- Hot Topic: Greece Counters Corruption
- June 27, 2012
- Law Firm: Norton Rose Canada LLP - Montreal Office
After months of criticism over widespread Greek corruption and its role in fuelling the country’s economic problems, Greece has begun to adopt measures designed to clamp down on corruption. On 15 March it was reported that over 100 civil servants involved in awarding investment grants had been suspended by the government following the arrest of two public officials on bribery charges.
Greece’s problems with corruption and tax evasion are well documented. Transparency International’s Corruption Perceptions Index ranks it as the most corrupt Eurozone member, with a score of 3.4 out of a maximum 10 - lower than China, Romania and Ghana. Widespread graft has frequently been linked to the country’s economic problems, which have been central to the Eurozone crisis that continues to threaten the stability of world markets.
Austerity measures introduced by the Greek government in a bid to reduce the country’s deficit and prevent a default have been met by aggressive opposition and riots in some of Greece’s largest cities. While Italy’s new technocratic government has introduced a number of measures, including government transparency initiatives, that have improved investors’ appetites for government bonds, Greece’s measures have so far failed to instil confidence that the country can reduce its deficits and stave off default. With corruption a major deterrent for foreign investment, the government’s increased appetite for countering public graft may help to improve levels of investment from overseas to introduce much needed impetus in Greece’s economy.
Anna Diamantopoulou, Greece’s recently-appointed development minister, explained that the entire staff of the investment department had been relieved of their positions and would be replaced immediately, proclaiming “we are going to unravel this knitted pullover of corruption”, and warning that there would be zero tolerance in future. It is reported that members of the investment department would demand between two and four per cent of a grant’s application’s value.
Ms Diamantopoulou stated that the creation of a business-friendly environment capable of attracting investors was a major priority for the government following the success of its debt restructuring. As countries such as the UK introduce far-reaching anti-corruption laws penalising individuals and corporate bodies for corrupt acts both at home and abroad, countries such as Greece must engage in radical reform if they are to secure the foreign direct investment that could serve as a catalyst for economic growth.