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Friday, August 30, 2013

Offshore Companies, EU-Grants, etc.

Even though I have no evidence to back it up, I will make the following intuitive argument: if Greece managed to clean up the activities behind anonymous offshore companies and EU-grants, a very large part of the country's corruption, tax-cheating, etc. would be taken care of.

And the beauty of it is --- IT WOULD BE SO EASY TO DO THAT!!!

EU-grants
The EU Commission maintains a data base which records EVERY disbursement of an EU-grant: the amount of the grant; its purpose and its recipient. With so many well-educated young Greeks being unemployed, it should be easy to train a few hundred of them in the auditing of EU-grants. The simple question to check would be: were the monies disbursed used for the purpose stated in the application? This link leads to the various EU data bases registering recipients of EU-grants: EU grant recipient and contractors

Offshore companies
There is only one reason to have an anonymous offshore company: to do something which one doesn't want anyone in Greece to know. Theoretically, a wealthy Greek, out of personal modesty, might want to hide the fact is he donating a lot of money to cancer research. In practice, wealthy nationals normally want to hide other things.

If not already in place, the first step would be to require registration of all anonymous offshore companies before they can transact business in Greece.

The next step would be to identify the beneficial owners of those anonymous offshore companies. That, of course, can only be accomplished if there is cooperation from these owners. If they refuse, there is nothing one can do about it. However, one can make such refusals punitively expensive.

The best instrument is punitive taxes if anonymous offshore companies refuse to reveal their beneficial owners. For example: one could implement punitive taxes fall all payments made to such companies or on all properties which they own in Greece (with the threat of expropriation).

One could require anonymous offshore companies to have a bank account in Greece if they want to transact business in Greece. That would automatically take care of the problem because EU-regulations require all banks to know the beneficial owners of their anonymous corporate customers (actually, I would be interested if Greek banks comply with these EU-regulations).

To be sure: there is absolutely nothing illegal about having anonymous offshore companies. The problem begins when anonymous offshore companies engage in illegal business practices like corruption, tax evasion and so forth.

Conclusion
My understanding is that there are about 21.000 anonymous offshore companies transacting business in Greece. That is a manageable number. I don't know the number of annual disbursements of EU-grants but I would guess that that, too, is a manageable number.

What is keeping the government (perhaps with the help of the EU Task Force) from pursuing these issues with full force? It can only be a lack of political will.

Could more forceful popular will perhaps influence the political will?

1 comment:

  1. Klaus, both of your ideas are good, and the Troika could maybe force the government to implement the one with the offshore companies. There is a rising understanding in the population that these people got off too light (divide et impera?).
    The one with the EU grant will NOT fly, ALL Greeks benefit from it, they know it, they wish it to continue. You would find recruitment of young Greeks very difficult; they would be pariahs even in their own families. They would "work against Greeks" for the "banksters"? They would have to be sure that the system breaks down and is replaced with an honest one within a few years. They are not sure that change will come, they are still in denial. For many Greeks the "light at the end of the tunnel" is when EU will start transfering money that can keep them in the lifestyle they have grown accustomed to. That is also why they live off the "fat" as you call it, no reason to change lifestyle, this is a temporary thing, soon it will be business as usual. Scary yes? To me it is, because as long as denial is here, nowbody will claim ownership for any of the programs, and therefore there will be no real progress.
    PS. You could allways put these young Greeks who are "ratting" on their own, in something like the American witness protection program.

    Lennard Schorlemmer

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