Greece passes bill critics warn is de facto amnesty for tax offenders

5/11/2020

By Kerin Hope

Opponents say law will freeze criminal probes and court hearings of more than 5,000 alleged tax evaders

Greece’s parliament has approved legislation that will effectively grant an amnesty to several thousand alleged tax offenders, setting what critics say is a worrying precedent for an EU country that has struggled to crack down on tax evasion.

The law, whose passage after a debate in parliament on Thursday had been largely expected, has drawn criticism from opposition MPs, lawyers and public prosecutors.

Critics say 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 legislation calls for freezing 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 each. Hundreds of criminal prosecutions would only be able to go ahead after all procedures by the tax settlement authorities and the administrative courts have concluded.

But only a few cases are likely to reach the prosecution stage as the lengthy administrative process means most will run up against Greece’s five-year statute of limitations for tax offences and be 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,” said Emilios Avgouleas, a financial law professor at Edinburgh University.

In other EU member states, criminal and administrative probes of tax evasion can run in parallel, he added.

Justice minister Kostas Tsiaras on Thursday argued the legislation to change Greece’s tax code would speed up legal procedures, thereby reducing the backlog of cases and making the judicial system more efficient. It would also increase revenues for the state, he said.

“I have an official opinion from the council of state [Greece’ highest legal body] that there is absolutely no problem with this law,” he told parliament.

During Thursday’s heated parliamentary debate Angeliki Adamopoulou, an MP with the Mera25 party of the leftwing former finance minister Yanis Varoufakis, accused the government of undermining the independence of 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.

It is not the first time the 15-month-old, centre-right government of Kyriakos Mitsotakis, the US-educated prime minister, has caused controversy with legislation critics have said appeared to favour alleged wrongdoers.

“Recent laws implemented by the government, not just this one 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,” said Nikolaos Farantouris, a law professor at Piraeus University.

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 specifically requested an investigation by a public prosecutor.

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”.

Breach of trust charges against more than 250 Greek bankers were dropped as none of the banks made such a request. The government said it was implementing a commitment to Greece’s bailout creditors to protect bankers from criminal liability over the restructuring of non-performing loans.

“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.

Another amendment to the penal code approved a year ago ruled that suspected money-launderers could recover assets frozen by the court if they were not brought to trial within 18 months. Some 900 people were able to recover property, shares and the contents of bank accounts that had been confiscated.

“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,” said Prof Avgouleas, a former board member of the European Banking Authority, the EU agency fighting money laundering.

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