Greek Tragedy: Voracious Corruption, Black Economy, And Tax Evasion

Human Wrongs Watch

When German Chancellor Angela Merkel decided to take a firm stand vis-a-vis Greece bleeding financial crisis, she was surly aware that black economy accounts as high as one-third of Greek GNP, that tax invasion amounts to 20 billion dollars a year, and that corruption is rooted everywhere, at all levels,  particularly among political parties.

Image: Wikimedia Commons

These are some of the key facts that International Transparency Greece (TI-Greece) has identified in its reports about Greece.

As citizens in Greece take to the streets to protest austerity plans, their leaders negotiate deeper spending reductions to secure terms for further financial bailouts. Meanwhile, one of the root causes of the crisis –corruption– is fading from view, it says.

“The black economy is estimated to be as much as a third of Greece’s gross national product with tax evasion costing upwards of US 20 billion dollars a year. This limits Greece’s ability to fund the public sector adequately.”


In March, TI-Greece published its 2010 Annual Survey on Corruption in Greece covering the period between July and December. The following are extracts of its key findings:

It estimated that bribery cost Greece 632 million euro in 2010 (837 million US dollars).

“Although down from a high of 787 million euro (US 1.09 billion dollars) in 2009, this was mainly due to a reflection of the effects of the financial crisis and the shrinking size of the Greek economy, as well as government efforts to reduce opportunities for corruption.”

One In Ten People Report Having To Pay A Bribe

“The overall picture taken over the four years since the survey started in 2007, is more troubling: on average more than one in ten people report having to pay a bribe for some kind of service, predominantly to public sector institutions.”

In 2010, for example, more than a third of people surveyed who used a public health sector facility reported paying a bribe to secure a service or jump a queue.

75% Of Greek People Surveyed Say Corruption Is Increasing

Transparency International’s 86-country public survey, the Global Corruption Barometer, tells the same story. 75 per cent of Greek people surveyed in June 2010 thought corruption was increasing, and 18 per cent of households who had contact with a public service in the previous 12 months had paid a bribe.

A study, published last year by Transparency International, shows that lengthy proceedings and short statutes of limitations pose significant problems for prosecuting corruption in Greece.

Political Parties, The Most Corrupted

“It is particularly striking that statutes of limitations for parliamentarians and ministers are shorter than for regular citizens. Greeks named political parties as the institution they perceived to be the most corrupt.”


Transparency International Greece has submitted a series of recommendations to  Greek government:

On political financing, it wants the Elections Committee upgraded, parties to comply with accounting requirements, and the procedure of politician’s asset declarations to be reinforced;

On tax system, a TI conference in Athens identified the need for a codified, unified set of tax regulations which would not include the formalities and excessive red tape in the current tax code and the permanent abrogation of tax settlements (where unpaid taxes are resolved with a once-off payment);

On public contracting, it wants the government to implement Integrity Pacts – a tool for keeping public procurement clean.

The Integrity Pact is an agreement between a government or a government department (at the federal, national or local level) and all bidders for a public contract that neither side will: pay, offer, demand or accept bribes; collude with competitors to obtain the contract; or engage in such abuses while carrying out the contract.

Integrity Pacts

Transparency International has used Integrity Pacts for ten years in hundreds of contracts in over 15 countries, which shows that practical solutions can make a difference if the political will is there.

Summoning The Political Will To Fight Corruption

For the past four years, TI-Greece has convened an annual conference under the heading “State and Corruption” attended by both government officials and members of opposition parties, including Prime Minister George Papandreou, who recognised the need for reform in his speech.

The government has adopted a number of Transparency International’s recommendations. For example, government procurement legislation refers to Integrity Pacts, including 2011 laws on public contracting in the defence sector and a, draft law on procurement of public works.

Since October 1st 2010, all public institutions (ministries, public entities, local authorities) are obliged to upload their decisions (legislative acts, ministerial decisions, tenders, budgets etc) on the Internet through the Diavgeia or “Cl@rity” programme . Decisions that are not posted cannot be implemented..

Problems And Solutions

TI undertakes what it calls National Integrity Studies to identify how key institutions in a country, such as the judiciary, the police, the executive branch and the media, are set up to limit corruption.

“Is the Judiciary independent, for example, or can the executive branch influence decisions? Are there rules in place to limit conflicts of interest in government?”

TI-Greece is in the process of compiling a National Integrity Study of Greece. It is part of a Europe-wide programme that is undertaking these studies in 24 European Union countries as well as Norway and Switzerland.

These studies provide recommendations but also act as a baseline as they can be repeated to see if the country has either improved or fallen behind in the fight against corruption.

Transparency International is a global civil society organisation leading the fight against corruption. It brings people together in a powerful worldwide coalition to end the devastating impact of corruption on men, women and children around the world. TI’s mission is to create change towards a world free of corruption.

(Resources: TI Greece 2010 National Corruption Survey; TI Greece Press Release for 2010 Survey; Global Corruption Barometer)

Copyright © 2011 Human Wrongs Watch

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