Europe & Central Asia
Greece risk report
Corruption severely affects Greece’s business environment, distorting market competitiveness. A common form of corruption in Greece is known as ‘fakelaki‘, translating to small envelopes and signifying bribes passed on to officials or other recipients to obtain some form of benefit. Greece’s Penal Code criminalizes several forms of bribery, including passive and active bribery, abuse of office and money laundering. However, ineffective implementation of existing laws has exacerbated corruption in both the higher and lower echelons of government. The tax administration and public procurement are identified as the sectors most affected by corruption. Gifts, bribery, and facilitation payments are widespread despite existing provisions that criminalize these acts.
Judicial system Very high risk
Companies contend with high corruption risks when dealing with Greece's judiciary. Businesses indicate that irregular payments and bribes are fairly frequently exchanged for favorable judicial decisions (GCR 2015-2016). Over a third of companies perceive the independence of courts as fairly or very bad (JS 2017). Companies also report very low satisfaction with the efficiency of the legal framework pertaining to settling disputes and challenging regulations (GCR 2017-2018). Roughly two out of five Greeks perceive corruption to be widespread in the judiciary (Eurobarometer 2017). Judicial processes are highly time-consuming and ineffective in, for instance, enforcing property and contractual rights (ICS 2017). Companies report that Greek courts do not consistently deliver unbiased judgments (ICS 2017). The institution is described as inefficient, slow and vulnerable to corruption and political influence (HRR 2017). The Council of Europe's anti-corruption group has called for clearer standards of professional conduct and integrity for judges and prosecutors (GRECO 2018).
Enforcing contracts is nearly three times more time-consuming on average compared to other OECD countries (DB 2018).
The judicial system ensures arbitration proceedings for investment and trade disputes and commercial laws accord with international norms (ICS 2017). Greece is a member of the International Center for the Settlement of Investment Disputes and complies with the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Police Moderate risk
Companies face a moderate risk of corruption when dealing with the police. Companies are not entirely confident in the reliability of the police services (GCR 2017-2018). More than half of Greeks perceive corruption to be widespread in the police services (Eurobarometer 2017). The government has established effective mechanisms to control corruption among the police (HRR 2017). In 2015, the internal affairs bureau investigated 1002 police staff alleged of corruption (HRR 2016).
Public services Very high risk
Public services carry a high corruption risk for companies operating in Greece. Companies report that bribes are not commonly paid when interacting with public services (GCR 2015-2016). However, businesses indicate that government policy-making is very intransparent (GCR 2017-2018). Nearly nine out of ten Greeks and Greek businesses indicate that they believe bribery and the use of connections is the easiest way of obtaining public services (Eurobarometer 2017; Flash Eurobarometer 2017). A third of Greeks indicate they perceive corruption to be widespread among local government officials (GCB 2017). Businesses complain about complex and overlapping regulations, uneven implementation and arbitrary decision-making, and rent-seeking on the part of public servants (ICS 2017).
Starting a business in Greece is slightly more time-consuming compared with the OECD average (DB 2018).
Allegations that ten senior Greek politicians took bribes from Swiss pharmaceutical giant Novartis emerged in February 2018 (The Guardian, Feb. 2018). Among those accused of accepting bribes in return of preferential market treatment are the governor of the Bank of Greece Yannis Stournaras and former Prime Minister Antonis Samaras, but all of the accused have denied the charges (The Guardian, Feb. 2018). An investigation was announced by Members of Parliament in February 2018 (The Guardian, Feb. 2018). As of May 2018, Greece's anti-corruption prosecutors indicated that the investigation is ongoing and that Greek authorities are cooperating with other European authorities to gather evidence (Politico, May. 2018).
Land administration High risk
There is a moderately high risk of corruption in Greece's land administration. Property rights are protected by Greek legislation (ICS 2017), companies report that property rights are not adequately protected in practice (GCR 2017-2018). Three out of five Greeks perceive officials issuing building permits as corrupt (Eurobarometer 2017). The Greek government is developing a comprehensive land registry with the aim of enhancing overall transparency within the sector (ICS 2017). Expropriation under Greek law may only happen in a non-discriminatory manner and with prompt, adequate, and effective compensation (ICS 2017).
The number of procedures required to register property is higher than average compared to other OECD countries (DB 2018).
