SALEM, Mass. — The county jail here was built in 1813, the year after Charles Dickens was born, and Dickensian is the word for it: crumbling brick walls, grimy cells and clanging steel gates, plus nice 19th-Century touches like brass handrails and hardwood floors.
It is an improbable base of operations for a fugitive millionaire who may soon bring down the government of Greece. But in a dank little cell, next to a man accused of killing his girlfriend's baby, paces the one-time boy wonder of Athens' financial district, a banker named George Koskotas.
A year ago, Koskotas, 34, was the Donald Trump of Greece, a brash young wheeler-dealer who thought he could show the old Establishment how to do business. Today, fighting extradition to Athens on charges of fraud, he is the chief witness in a spreading scandal that could topple Andreas Papandreou, Greece's wily Socialist prime minister.
Papandreou's government, which helped Koskotas build a $300-million financial and publishing empire in only four years, has accused the banker of embezzling about $213 million from his own bank.
Koskotas has replied with a series of astonishing tales of payoffs, kickbacks and bribes--including $600,000 in cash, hidden in a box of Pampers diapers, which he says went to Papandreou himself. And in an interview with The Times, Koskotas added a new charge: that Papandreou accepted secret contributions from Libyan leader Moammar Kadafi and Palestine Liberation Organization chief Yasser Arafat for his 1981 election campaign.
At first, Papandreou dismissed the charges as partisan inventions. Then he denounced them as a U.S. plot to bring down his government, the most leftist in the North Atlantic Treaty Organization.
But in recent weeks, Koskotas' old confederates in Greece have begun to confirm pieces of his tale. Several government ministers have quit in disgust. A deputy prime minister implicated in the scandal has been forced to resign. And last week, one of the prime minister's closest friends was jailed in Athens on charges of carrying the cash in the Pampers box.
Papandreou, 70, is already under the worst political pressure of his seven-year reign. His government is enmeshed in half a dozen scandals, large and small, and he has become an object of ridicule because of his public relationship with his mistress, a 34-year-old airline flight attendant named Dimitra Liani.
But as Greece's June 18 national election nears, it is the man in the Essex County Jail who may hold the key. George Koskotas says that he is going to release a tape, hidden somewhere in Greece, that proves Papandreou was directly involved in the banking scandal.
Koskotas talked for five hours recently in the jail's dingy library, a refuge from the noise and smell of the cellblocks, and told his story: the saga of an overambitious young tycoon who used political payoffs to advance his own interests--but ended up in over his head.
"There are many scandals in Greece," he said quietly. "The only difference in my case is that here someone is saying, himself, what he did with Papandreou."
A family painting business on New York's Long Island was how George Koskotas got his start. When Koskotas liquidated the business in 1979 to return to Greece, he said he walked away with more than $3 million.
He also left behind an indictment for allegedly filing false claims for income tax refunds and unemployment insurance. He admits that the claims were irregular but says that he filed them on behalf of Greek employees who were illegal aliens.
Back in Greece, Koskotas said, he parlayed his $3-million stake into $10 million through wise investments that he describes only in general terms. "I bought Mexican bonds," he said, "when nobody was buying Mexican bonds." And in 1984, when the privately held Bank of Crete was put up for sale, Koskotas--only 30--snapped it up for $9 million.
One of his first moves was to get closer to Papandreou by hiring one of the prime minister's associates as the bank's general manager.
Soon, he said, he was printing election posters at no charge for the ruling party at a printing press he owned--and the party, in return, was steering government bank deposits his way.
After awhile, he said, Papandreou's people asked him to buy several newspapers to stop them from attacking the government--and one magazine to stop it from printing nude photographs of the prime minister's mistress. At the same time, Koskotas said, he won government permission to open almost 50 new Bank of Crete branches in only four years.
"In my mind, I was thinking: 'They're using me now, but as a businessman, let me get as much out of it as I can,' " he said. " 'Let me get the licenses for the bank branches. . . . If I make my moves before they do, I'll be ahead of the game.' "
