This law stands in the way of efforts to privatize, through the «back door,» a large portion of the services provided by local government agencies, whether municipalities or regional authorities. As reported by Local Government News the much-talked-about «Development Agencies S.A.» under the Theodorikakos Law (Law No. 4674/2020)—which was passed just as the country was on the brink of an unprecedented global health crisis—serve as a vehicle for a peculiar form of public funds management. This law, published in the Government Gazette 53A’/March 11, 2020, with all that it stipulates and «provides,» not only fails to combat but actually reinforces opacity, cronyism, and the complete «stripping» of the Municipal Council of its powers, among other things, by entrusting everything to these utterly unaccountable «Development Organizations.».
These «Development Agencies» will essentially function as intermediaries. Without adequate staff, whatever tasks are assigned to them by the municipalities, they will directly subcontract them to third parties (private individuals) to carry out. They will operate as corporations, but in the end, the debts they accumulate will be passed on to the municipalities, which, however, will have no say in their actions. They will not even be able to react or prevent it.
The deeply insightful and hard-hitting statement made at the most recent meeting of the Athens City Council (July 28) by Mr. Alexiou, a City Council member representing the «Open City» faction.
Mr. Alexiou, citing «names and addresses» and making specific references to the current situation, completely undermined the legitimacy of the objectives of the overwhelming majority of today’s municipal and regional authorities regarding these «mutated» «Development Agencies.».
Specifically, Mr. Alexiou stated, among other things:
– «Development agencies are exempt from Article 12 of Law 4412. Articles 1, 2, and 12 of this law cannot be amended «as long as Greece remains in the EU.»”.
– The contracts awarded to these entities, which will be signed by the municipalities, provide for payment by the local authorities in the form of contract execution costs.
– The ploy to conceal the direct payments made by municipalities to development agencies is intended to «legitimize» the relevant decisions of local authorities regarding the conclusion of such contracts from scrutiny by the Decentralized Administration and the auditors of the Court of Auditors.
– In order for them to be considered «legitimate,» it must appear that they do not receive funding from local government agencies.
What's the deal?
– Law No. 4412 brought Greek legislation into line with European Court of Justice rulings, without exceptions
– Paragraph 1 of Article 16 of Law 4483/17 states that local government development companies are not considered public sector entities.
– They do not receive any direct or indirect subsidies from local government authorities. They operate according to private-sector economic principles. As defined by Law 4412, they are Economic Entities and not Contracting Authorities.
– At the same time, their hiring of staff continues to be governed by the ASEP, since there is no other legislation that repeals the current «law on the hiring of civil servants.».
– Article 179 of Law 4555/18, which amended Article 100 of Law 3852/10, stipulates that only local government enterprises belonging to the public sector, in accordance with paragraph 6 of Article 1 of Law 1256/82, as currently in force, may enter into contracts with local government authorities.
– Or, alternatively, those that are subject to oversight by local government authorities and whose board of directors is appointed by the municipality or the relevant state agency to which they are subordinate, with more than half of the board members appointed by that municipality or agency.
– According to Directive 7789/7-2-19 of the Public Procurement Authority, it appears that the Development Agencies meet two of these three criteria. Since they are not funded by the municipality, their administration is not subject to oversight but is governed by the legal framework for public limited companies (AE); therefore, these organizations are not public or municipal authorities nor contracting authorities under Law 4412.».
The latter means that these «Development Agencies» do not have the authority to award contracts. In other words, for whatever is assigned to them, they can act as «intermediaries» and, in turn, subcontract the work to a third party. However, they must also manage and carry out the work using their own staff, who will have been hired through the ASEP.
