New Democracy Legislation Freezes Tax Evasion Probes, Prosecutions

November 11, 2020

ATHENS – The Greek Parliament controlled by the ruling New Democracy government has okayed a bill effectively giving a pass to thousands of alleged tax evaders in a move critics said was aimed at benefiting Greek bankers facing breach of trust charges and undermining anti-money laundering laws.

It also backs away from trying to hunt down legions of tax cheats as successive governments have been unable to rein them in despite a critical need for cash during a long-running economic crisis and now facing the aftermath of COVID-19.

In a report, The Financial Times said opponents of the move that came after the government promised to go after tax dodgers could set a worrying precedent, with rival parties, lawyers and prosecutors critical.

Critics said 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.

The legislation will freeze criminal probes by prosecutors and court hearings of more than 5,000 alleged tax evaders with debts to the Greek state of more than 150,000 euros (176763.75) and allow prosecutions only after all other measures to settle cases have been exhausted.

That likely means very 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 he automatically dropped.

“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 news site.

Justice Minister Kostas Tsiaras explained the government's position is that changing the tax code would reduce a long backlog of cases and bring in revenues without saying how that would happen if tax cheats escape without paying.

“I have an official opinion from the Council of State [Greece’ highest administrative court) that there is absolutely no problem with this law,” he told Parliament without providing details.

In an intense debate, Angeliki Adamopoulou, a lawmaker with the tiny Mera25 party led by a former finance minister, Yanis Varoufakis, said the government was politically interfering with the judicial system, which New Democracy had accused the former ruling Radical Left SYRIZA of doing.

“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.

There's been so many crackdowns on tax cheats in Greece you'd need a computer to keep score but in August, 2019, a month after New Democracy ousted SYRIZA and took power, tax inspectors were directed to to check records going back to 2014 to find violators.

Many wealthy Greeks who hide their money in secret foreign bank accounts and get away with it, as inspectors concentrate on people who put their money in Greek banks, even confiscating salaries and parts of pensions and planning to raid bank security boxes.

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.”

A former New Democracy-led coalition gave immunity to bank officers who provided 250 million euros ($294.61 million) in loans to the party and its partner, the now-defunct PASOK Socialists which weren't being paid back fully.

The Parliament controlled by the Conservatives earlier approved a change in the penal code that allowed bankers accused of criminal breach of trust to escape prosecution unless the bank requested an investigation.

Anna Zairi, head of Greece’s anti money-laundering agency, warned at the time that “many serious offences would go unpunished because of this measure,” but was ignored and breach of trust charges against more than 250 Greek bankers were dropped.

The government claimed that was done not to protect bankers close to the party but as part of a commitment to the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) that put up a third bailout, this one for 86 billion euros ($101.34 billion) under a SYRIZA regime.

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

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


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