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Deceived investors nearly lynched Pavlos Psomiadis

10 December 2010 / 17:12:49  GRReporter
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Dozens of citizens – victims of the investment programs of Aspis Pronia gathered today before the court of Evelpidon where the president and managing director of the group of companies Pavlos Psomiadis had to give evidence before a magistrate. Only the riot forces, which guarded the magistrate’s office, saved him from lynching. However, it was not possible to complete the procedure and the magistrate postponed the hearing indefinitely.

Pavlos Psomiadis was arrested at his home in the Athens suburb of Halandri on Tuesday after his former aide informed the authorities that the scandalous businessman was preparing to flee the country. His wife and their daughter Olga, who also works in Aspis Pronia, are also banned from fleeing Greece and their property is under seizure.

The Private Insurance Supervisory Committee in Greece has decided in September 2009 to close 5 of the companies of the group the entrepreneur founded and managed. The same happened with another of his companies – Commercial Value – a few months later. Pavlos Psomiadis tried to mislead the authorities with a false bank guarantee worth 500 million euros, issued by the HSBC Bank, but was promptly brought to light. So, here is the early end of his 20-year-old empire that consists of 17 companies operating in the fields of insurance, banking, stock and real estate, which employs 2000 people as administrative staff, 4500 insurers, 1200 agents and brokers, whose customers exceed 1.1 million people in Greece, Cyprus, Albania, Germany and Sweden.

A true Ostap Bender on the Greek insurance market

Pavlos Psomiadis’ career started in 1968 as assistant of the insurance company Alico, the Greek branch of the U.S. giant AIG. He worked in the company of the other big name on the Greek insurance market Dimitris Kondominas, Interamerican, for five years from 1971 to 1976. He was the president of Transamerica Ltd. between 1976 and 1981. He made his great stride forward in 1986 when he became the majority shareholder of Aspis Pronia through buying the share of Alexandros Tabouras who withdrew from the company. The group growth started even the next year by founding the Aspis Bank and three other investment companies. Aspis Pronia bought the Aegon Company in 1993 and the insurance company Ilios the next year. Another investment company was established within the same group.

Aspis Pronia and Aspis Bank were registered on the Athens Stock Exchange in the following years and the president of the empire continued impetuously to buy and establish new companies and funds with a single activity - investment, insurance and banking services. One of the group’s companies buys another; the third buys the shares of the first while the fourth invested in increasing the authorized share capital of the second. The empire’s scheme became so complicated that even its manager himself is not sure about the possession of a specific company as well as which possession is this specific company.

In 2003, however, Pavlos Psomiadis managed to achieve something that surely will find its place in economics textbooks in Greece. The company Aspis Capital he founded with authorized share capital of 60,000 euros issued bonds worth eight million euros in just three years which it sold to investors for 55 million euros. Quite deservedly the bonds bore the name of Psomiadis. He ran into difficulties in 2007 when the Greek Ministry of Development imposed a fine on the group of 1,300,000 euros because of the Mega Asset pension package, which did not comply with the national laws but, on the other hand, offered an impressive interest rate of 6 percent. A new warning from the Ministry of Development followed after a former chief officer of Aspis Pronia filed a formal complaint and claimed with evidence that the capital of the group in practice was fictitious.  

From this moment on events took the speed of lightning. The Private Insurance Supervisory Committee required another insurance company of the group, namely Commercial Value, to increase its authorized share capital by at least 90 million euros to patch up the hole in its solvency. Then followed the same requirement to the whole Aspis Pronia and here we come to the false bank guarantee from HSBC.

"Our goal is not simply to sentence Psomiadis. We want people to get their money back," told Nikos Kehaioglou, member of the committee of the victims of the insurance activities of Aspis Pronia for the Greek Internet edition Nextdeal. He recalls that more than one million people are stung and encourages them all to take proceeding in the court in order to exert pressure on the government to take any measures. According to Nikos Kehaioglou, the Aspis scandal is greater than the scandals with the Athos monastery Vatoped or Siemens’ black cash money.

Tags: Pavlos PsomiadisDeceived investorsAspis ProniaInvestigationInsurance
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