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What’s the Solution to Chronic Greek Corruption?

Corruption in Greece is one of the major factors dragging down the country’s economy. The estimated 1.4 billion euros ($1.8 billion) spent on bribes by Greeks last year wouldn’t pay off its bailout debts, but it might give its people more spare cash to deal with belt-tightening elsewhere.

Angelo Cavalli | Photodisc | Getty Images

You can’t be in Greece for long without hearing about “fakelaki” or “little envelopes” used to bribe officials. Everyone agrees corruption is a huge problem, but no-one seems to have the solution – and most Greeks adopt a policy of selective deafness when asked if they’ve ever paid a bribe.

Corruption is present in every country around the world, but Greece has one of the biggest problems in Europe.

This is one issue which might help leftist, anti-bailout party Syriza gain power in the Greek elections this weekend, as it has never been involved in any scandal – or indeed ever had the power to award contracts or top jobs.

Thousands gathered in front of Greece's parliament building Friday night to hear New Democracy leader and possible future Prime Minister Antonis Samaris promise to keep the country in the euro - and warn of the danger presented by Syriza.

The problem is particularly acute in the health service. Greeks pay up to 20,000 euros to public health officials to have their operations moved up the priority list, according to Transparency International. Getting a construction license can set you back 8,000 euros in bribes before foundation stones have been laid, while paying the taxman to turn a blind eye to your undeclared income can cost up to 20,000 euros.

The amount being paid in bribes has shrunk slightly over the course of the crisis, but so has the average Greek household income.

“The economy does make people more anxious to see that the money that they pay isn’t going into other people’s pockets, and more concerned about how the state is spending their money,” Angelos Syrigos, a board member of Transparency International Greece, told CNBC.

“However, when you have more and more taxes more people won’t pay them.”

The recent increase in value-added tax on goods in Greece from 17 percent to 25 percent could help fuel the black market in consumer goods, he added.

Multinational companies have often been accused of playing the game. Siemens and medical device maker Smith & Nephew have both recently settled allegations of bribery by their subsidiaries in the country – although Smith & Nephew’s settlement with the Securities and Exchange Commission did not include an admission of liability.

Transparency believes that the problem can only be tackled by starting at the very top of the food chain.

“The political system is at the heart of almost everything here in Greece and that includes corruption,” Syrigos said. “Petty corruption is a problem of course, but corruption on a grand scale must be tackled first.”

Of course, all the political parties profess to be anti-corruption - when was someone running for power ever pro-corruption? Yet previous administrations have failed to combat the issue.

Transparency believes the new administration should start by establishing a new committee to investigate political corruption, and by speeding up the process of prosecuting offending MPs – who are currently investigated by other MPs before they get to court.

Their eight-step plan to tackle corruption has been sent to all the major parties, but none has yet responded.

Watch CNBC's “A Greek Tragedy” anchored by Michelle Caruso-Cabrera, on Sunday, June 17th at 8 p.m. ET.