Greece Tax Cheat Probes Freeze Undercuts Money Laundering Fight

Legislation approved by the Greek Parliament controlled by the ruling New Democracy party will grant amnesty to some 5,000 alleged tax evaders but also, according to critics, undermine the fight against money laundering and financial crime.

The legislation will freeze criminal probes by prosecutors and court hearings for people accused of owing more than 150,000 euros ($176,763.75) and allow prosecutions only after all other measures have been exhausted.

That means few cases will be taken to court as drawing out the process means they will run up against a five-year statute of limitation for tax offenses and be automatically dropped, according to the Financial Times.

“By postponing enforcement of tax laws the new legislation encourages rather than discourages corruption and tax evasion and weakens compliance with the rule of law,” Emilios Avgouleas, a financial law professor at Edinburgh University told the London paper.

Justice Minister Kostas Tsiaras said the government changed the tax code to reduce a long backlog of cases and bring in revenues, with critics raising doubts about the effectiveness of the measure.

A study in 2016 by the DianNEOsis research and police institute, with Ernst & Young, estimated that tax evasion costs the country between 6-9 percent of Gross Domestic Product or as much as 16 billion euros ($18.82 billion) a year.

The government, when it took office in July, 2017 promised to act on tax avoidance; in the meantime, the financial shock brought by the COVID-19 pandemic will see the economy shrink some 10 percent this year.

The amendment rewards high-profile tax evaders, curbs the independence of public prosecutors and will taint Greece’s reputation as it tries to attract fresh investment from abroad to help rebuild the economy, the report said.

Nikolaos Farantouris, a law professor at Piraeus University, told the site that recent New Democracy laws, not just the new bill on tax evasion “but criminal code amendments and anti-money laundering legislation, can be interpreted as intended to protect specific groups accused of serious financial crime.”

Parliament this year approved a change in the penal code that allowed bankers accused of criminal breach of trust to escape prosecution unless the bank involved requested a prosecutor to investigate.

Anna Zairi, head of Greece’s anti money-laundering agency, warned then that “many serious offences would go unpunished because of this measure”.

Angeliki Adamopoulou, a lawmaker with the marginal Mera25 party led by former finance minister Yanis Varoufakis, said the government was interfering in the judicial system.

“This bill is a step backwards in the legal culture of Greece and points clearly to the intervention of the executive in the judiciary,” she said.

Effie Achtsioglou, shadow finance minister for the former ruling SYRIZA that was ousted by the Conservatives said that, “The government set up a special mechanism for the bankers in order to make these cases against them disappear.”

Another amendment to the penal code approved in 2019 said suspected money-launderers could recover assets frozen by the court if they were not brought to trial within 18 months.

That led to some 900 people being able to recover property, shares and the contents of bank accounts that had been confiscated despite being accused of hiding assets and laundering money.

“Money-laundering is a practice that can easily migrate from jurisdictions with strong enforcement to more relaxed ones, undermining the integrity of the whole EU internal market, Professor Avgouleas, a former board member of the European Banking Authority, the EU agency fighting money laundering, told the site.