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TAIPED and the Colpo Grosso of Kassiopi

Haris Karanikas
To ΤΑΙΠΕΔ και το colpo grosso της Κασσιόπης

Euclid is silent on the “Kassiopi trick”

The Ministry of Finance is silent with regard to Protagon’s revelations concerning the methods used for the privatisation of the forest area in Corfu. At the same time, local factors are calling the sale a “sell-off”, while an environmental organisation is planning an appeal to the European Court of Justice.

On June the 18th, 2018, Protagon published an investigation into the privatisation of Kassiopi, Corfu, which was launched by TAIPED in 2012 as a long-term lease of 490 acres for 99 years and yielded 23 million Euros, under the condition that the land and infrastructure would return to the State. The investigation reveals the trick under which this concession continued in 2017 with the final sale of part of the lands of Kassiopi – where the building of 27,000 sqm is planned without being returned to the State – for just 2.05 million Euros to… the same company that had been bidding for the long-term lease.

As if that wasn’t enough, Protagon identified adjacent areas to the areas in question, where the price to be paid per buildable square metre is much higher. For instance, an area of 15 acres in which 350 sqm are buildable were sold for 2.5 million Euros. In another case, a forest area, near Kassiopi, of 390 acres and 12.4 buildable acres for 5.7 million – either a house of up to 325 sqm or a hotel of 2,480 sqm can be built there. The two abovementioned examples show that something is wrong with this case.

NCH Capital with subsidiaries from the Cayman Islands to Cyprus, emerged as the winner of both TAIPED’s tenders for the privatisation of Kassiopi – with regard to the long-term lease and sale.

Protagon’s report reached the Parliament, annexed to a report issued by the MP of Democratic Coalition Yiannis Maniatis to the Minister of Finance Euclid Tsakalotos, which was submitted on June the 20th, 2018. Mr. Maniatis noted in his report:

“Huge question marks arise from the actions of TAIPED regarding the Kassiopi tender in Corfu, as evidenced by data published on Protagon.gr” and noted that the publication “mentions, on the one hand that the decision of announcement of the new tender was never published, which was approved in 16.3.2017, on the other hand that there was an obvious distortion of competition, as the terms of the original tender has been altered and, consequently, the sale of part of a property already licensed and reserved for 99 years did not attracted any investment interest. In fact, this is alleged to have resulted in the final price, which will be paid by the sole participant – the new owner, identified as the bidder of the original tender – to be substantially lower, almost 7 times, than the current market value of real estate in the area and causing significant damage to the Greek State. Following this, I submit to you the abovementioned article and invite you to promptly respond to the complaints referred to therein”.

In accordance with Parliament Rules of Procedure, Mr Tsakalotos was obliged “within twenty-five days of the filing (of the report) to reply to the Parliament together with the simultaneous notification of the MPs who have approved it and of that who submitted it”. As Mr. Maniatis assures, Mr. Tsakalotos has not responded until today.

Protagon contacted the Regional Governor of the Ionian Islands Mr. Theodoros Galiatsatos asking questions with regard to the privatisation and whether he considers it to be in favour or against the public interest.

The opinion of the Regional Administration of the Ionian Islands, based on the decision of the Regional Council, is that the “investment”, was disadvantageous, from the outset, not only regarding the low price but also because it would seriously undermine two key constants. The first one is the planned abolition of the (unique) Naval Fortress that controls the security of the straits with Albania and the second is the environmental degradation that will result in tens of thousands of buildable surface in a place of exceptional natural beauty. There is no doubt that this “investment” is not in the public interest, Corfu and its citizens”.

“This is a “profound” fraud of the TAIPED administration that directly violates the trading rules and severely damages the interests of the Greek State”.

In addition, the Regional Governor was asked if he believed there would be greater investment interest if it was known from the beginning there would be a sale of the ownership and not just long-term leases. He replied:

This is a “profound” ill – treatment by the TAIPED administration that directly violates the trading rules and has significantly damaged, as anyone can easily see, the interests of the Greek State. If members of the TAIPED administration did not have the coverage of their particular legal immunity, would they dare to do something like that?”

