Greek magazine editor in court for naming alleged tax evaders

Julian Borger guardian.co.uk, Sunday 28 October 2012 19.58 GMT

Kostas Vaxevanis at centre of political storm after publishing names of wealthy Greeks alleged to have Swiss bank accounts

Greek journalist Kostas Vaxevanis leaves the prosecutor's office following his arrest over the publishing of the so-called Lagarde list. Photograph: Alexandros Beltes/EPA

A magazine editor in Greece will appear in court after publishing the names of more than 2,000 wealthy Greeks alleged to have Swiss bank accounts, triggering a row over tax evasion that threatens the stability of the government.

Kostas Vaxevanis was arrested on Sunday, after his weekly journal, Hot Doc, printed the list of names, which including prominent members of Greece's political and business elite.

The editor was giving a live radio interview when police arrived, and broke off saying he had to go "to be arrested". At the same he tweeted about the arrest, comparing the police to German stormtroopers in the second world war. In another tweet he wrote: "They're entering my house with the prosecutor right now. They are arresting me. Spread the word."

Police officials said that Vaxevanis had illegally published personal details without proof that the people involved had broken the law. But he and other critics of the government have portrayed his arrest as part of a cover-up intended to obscure claims that the finance ministry had had the list for more than two years without taking action against those named.

"If anyone is accountable before the law then it is those ministers who hid the list, lost it and said it didn't exist. I only did my job. I am a journalist and I did my job," Vaxevanis said in the video sent to Reuters news agency.

The case has triggered a parliamentary inquiry and could provide the basis for prosecutions at a time of rising radicalism on both left and right and a sense of injustice over the widespread destitution and despair created by Greece's economic crisis set against the relative impunity of the country's rich, who have a long history of tax evasion.

George Papaconstantinou, a former finance minister, said the Greek tax authorities had failed to act on the list because they were afraid of confronting the country's elite tax evaders. He also claimed that the affair brought to light only a small part of a massive tax evasion problem that was part of what he described as a "broken and corrupt system".

The scandal has its origins in a raid in January 2009 on the French home of a former computer technician for HSBC bank's Geneva branch, Herve Falciani, accused by the Swiss of selling stolen data on the bank's clients. The French police found computer files on 130,000 potential tax evaders and, to the fury of the Swiss authorities, held on to them and began investigating them.

In mid-2010, the French intelligence service, the DGSE, informed Athens that many of those named in the Falciani dossier were Greek.

Papaconstantinou, then finance minister, asked his French counterpart at the time, Christine Lagarde, to pass it on. It arrived through diplomatic channels in the form of an unlabelled CD containing spreadsheets for the roughly 2,000 accounts now known in Greece as the "Lagarde list". What happened to it next is at the heart of the current political storm in Athens.

"I handed the head of the tax police the 20 people with the biggest balances, and who accounted for about half of the total amount on the files we got from the French authorities, and asked him to see what we could learn by looking at their profiles," Papaconstantinou told the Guardian. "He came back and told me that their profiles did not justify these kind of bank accounts in Switzerland. On the basis of this information, I asked him to go ahead and do a full investigation. I was not happy with the lack of follow-up."

As Greece faced economic meltdown, Papaconstantinou enacted a series of measures aimed at cracking down on tax evasion, but was forced out as his austerity programme became politically toxic. "Before I left the ministry in mid-2011, I handed all the files to the new head of the tax police and asked him to proceed with a full investigation," he said.

Papaconstantinou told a parliamentary inquiry last week that the French CD stayed at the ministry when he left and he did not know what had happened to it since. He has been lambasted in some parts of the Greek press for having lost it.

"I am being accused of having lost the original. I did not; I gave all the information to the tax police with instructions to investigate, so it is there on the record in electronic form," the former minister said. "The CD of course I left at the office when I left finance. I don't know where it is now, but even that is not the original. It is a copy of a CD which the French authorities have."

Papaconstantinou also rejected the argument presented to parliament by a former tax chief that the data could not have been used for an investigation as it had been illegally obtained, saying: "This information is equivalent to getting an anonymous tip. It is not permissible in court but the tax police are obliged by law to follow it up and use it in their investigations. And they did not."

Papaconstantinou argued that the tax authorities deliberately chose not to pursue information on the list. "My interpretation is they probably got scared. They looked at the names on the list and saw it was full of important people from business and publishing and decided not to go ahead without clear political instructions and cover," he said, adding that the Lagarde list was only the tip of a Greek tax evasion iceberg.

"It is not insignificant [about €1.5bn in total] but the truth is that compared with other lists it's not the treasure trove everyone is looking for," Papaconstantinou said. "There is a list from the Bank of Greece of 54,000 people who took €22bn out of the country. That is official and can be used in court. The first check found 6 billion that can't be justified and letters are going to 15,000 people on that list who will be taxed at the 45% rate."

The former finance minister said measures he took to tighten tax collection still face resistance and delay in the bureaucracy and judiciary, adding: "What we have is a corrupt and broken system."

Petros Markaris, an author and social commentator, who recently published a bestselling detective novel about a serial killer targeting tax evaders, said: "This really is a mess, and it has become a mess because the politicians have handled it so badly. This was not incompetence but because they did not want to make public what could harm them."

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