ATHENS – As Greece continues to bury its workers, pensioners and poor with waves of taxes to keep the country from going bankrupt, the two prosecutors in charge of going after tax cheats costing the country more than $60 billion in back taxes and $17 billion a year have resigned, saying a coalition government wants to replace them with a court official.
Spyros Mouzakitis and Grigoris Peponis submitted their resignations to the Supreme Court on Dec. 28, citing political interference. The head of the tax inspectors union, whose members are charged with rampant corruption, said the government was meddling in its work as well. The coalition, made up of holdover ministers from the former ruling party of PASOK Socialists, their bitter rival New Democracy conservatives, and the far Right-Wing LAOS party is headed by former European Central Bank Vice-President Lucas Papademos and is charged with trying to keep international rescue loans flowing into the country and approving a second bailout that would allow the write off of 50 percent of much of the debt.
The Troika of the European Union-International Monetary Fund-European Central Bank that is providing Greece rescue money to help it cope with a $460 billion debt, 10 percent deficit and correct generations of corruption, incompetence and packing public payrolls with political hires, has accused the government of failing to after tax evaders, despite a recent crackdown that has led to 50 arrests but no prosecutions.
The newspaper Kathimerini reported that the prosecutors – who were appointed in September – claim they were recently made aware of a draft law that would essentially make their roles irrelevant. Peponis and Mouzakitis had recently launched investigations into a number of high-profile cases, including major tax evasion, the funding of Alter TV by banks, allegations of benefit cheating and claims of fiddled statistics at the Hellenic Statistical Authority (ELSTAT).
The head of the tax inspectors’ union, POE-DOY, Christos Nikolakopoulos accused the Deputy Agriculture Minister Asterios Rondoulis, a member of LAOS, of intervening to prevent the merger of two tax offices in Larissa, central Greece. Nikolakopoulos also said that claims of corruption among tax inspectors had been exaggerated.
Peponis and Spiros Mouzakitis say the government is “attempting to replace and get rid of” them with a new draft law that would appoint a high court prosecutor in their stead. In a letter, the prosecutors insisted that they had served their mission with full dedication. The finance and justice ministries said the draft plan for the prosecutors’ replacement was meant to improve the task force’s functioning.
Earlier this month, Finance Minister Evangelos Venizelos,who has repeatedly missed self-imposed deadlines to release the names of the country’s top 6,000 tax evaders, asked Peponis to conduct an urgent investigation into claims made at a conference by former and current tax officials about corruption among tax inspectors that is causing billions in lost revenues each year. Venizelos wanted Peponis to examine whether there is any evidence to back up the claims made by Diomidis Spinellis, the former General Secretary of information systems at the Finance Ministry, and the head of inspections planning at the Financial Crimes Squad (SDOE), Nikos Lekkas. Spinellis said that it was common for inspections on businesses suspected of evading their dues to be governed by what he called the “40-40-20” rule. He said this meant that tax inspectors would agree to reduce the penalty that firms would have to pay by 40 percent in return for receiving a bribe of 40 percent. Spinellis claimed that only 20 percent of the original penalty ended up in public coffers. He suggested that the state loses some 13 billion euros ($17 billion) annually, or 5 percent of Gross Domestic Product, as a result of the failure to clamp down on tax evasion. As with most calls for investigations in Greece, nothing happened.
Lekkas alleged that when companies are due to receive large amounts in tax repayments, inspectors often demand 10 percent of the amount as a bribe in order to ensure the transfer takes place. Lekkas added that a bank transparency law adopted in 1995 had been applied only last year. He suggested that entangled interests between the political and business worlds were to blame for the delay, Kathimerini said.
The comments by the two men prompted tax inspectors to issue a statement calling for them to propose specific measures to tackle the problem rather than try to impress people with “fireworks.” They went on to suggest that politicians had to take a large share of the blame for any failures in tax collection. Spinellis resigned earlier this year over a Finance Ministry decision to scrap penalties for oil trading firms, another charge Peponis was investigating.
Deputy Defense Minister Yiannis Ragousis told SKAI TV at the time that when Spinellis was still at the ministry, the Cabinet was under the impression that progress was being made in the fight against tax evasion. “At cabinet meetings we were told categorically that everything was being done to fight tax evasion,” he said.