Responding to the same questions, the Mayor of Corfu Konstantinos Nikolouzos replied:  

“We have repeatedly stated our opposition to the Erimitis privatisation (the privatised area of Kassiopi) and have practically expressed this opposition. The reasons:

Α.  The public interest is not solely defined in economic terms and our objections are not only focused on the economic part of the “exploitation”. In particular, we disagree on the allocation of an ecosystem of unique natural beauty with wetlands, municipal paths and significant flora and fauna, which cannot be economically valued.

B. The “reputed” tourist development of Erimitis – and I say “reputed” because we haven’t seen anything yet – is sure to have an adverse economic impact on the tourist economy of the region.

C. As far as public revenue is concerned, it is obvious that we are talking about a “sell-off”. Therefore, categorically NO. The privatisation does operate in favour of the public interest. It is likely that more prospective investors would be interested. I will insist on my initial reply. Not everything is valued in money even in a bankrupt country. In the case of Erimitis, we can’t even say “we sold high”. The exact opposite”.

Dimitris Fatiras, president of the Corfu – based “Environmental Association Erimitis Voyage” which operates in Corfu, stated:

“We have decided to appeal to the European Court of Justice because we believe that European and International treaties and conventions have been violated, in order to protect the key environmental elements of the Erimitis ecosystem that offers uniqueness to our island”.

During its investigation into Kassiopi’s privatisation, Protagon sent, last month, four questions to TAIPED (you can see them in more detail here), of which the latter answered three. With regard to the question “if any research was conducted – within the framework of the tender for the concession of the ownership entitlement (land sale) – in adjacent areas so that the market value of the adjacent lands for sale will be taken into consideration”, there was no answer.

Tsakalotos, TAIPED and the fund

According to a 2016 Law, TAIPED constitutes a subsidiary of the Hellenic Holdings and Assets Association, the “Superfund” as it has become known, with the sole shareholder being the Ministry of Finance. On March 16th, 2017, when the decision was taken by the TAIPED Board of Directors for the second tender regarding the sale of land in Kassiopi, Euclid Tsakalotos was essentially the Chief Political Officer. President and CEO of TAIPED was at that time Antonis Leousis and board members were Lila Tsitsogiannopoulou and Angelos Vlachos.  Antonis Leousis, who has been chief executive since 2015, has temporarily succeeded (for a six-month term) Stergios Pitsiorlas in the TAIPED presidency, who assumed the post of Deputy Minister of Economy and Development in November 2016. In early May 2017, two months prior to the official announcement of the second tender for the land sale in Kassiopi, Lila Tsitsogiannakopoulou was appointed President of TAIPED, while Antonis Leousis remained the Managing Director.

While the institutionally responsible either do not answer at all (i.e. Minister of Finance) or answer by 75% (i.e. TAIPED), “comments” for the revelations of Protagon was sent by a representative of the fund who won both tenders. In its June inquiry, Protagon did not sent any questions to NCH on the grounds that this fund (and any fund) is profit-driven, and since the persons in charge are responsible for safeguarding the public interest are offering such a chance, the fund would immediately exploit it.

These informal “comments” received by Protagon in the form of non-paper, without the document having any corporate characteristics, include:

The article mentions that the valuation process adopted by TAIPED for this property is detrimental to the Greek State by presenting comparative data from only two real estate deals taken place in the wider area. The above data used are fragmented and cannot be a representative sample of the trades in the area. Statistically accurate conclusions concerning the value of real estate in the Erimitis region (Kassiopi Area) can only be derived using a larger sample of real estate transactions in the area”.  

To ΤΑΙΠΕΔ και το colpo grosso της Κασσιόπης

However, Protagon, as shown in the already published article, cited a wide range of prices from other plots for sale in Corfu. As mentioned in the Survey of June:

“On the basis of a simple internet search, it appears that real estate that can be built “luxuriously” and are situated near the beach start from 70 Euros and exceeds 200 Euros per square metre to gain ownership. In the Erimitis case, where the ownership of 74 acres (27,120 sqm, is the approximate size of the building blocks that can be built) was acquired for 2.05 million Euros – not counting the right to surface – the prices range up to 30 Euros per sqm”.

