question to the competent ministries of National Defense and National Economy and Finance.

As they stated, “while the war in Ukraine is ongoing and the European Union has chosen to assist in various ways with the production of ammunition to facilitate Kyiv’s military efforts, the ND government proceeded with an agreement that harms the interests of the Greek defense industry and concerns highly sensitive matters related to defense equipment”.

In fact, the 11 MPs emphasized that “within the framework of the opaque agreement between E.A.S. and the company MSM Export, the question arises whether all the legal conditions regarding free competition and equal access for interested parties to the public tender have been respected, both before and after the conclusion of this agreement. The relevant legislation aims to prevent any monopolies in order to protect the interests of the Greek State. Moreover, the EU has specifically addressed this type of contract, which concerns the sensitive area of defense, by issuing directives that are clearly binding on the Greek government once they are incorporated into Greek law.”

In his response, the Minister of National Defense, Nikos Dendias, essentially washed his hands of the matter, stating that “the questions raised cannot be answered at this stage, as they concern a case that is currently before the judiciary, following a request for annulment and suspension by another company. On the basis of Article 91 of Law 3978/2011, EAS A.V.E.E. is obliged to refrain from concluding an agreement with MSM Export until the ruling on the suspension request.”

The Parliamentary Question from PASOK

In October last year, a new question was submitted to the Ministers of National Defense and National Economy and Finance, this time by Dimitris Biagkis, a Member of Parliament from Corfu for PASOK – Movement for Change. As he stated, “during the tender process for the cooperation between the Greek Defense Systems (E.A.S.) and the company MSM Export, the prescribed evaluation procedures were not followed and the provisions of the relevant legal framework were violated”. In addition, as he pointed out, “the management of E.A.S. proceeded with binding decisions in favor of the Slovakian company, without considering other alternative options that could have brought greater financial benefits to the Greek State”.

In his reply, the Minister of National Economy and Finance referred to his colleague, the Minister of Defense, Nikos Dendias. In fact, the Ministry of National Defense sent a reply letter, but it did not provide any substantial information.

“In response to the relevant question, regarding the first ten points, allow me to refer you to the minutes of the urgent question 110/25-10-2024 of the Hellenic Parliament, which was discussed in plenary on November 4, 2024,” Mr. Dendias said, among other things.

Read two previous investigations by Data Journalists on the future of Greek defense systems and the bombs in the country’s defense: