EU orders Hellenic Shipyards to pay back €230 million subsidy
The European Commission on Wednesday ordered Hellenic Shipyards to pay a €230 million (US$363 million) subsidy back to the Greek government with interest, saying the money gave the company an unfair commercial advantage over rivals.
Regulators said Greece broke state aid rules with a series of payments, loans and guarantees to the troubled former state-owned shipyard between 1996 and 2002 that it failed to clear with EU authorities.
They also said the shipyard did not follow EU conditions on a subsidy granted in 1997 to modernize the yard and another in 2002 to cut back on commercial shipbuilding.
One of those conditions was the sale of a 49-percent stake in Hellenic to its employees for €24 million (US$38 million) over 12 years. The EU said Greece never collected that money, giving these shares away to workers for free.
Loans and guarantees from the state and a state-owned bank to the yard were also provided at either below market price or at a time when the company was in such financial trouble that no normal lender would have given it money, the EU said.
"Greece has repeatedly provided unlawful and incompatible financing to the loss-making civil activities of the yard until 2002," said EU Competition Commissioner Neelie Kroes. "The illegal aid must now be recovered."
Paying back the aid will help to restore the situation the yard would have been in if it had not been bolstered by state cash, the EU said. The full amount — including interest — must still be calculated, it said.
Regulators also ruled that it was illegal for the government to privatize the shipyard with a promise to cover any future subsidy paybacks. The yard was privatized and sold to a consortium headed by Howaldtswerke Deutsche Werft AG and Ferrostaal AG in 2002.
Hellenic is now owned by German engineering group ThyssenKrupp AG and will be liable to repay the state aid. Apart from building and repairing commercial vessels, the company also fixes and builds ships and submarines for the Greek navy.
EU regulators cannot rule on public funding for the military but they said the navy overpaid for some of its contracts and the yard used the money temporarily for other operations — effectively receiving an interest-free loan. The interest on those payments must also be returned.
Regulators said Greece broke state aid rules with a series of payments, loans and guarantees to the troubled former state-owned shipyard between 1996 and 2002 that it failed to clear with EU authorities.
They also said the shipyard did not follow EU conditions on a subsidy granted in 1997 to modernize the yard and another in 2002 to cut back on commercial shipbuilding.
One of those conditions was the sale of a 49-percent stake in Hellenic to its employees for €24 million (US$38 million) over 12 years. The EU said Greece never collected that money, giving these shares away to workers for free.
Loans and guarantees from the state and a state-owned bank to the yard were also provided at either below market price or at a time when the company was in such financial trouble that no normal lender would have given it money, the EU said.
"Greece has repeatedly provided unlawful and incompatible financing to the loss-making civil activities of the yard until 2002," said EU Competition Commissioner Neelie Kroes. "The illegal aid must now be recovered."
Paying back the aid will help to restore the situation the yard would have been in if it had not been bolstered by state cash, the EU said. The full amount — including interest — must still be calculated, it said.
Regulators also ruled that it was illegal for the government to privatize the shipyard with a promise to cover any future subsidy paybacks. The yard was privatized and sold to a consortium headed by Howaldtswerke Deutsche Werft AG and Ferrostaal AG in 2002.
Hellenic is now owned by German engineering group ThyssenKrupp AG and will be liable to repay the state aid. Apart from building and repairing commercial vessels, the company also fixes and builds ships and submarines for the Greek navy.
EU regulators cannot rule on public funding for the military but they said the navy overpaid for some of its contracts and the yard used the money temporarily for other operations — effectively receiving an interest-free loan. The interest on those payments must also be returned.