A fund representative who sent the “comments” for the Protagon’s investigation says:

“According to a realistic estimate, out of 23,000,000.00 Euros (paid for the first tender) 17,000,000.00 Euros relate to the building blocks intended for residential development… Consequently, the total price (adding the award of 2.05 million of the second tender) for these building blocks are EUR 19,050,000.00 and, therefore, the price per buildable sqm amounts to 705 Euros; i.e. it is more than three and a half times higher than the highest price of demand in Corfu!”.

The latter contrasts sharply with the two deals in the Kassiopi area analysed by Protagon, in which one has to pay at least 2,300 Euros up to 6,850 Euros to build.

In fact, the non-paper of the fund attempts to fully justify TAIPED with regard to the second tender. Here are some characteristic quotes:

Regarding the second process via which TAIPED conceded ownership of a small part of the Kassiopi property, the following must be noted: all privatisations of TAIPED tourist real estate are subject to either (a) only or (b) a combination of ownership and right to surface. For example, in “Asteras” case, perhaps the most emblematic privatisation in the field of tourist real estate, the ownership of the whole property, including the hotels, was eventually transferred. The privatisation of Kassiopi was the only exception because its scope was initially only the transfer of the right to surface of the entire property for 99 years. That is why, TAIPED has announced the additional tender, which concerned only those parts of the property on which houses were to be built.

In addition, with regard to the procedure itself, it should be noted that there was interest from another investor who even formally requested the dossier of the tender and that is why TAIPED granted a one-month extension to the tender deadline.

The conclusion (of the Protagon’s journalistic inquiry) “that if TAIPED announced from the first tender that intended to transfer the right of ownership and not the right to surface for the areas where the luxury residencies would be built, so would the interested investors as well as the price would be different”, is unfortunately hypothetical and does not correspond to the actual facts and the legislation in force. The law establishing TAIPED explicitly provided for the capability of TAIPED to concede, subsequently, the ownership of the real estate on which it has originally conferred the right to surface. In fact, the law also provides for the right of the surface owner to the acquirement of the ownership. Consequently, since 2012, it was common knowledge that TAIPED has the opportunity to subsequently sell up ownership of the property and that if TAIPED did so, the investor who prevailed in the first tender would have the advantage.

Nonetheless, it is noteworthy, that not even TAIPED supported itself so firmly, in its responses to Protagon…


Kassiopi at a glance
Cost of building “air”

There are distinctive differences with regard to the money that the investor of the State property of Kassiopi paid for every square metre of luxury housing that may be built, in relation to the owners of real estate in the wider area.

Based on the price against which the State property was conceded to the investor, each square metre costs at least six times lower than the corresponding prices that the owners of the adjacent properties paid.

State Property of Kassiopi
1st transaction (2013)

EUR 23 million for the long-term lease for 99 years (right to surface, as it is called) of the property of 490 acres.

34,150 sqm, are buildable (luxurious residencies and hotel), the exploitation of which belongs to the investor for 99 years. Afterwards, the area and the infrastructure would be returned to the State.                                                         

2nd transaction (2017)

EUR 2.05 for the purchase of the ownership of the buildable areas where luxurious residencies may be built.

27,120 sqm, of luxurious residencies on which the investor can built, will stay under his ownership, even been sold, due to the fact that he is not required to return the land and the constructions to the State after 99 years.


EUR 25.05 million,

The revenue for the State by the long-term lease and the sale of ownership of part of the property.

Property adjacent to Kassiopi

(recent sale of 15 acres between private individuals)

EUR 2.4 million, the price of the purchase

350 sqm, are buildable

The Comparison

State Property of Kassiopi

25.05 million / 27,120 sqm = 923.63 EUR

(the cost of the building “air” per sqm)

Adjacent property in Kassiopi

2.4 million / 350 sqm = 6,847.17 EUR

(the cost of the building “air” per sqm)




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