Tax administration Very high risk
Tax corruption and evasion is a serious problem in Greece, representing a high risk for companies. Companies indicate that bribes and irregular payments when making tax payments are common (GCR 2015-2016). A third of companies believe tax fraud and non-payment of VAT are among the most widespread corrupt practices (Flash Eurobarometer 2017), while two-thirds of citizens perceive abuse and bribery to be common among tax officials (Eurobarometer 2017). Greece's tax regime is characterized by a lack of stability, predictability, and transparency (ICS 2017). Numerous changes to tax laws and regulations since the beginning of the economic crisis have led to greater unpredictability (ICS 2017; SGI 2017). Tax evasion is a pressing issue in Greece; a study estimated the VAT gap to be approximately 28 percent, which amounts to nearly EUR 5.1 billion annually (EC VAT GAP 2017). The government has increased its attempts to combat tax evasion, but the media has alleged instances in which tax officials are complicit in the tax evasion of individuals and businesses (ICS 2017). Companies make fewer annual payments, but spend more time on filing taxes compared to the average among OECD high-income countries (DB 2018).
The Lagarde list, which revealed the names of more than 2,000 potential tax evaders (including high-ranking officials), was a corruption scandal that shocked the Greek government. Giorgos Papakonstantinou, former Greek finance minister, was found guilty of tampering with the Lagarde list and removing three of his relatives' names (Greek Reporter, Mar. 2015). Yannis Diotis, former head of the Financial and Economic Crime Unit SDOE is also on trial. Diotis allegedly overlooked evidence of tax fraud in the list and failed to carry out the necessary tax audits (To Vima, Oct. 2015). Diotis was handed a 10-year suspended sentence in October 2017 (Ekathimerini, Oct. 2017).
Customs administration High risk
There is a moderately high risk of corruption in Greece's customs administration. Businesses report that bribes and irregular payments during customs procedures are fairly common (GETR 2016). Companies are not sufficiently satisfied with the time-predictability and efficiency of the clearance process (GETR 2016). Companies cite burdensome import procedures as an obstacle (GETR 2016).
Complying with export procedures is considerably more time-consuming and costly compared to the OECD high-income average (DB 2018).
Public procurement Very high risk
Greece's public procurement sector suffers from widespread and high corruption risks. Companies indicate that bribes and irregular payments are very common in processes of awarding public contracts (GCR 2015-2016). Businesses also indicate that favoritism in decisions of government officials and diversion of public funds are both very common (GCR 2017-2018). Almost three-quarters of surveyed companies perceive public procurement managed by national authorities to be corrupt, while almost four out of five companies believe that procurement managed by local authorities is corrupt (Flash Eurobarometer 2017). Slightly more than half of all companies indicate they believe that corruption has kept them from winning a public tender contract in the last three years (Flash Eurobarometer 2017). The most common reasons cited for this were: the criteria seemed to be tailor-made for certain participants (20 percent), collusive bidding (19 percent), the deal appeared done before the call for tender was published (17 percent) (Flash Eurobarometer 2017). More than half of Greeks perceive officials awarding tenders as corrupt (Eurobarometer 2017). The evaluation of bids is not transparent and is subject to political influence (ICS 2017).
The Greek Minister of State for Combating Corruption, Panagiotis Nikoloudis, recently found that all contracts concluded between the Greek state and companies included kickbacks amounting to 2-2.5 percent of the total contract. Public officials received commissions of up to 4 percent of the amount of the contract in dealings involving the purchase of weaponry (Greek Reporter, Apr. 2015). In one corruption case in 2010, ex-transport minister Tasos Mantelis admitted to accepting EUR 230,000 in bribes from the German group Siemens. Mantelis received a three-year suspended sentence. This year, new investigations were launched, leading to 19 former executives of the German engineering group Siemens, among 60 other suspects, being investigated for bribery of several officials within the Greek government, with a total of USD 78 million in return for obtaining lucrative contracts. The US-based CorpWatch described the case as ‘the greatest corporate scandal in Greece’s post-war history’ (Business Insider UK, Aug. 2015). Greece's former transport minister, Tassos Mantelis, was found guilty in 2017 of accepting approximately USD 270,000 in bribes from Siemens via a third party (OCCRP, Jul. 2017).
Companies are recommended to use a specialised public procurement due diligence tool to help mitigate the corruption risks associated with public procurement in Greece.
