A top Finance Ministry official was charged this week with failing to collect fines imposed on firms for smuggling, court officials said, the second case to embarrass the government in under a week.
Yiannis Kapeleris, a general secretary who was handling the tax and customs portfolio and had previously worked in the Financial and Economic Crime Unit (SDOE), was accused of not collecting fines imposed on fuel and heating oil suppliers for smuggling.
Financial crimes prosecutor Grigoris Peponis ordered his prosecution on the charge of breach of duty.
Finance Minister Evangelos Venizelos requested his resignation after he was charged, in order to facilitate the investigation. Kapeleris denies wrongdoing but he tendered his resignation.
“He is charged with breach of duty,” a court official said, adding that the state had lost an estimated 15 million euros as a result. “An investigating magistrate will look into the case and also for accomplices.”
The investigation was launched two months ago after media reports that Kapeleris and the head of the Customs Control Directorate, Evangelia Pantazi, issued circulars that blocked the collection of fines imposed through the electronic Ifestos system.
The affair came to light after another Finance Ministry General Secretary, Diomidis Spinellis, resigned over decisions preventing him from collecting such fines. Press reports concerning Spinellis’ resignation mentioned a secret system within the finance ministry that froze or blocked the collection of fines.
A subsequent investigation conducted by deputy financial crimes prosecutor Spyros Mouzakitis found grounds to prosecute for breach of duty and said that the estimated losses to the state amounted to at least 15m euros.
Kapeleris said that the system was not operating properly, most of the fines should not have been imposed or there would be serious fuel shortages, and the ministry was preparing a bill to address the issue.
“I respect the prosecutor’s decision but I am not responsible for the dysfunction of the electronic system,” he told Reuters.
He asserted that thousands of businesses would have closed if the process of collecting fines went ahead and that the Finance Ministry leaders were aware of the problem and had been asked to pass legislation to fix it.
A Finance Ministry announcement confirmed that Kapeleris had proposed legislation to resolve the problem at the last meeting of the National Commission against Tax Evasion, considering that the problem was with the system and not the sale of contraband fuels.
At the time, the Finance Ministry had asked the secretariat, in Peponis’ presence, to crosscheck the information at their disposal with that of the police, especially the Financial Police, and the General Secretariat for Trade that also deals with contraband fuel cases. In another high-profile case that shook the government last week, two financial crime prosecutors resigned, saying unnamed third parties were pressing the government to replace them.
This prompted Prime Minister Lucas Papademos to demand an in-depth investigation by the justice minister. A day later, the top court ruled that there had been no government interference in the prosecutors’ work.
The two fraud prosecutors involved, Grigoris Peponis and Spyros Mouzakitis, are now involved in the investigation against Kapeleris. They withdrew their resignations over the weekend.
The government has stepped up its drive against tax evasion and corruption by lifting privacy restrictions on bank accounts and slapping tougher penalties on tax dodgers.
But international lenders say the results so far are not satisfactory.