Larco still a bleeding wound

Larco, the state-owned General Mineral and Metallurgical Company, continues to milk the country’s coffers, and yesterday the Court of the European Union slapped a one-off fine of 5.5 million euros on Greece and a penalty of almost €4.37 million for every six months of non-compliance since 2017 for the retrieval of illegal state subsidies to the troubled enterprise.

Next month it will be two years since the government boldly decided to ignore the political cost and put an end to the 35-year-long story of state losses due to Larco, under pressure from the EU regarding the return of state subsidies amounting to €160 million. Twenty-three months on, the problem has not been resolved at all, and fine decisions keep coming in.

It was February 20, 2020 when the government published the decision to appoint a special administrator for Larco with the task of fast-tracking the tender for the privatization of the company’s assets; in case that proved fruitless, Larco would have to declare bankruptcy.

Although the decision appeared to signal the healing of that open wound created by the reluctance of the governments of previous decades, draining Greeks – directly or indirectly – of more than half a billion euros, developments in those two years have dashed those hopes. This situation also renders the utilization of mineral wealth deemed rare by European standards ineffective.

The only way for Larco not to have to return subsidies deemed illegal to the state is to cease operations, as the court’s decision rules that an enterprise under bankruptcy still has to meet its obligations. Therefore Larco will either have to be bought out by an investor, who will run it as a different entity (as the two simultaneously running tenders hope for), or shut down altogether.

Until the results of the privatization’s tenders are known, when we will learn which of the two options will be chosen, Greece will have to continue paying million of euros in fines, as well as paying to keep Larco operating.