Greece Finds 40,000 Cases of Pension Fraud

Greece Finds 40,000 Cases of Pension Fraud

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Greek pensioners protesting benefit cuts have been ignored by the government, which is paying 40,000 fraudulent claimants

ATHENS – Nine months after it was reported that Greece was paying pensions to 4,500 dead, it has been discovered the country – in the midst of a deep recession and economic crisis – is paying benefits as well to 40,000 fraudulent claimants, but they’re only being asked to return the money they took, some for more than 20 years.

Labor Minister Giorgos Koutroumanis said on March 6 that the state would try to reclaim some of the money but said it was a complicated procedure without detailing why the government won’t be prosecuting those who allegedly have bilked the government out of an estimated $530 million a year. The temporary hybrid government of PASOK Socialists and their bitter rival New Democracy conservatives led by interim Prime Minister Lucas Papademos this month worked out a deal with international lenders to make $5.7 billion in spending cuts, including pensions, as a condition of getting a second bailout, this one for $172 billion, to keep from defaulting.

Pension fraud has been rampant in Greece for generations without much attempt by the government to stop it. Last year, Reuters reported that claimants getting checks for people who were dead were raking in more than $20.9 million a year, and that more than 9,000 people who said they were more than 100 years old were being paid too, but the wider scale of outright fraud is much higher. The government vowed to find out how many were still alive, but did not. Greek authorities keep poor records and citizens often fail to declare the deaths of relatives to continue cashing in their pensions.

Besides fraud taking money away from legitimate pensioners, the news for them could get worse when Greece concludes a deal with private investors in which the lenders are being asked to take losses of 74 percent as part of a so-called Private Sector Involvement (PSI) agreement being worked out as a condition of getting the second bailout. Koutroumanis said Greek pension funds will lose about $14.4 billion, but that the government is trying to work out an arrangement to cover the losses, although other investors won’t be so lucky.

The public workers union ADEDY said the deal could be a disaster for the savings of pensioners who’ve already seen them cut drastically under austerity measures. “We call on fund boards to refrain from a new crime against their members,” the union said, terming the debt write-down ”a coup de grace to fund reserves.” Greek Finance Minister Evangelos Venizelos, who has doubled income and property taxes and overseen the slashing of pensions, said the pension funds have no choice but to go along with the deal or they will be forced to.

But he said the pension funds won’t be harmed as much as the unions have said.  ”Debt restructuring will not affect pensions,” Venizelos said. ”Each year the state gives the funds over 13 billion euros ($17 billion) in subsidies,” he said. ”Hence, in two years, the state budget pays out the entire value of their holdings…we will restore fund possessions fully,” he said.
(Sources: Kathimerini, Reuters, AFP)