Greece Corruption Report

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).

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).

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.