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Storm Over ‘Lagarde List’ Intensifies

Kerin Hope, Financial Times
Friday, 2 Nov 2012 | 4:49 AM ET

Greece's parliament has been asked to investigate why two former finance ministers did not pursue possible tax evaders on the so-called "Lagarde list" of 2,000 Greeks with Swiss bank accounts.

Christine Lagarde, IMF Managing Director
Paul J. Richards | AFP | Getty Images
Christine Lagarde, IMF Managing Director

George Papaconstantinou and his successor Evangelos Venizelos, who held the finance portfolio from September 2009 until June this year, could face charges of criminal negligence if parliament referred them for trial, according to legal experts.

Thursday's request by Gregoris Peponis, a financial prosecutor, came on the day that a Greek journalist who published the list was acquitted of violating data protection laws. Costas Vaxevanis has said he acted in the public interest by publishing the list in Hot Doc magazine, which he edits.

A crowd of journalists and other supporters filling the courtroom cheered after Maria Volika, the only judge hearing the case, announced: "You are innocent."

The case has triggered strong criticism of Greece's judicial system.

"Instead of arresting the tax evaders, the journalist who published their names has been arrested," said Emilios Avgoleas, an international banking law and finance professor at Edinburgh University. "It's a reminder that in corrupt regimes around the globe, freedom of speech is repressed in order to serve vested interests."

Mr Papaconstantinou received a disc with the list of Greek depositors in 2010 from Christine Lagarde, who was then French finance minister, but did not instruct Greek financial police to carry out a full investigation. He said the list was later "mislaid". Mr Venizelos also let the issue lapse after he took over as finance minister in 2011.

Parliament opened proceedings on the prosecutor's request last night. Yannis Stournaras, the current finance minister, told the house that he had found no trace of the list when he took over in June: "It is another list that would be useful for cracking down on tax evasion ... I was told by my officials that it couldn't be found."

Under Mr Stournaras, the finance ministry has launched separate investigations into possible tax evasion in the purchase of high-end London properties by 400 Greeks, and also overseas transfers totaling €22bn by 54,000 Greeks.

The finance ministry has said at least 15,000 transfers involved funds that had not been declared to the tax authorities. It hopes to recapture at least €2.5bn in unpaid taxes.

The prosecutor's request also compounds the political problems of Mr Venizelos, now leader of the Panhellenic Socialist Movement, a partner in the country's three-party governing coalition. He was confronted on Thursday by a rebellion of socialist lawmakers ahead of a critical November 11 vote on Greece's latest bailout package.

Two of Pasok's 33 deputies quit on Thursday as a move to unseat Mr Venizelos as leader gained ground. Mariliza Xenogiannakopoulou, a former health minister, said she was leaving the party "because the government is continuing to pursue the same dead-end policies that have already had such dramatic financial and social consequences".

Mr Venizelos made clear he would continue to support the conservative premier Antonis Samaras, who is committed to implementing fiscal and structural reforms despite mounting criticism within the socialist party.

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