Koskotas scandal

Koskotas scandal (Greek: σκάνδαλο Κοσκωτά) was a Greek corruption and financial scandal in 1988–1989 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. The scandal marked the end of Papandreou's era of populist rule, during which he had tightly controlled the state apparatus since 1981.

Koskotas began his career as a bank employee at the Bank of Crete in 1979 and, within a few years, amassed a fortune by falsifying bank records. By 1985, he bought the Bank of Crete and laid the foundations for his media empire. However, his rise was interrupted by investigations into the rapid changes in media ownership in the mid-1980s, which Greek publishers and the judiciary scrutinized. He left Greece for the United States to avoid justice, where US authorities caught him for unrelated fraud crimes on 24 November 1988. While in prison, Koskotas claimed in a series of interviews that the missing over US$200 million^[i] from his bank was embezzled with the support of several government ministers and even Papandreou. In return, Koskotas supported Papandreou's socialist political party (PASOK) through his media empire, which was bought with embezzled money. He took control of conservative newspapers which were critical of PASOK. The revelation gathered international attention and sparked political turmoil. Investigations exposed other corrupt practices within PASOK, which deepened the public's disillusionment. In response, Papandreou introduced legislation to prevent the investigation from advancing, and manipulated the state machine to consolidate his patronage and the state monopoly over radio and television services to maintain power and suppress the scandal.

Papandreou lost the June 1989 elections, owing much to the scandal. However, no single political party formed a government on its own, a consequence of Papandreou's electoral law change just before the elections that was intended to prevent the opposition from coming to power. The political gridlock led to an unexpected collaboration between conservative New Democracy and radical-left Synaspismos political parties to form a government with a limited mandate to carry out the investigations into PASOK's scandals that became known as "catharsis." This collaboration was extraordinary for Greek society since they were on opposite sides in the Greek civil war (1946–1949). However, the political polarization reached its peak when the Parliament indicted Papandreou and four of his ministers, with several terrorist attacks and assassinations occurred, aimed at intimidating the public and politicians.

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, while Papandreou was acquitted by one vote. The trial became a landmark event in modern Greek history.