The Greek Penal Code includes provisions against election fraud, passive and active bribery, abuse of power, money laundering and conflict of interest. Weaknesses in Greece's legal framework include an inconsistency in the provisions on active and passive bribery and trading in influence (EUACR 2014). The implementation of the law is weak, and officials sometimes engaged in corrupt practices with impunity (HRR 2017). Deficiencies in the regime that governs the liability of legal persons mean that companies cannot be held liable for foreign bribery (OECD 2017). Punishment for corruption offenses varies, but the maximum punishment consists of up to 10 years of imprisonment and up to EUR 150,000 for individuals (GTDT 2017). Companies may be fined up to EUR 2 million and various measures, including barring the company from bidding for public tenders, may be imposed (GTDT 2017). Greek law also criminalizes facilitation payments. Symbolic gifts are generally not criminalized, but if they form a pattern in an attempt to gain influence over a public official, they may be seen as a bribe (GTDT 2017). Attempts to crack down on corruption included the passage of a law to create a general secretariat for combating corruption under the authority of a new minister of state. Another law was passed stipulating that parliamentarians be stripped of certain parliamentary privileges if found guilty of felonies or misdemeanors (ICS 2017). There is no specific whistleblower protection legislation in place (WLG 2016).
Greece has ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the United Nations Convention against Corruption (UNCAC), the Council of Europe Civil and Criminal Law Conventions on Corruption and the Additional Protocol.
The constitution of Greece protects the freedom of speech and citizens have free access to information (HRR 2017). The economic crisis has led to a decrease in the number of newspapers published (FotP 2016). Many media owners have close ties to political actors, and this is frequently reflected in a lack of critical commentary on key issues (FotP 2016). There are concerns over censorship; following the July 2015 referendum, seven journalists who had opposed the government in their reporting had their membership of the Athens Journalists' Union suspended (HRR 2016). The decision to suspend their memberships was ultimately not upheld (HRR 2016). The internet is generally unrestricted (HRR 2017). Greece’s press environment is described as 'partly free' (FotP 2017).
Freedom of association is protected by the constitution (HRR 2017). Civil society's capabilities are relatively underdeveloped (SGI 2017). Civil society organizations (CSOs) do not have the appropriate resources to become involved in policy formulations and the Greek government also does not consult with CSOs (SGI 2017).
- World Bank: Doing Business 2018.
- GRECO: Fourth Evaluation Round Compliance Report 2018.
- Politico: "Drugs Scandal Roils Greek Politics", 30 May 2018.
- The Guardian: "Novartis Bribery Claims: Greek MPs Vote to Investigate Top Politicians", 22 February 2018.
- World Economic Forum: Global Competitiveness Index 2017-2018.
- Freedom House: Freedom of the Press 2017.
- US Department of State: Investment Climate Statement 2017.
- US Department of State: Human Rights Report 2017.
- European Commission: Eurobarometer Corruption Perception 2017.
- European Commission: Flash Eurobarometer Corruption 2017.
- European Commission: VAT Gap Study 2017.
- European Commission: EU Justice Scoreboard 2017.
- OECD: Follow-up to the Phase 3bis Report & Recommendations 2017.
- Getting the Deal Through: Anti-Corruption Regulation Greece 2017.
- Bertelsmann Stiftung: Sustainable Governance Indicators - Greece Report 2017.
- Ekathimerini: "Ex-SDOE Chief Receives 10-Year Suspended Sentence over Lagarde List", 26 October 2017.
- OCCRP: "Ex Greek Minister Sentenced for Money Laundering in Siemens Scandal", 31 July 2017.
- Freedom House: Freedom of the Press 2016.
- US Department of State: Human Rights Report 2016.
- World Economic Forum: Global Enabling Trade Report 2016.
- World Law Group: Global Guide to Whistleblowing Programs 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- To Vima: 'Diotis trial over Lagarde list scandal adjourned for 29 October', 12 October 2015.
- Business Insider UK: 'Dozens of German business execs are trying to escape prosecution for corruption in Greece', 30 August 2015.
- Dateline Atlantis: 'The Lagarde List and the Tooth Fairy', 8 October 2015.
- Greek Reporter: 'Combating Corruption Minister Nikoloudis: All Greek Contracts Included Kickbacks', 6 April 2015.
- Greek Reporter: 'Greek Court: Former FinMin Papakonstantinou Guilty of Misdemeanor, Not Felony', 24 March 2015.
- European Commission: EU Anti-Corruption Report: Annex 8, Greece 2014.