The future of national defense industries ELVO and EAS could be in jeopardy, causing concern amongst the employees of the companies who were outside the Ministry of Finances.

On Monday the Minister of Finances Yannis Stournaras had a meeting with Deputy Minister of National Defense Fofi Gennimata, members of the firms’ management and consultants. Mr. Stournaras later discussed the future of LARKO with the Ministry of the Environment and employee representatives.

Rumors suggest that the government wants to enter ELVO into a state of special clearance, in order to sell the entire or part of the firm. Likewise, the plan with EAS is to break it into two parts (civil and defense) and restructure the firm similarly to ERT.

According to the bailout and necessary prior actions, the reform plans of the three state defense industries must be submitted to the troika by the end of August and implemented by the end of the year.

The Ministry of National Defense is adamant that EAS and ELVO should continue operating, as they are main suppliers of munitions for the Hellenic Army. Decisions regarding the future of the companies will be made by the end of the week.

The situation at the three defense industries

Of the three firms, EAS faces the most serious problems, where employees being unpaid for 8 months. The main problem is the 1.2 billion euros of subsidies from EU funds that EAS has been called to return.

The troika has suggested breaking up the company into a defense and civil company and by using European legislation, EAS will only have to return subsidies related to non-defense purposes, which is about 5-7% total.

The employees at ELVO have not been paid in four months and the company’s debts are estimated to be 25 million euros. Furthermore, since the company is owed half of 2013’s subsidies, worth 7.5 million euros, it is unable to carry out with its scheduled plans. ELVO employees fear they will be dismissed without being compensated.

LARKO employs about 1,000 people and has accumulated huge debts, with DEI alone claiming 300 million euros bills via the Ministry of Justice. As with EAS, there is a fear that the EU might demand the return of subsidies worth 130 million euros.

The State consultant is rumored to have suggested entering the firm in a state of liquidation, in order to protect its creditors. It has also been suggested to sell off assets such as LARKO’s mines and factory.