GREECE - The president of the Greek Civil Servants Auxiliary Fund (TEADY), Agapios Simeoforidis, has resigned following bond-overpricing allegations.

The alleged transaction has provoked a political clash and led the prime minister to announce changes would be made to the rules governing the appointment of pension fund board presidents. Additionally an ad hoc committee has been formed to draw up a reform plan for pension fund investment and its supervision.

Simeoforidis' resignation followed a demand that all TEADY's board members step down from employment and social protection minister Savvas Tsitouridis in an evident attempt to limit the political damage caused by the scandal.

However, Greece's money laundering watchdog has since announced that it will investigate how many firms sold on the bond and took a commission before it was eventually sold to TEADY by local brokerage firm the Akropolis.

Additionally, the allegations provoked a heated parliamentary clash between premier Costas Karamanlis and opposition leader George Papandreou during which Karamanlis announced that the appointment of pension fund board presidents would have to be approved by the central bank and the investment regulator.

Earlier, a labour ministry probe concluded that the fund's board had been responsible for paying €5m too much for a bond, a sum alleged to have gone in bloated commissions charges.

Akropolis has denied any wrongdoing. However, the government is additionally investigating how a €280m government bond, issued to finance the Greek armed forces, was later bought by four pension funds from Akropolis.

Further the government has banned all 200 state controlled pension funds from investing in bond derivatives and has announced that it will check their accounts back to 1998.

According to authoritative Greek newspaper Kathimerini today "The plunder of pension funds is a systemic problem".

Simeoforidis is the son of the former general manager of Karamanlis' conservative New Democracy party. During their parliamentary clash Karamanlis and Papandreou accused each other's parties of secrecy and covering up scandals.