Mr Kokkalis has just been declared Greek businessman of the year

The 63-year-old businessman hit out at "well-known circles, through the same political personalities and newspapers, that have specialised in a war against me".

While allegations of fraud and money laundering have dogged the billionaire for two years, it is the first time that Mr Kokkalis, one of Greece's richest men has faced a spying probe.

The investigation relates to alleged espionage against Greece on behalf of the East German secret police, the Stasi, who were disbanded in 1990.

German born

Under the Greek justice system, Athens chief prosecutor Nikos Vazaios will name an investigating magistrate who will launch the formal probe.

The magistrate could call the accused to answer the preliminary charges, before deciding whether the matter should proceed to a full trial.

Mr Kokkalis grew up in East Germany and was educated in Berlin and Moscow before returning to Greece, where he established telecoms suppliers Intracom.

German authorities have sent evidence to Athens prosecutor Dimitris Papangelopoulos of alleged links with the Stasi, according to reports in Greek daily Kathimerini.

He also has a finger in the football pie

Mr Papangelopoulos cited five issues which will be investigated, including possible espionage, fraud and money laundering and two alleged misdemeanours of soliciting and giving bribes.

"All those who publicly slander my name will take responsibility when the charges collapse," Mr Kokkalis warned in a statement.

The Intracom chairman, whose fortune is estimated at $1.2 billion, is the first Greek citizen to face a formal probe for spying against his own state.

Intracom shares continued to fall in early trading on Wednesday, after plummeting 16.2% on the Athens Stock Exchange on Tuesday.

Slipping shares

The fraud allegations relate to Mr Kokkalis' activities in Russia, where his company, Intralot, has supplied lottery machines, technology and software.

Intralot shares also suffered an 11.2% dive on Tuesday, but stabilised on Wednesday.

"The initial panic has passed and many investors now see a buying opportunity," an Athens stock market source told the BBC.

Mr Kokkalis is listed 421st on Forbes 2001 list of world billionaires and was awarded with the title Greek businessman of the year in January by Price Waterhouse Cooper.

He is also president of Olympiakos Piraeus football and basketball clubs. Olympiakos have won the last five consecutive soccer league titles, but are finding the going harder this season and lie third in the table.

Mr Kokkalis last week resigned his position as vice-president of the League of Professional Clubs (EPAE) citing differences with fellow club chairmen.