Political Corruption and Media Retribution in Spain and Greece
As dissident media blow the whistle on tax evasion and corruption in southern Europe, compromised governments and economic elites are trying to shoot the messenger—maybe even literally.
In Spain, the radically pro-market and big business–friendly Partido Popular government has threatened to take legal action against any media outlet that publishes more revelations about what appears to be a massive slush fund in which construction companies have made illegal payments to politicians, including Prime Minister Mariano Rajoy. Meanwhile, in Greece, reporters investigating tax fraud in the oil market have received death threats.
Rajoy’s government in Madrid is fighting dirty, as more details emerge of kickbacks and money laundering in the ruling party. “Those who filter information and those who publish; we are going for all of them,” said PP spokesperson Carlos Floriano, after incriminating documents apparently written by former party treasurer Luis Bárcenas were published by Spain’s leading daily, El País. The documents indicate undeclared payments worth millions of euros to PP apparatchiks, from lowly MPs right up to ministers, including Rajoy and former Prime Minister José María Aznar. Aznar, accused by an El País source of setting up a system of bonuses for party leaders that “should not be subject to taxes,” filed suit against the newspaper last month. This week, another PP leader, secretary general María Dolores Cospedal, announced her own legal action against El País after suggesting that the paper had acted as part of a conspiracy against Spain “just in the moment that we were beginning to recover.”
Bárcenas’s credibility is undoubtedly suspect; he is implicated in another investigation of bribes paid to PP officials known as the Gürtel case. But the attacks on El País seem to reflect PP intolerance of media freedom, a flashback to the origins of the party in pre-democratic Spain. “It’s like Franco,” wrote José María Calleja in the new online Diario.com. “For the PP, this is all a Jewish-Masonic conspiracy, more or less Marxist.… They will sue anyone.”
The independence of the Spanish media and judiciary have been weakened in recent years by events such as the derobing of critical judge Baltasar Garzón for his investigation of Franco-era war crimes, and the assertion of direct government control over public broadcaster Radio Televisión Española (RTVE). But newspapers like El País and El Mundo still seem prepared to put up a fight, albeit with their own agenda. While the left daily Público closed last year, new dissident publications like Mongolia and La Marea are also trying to maintain critical journalism in difficult circumstances. On the legal front, the attorney general has pledged to pursue the Bárcenas case to its conclusion.
The depth of the new scandal will be difficult to conceal, however aggressively the government counterattacks. As if the accusations of illegal kickbacks were not enough, there is evidence that Bárcenas may have taken advantage of a government tax amnesty to channel some of the 22 million euros he held in a Swiss bank account back into Spain. Construction companies—which allegedly contributed to the PP slush fund in return for receiving building permits and public works contracts from PP administrations during Spain’s delirious construction boom—also appear to have benefited from Prime Minister Rajoy’s decision to grant a post-bubble tax amnesty. According to El País, Alfonso García Pozuelo, chairman of a small construction firm accused of involvement in illicit party financing, legally laundered half a million euros thanks to the amnesty.
The judge investigating the Gürtel case thinks other illegal bankrollers of the governing party have cashed in on the elite tax amnesty, which allows an estimated 2.7 billion euros of undeclared “black” money to be legally laundered by paying just a 10 percent tax, as compared with a top income tax rate of 45–49 percent.
This is occurring at a time when massive public spending cuts and tax hikes on basic goods have provoked widespread unrest in Spain. Vicenç Navarro, an academic at the University Pompeu Fabra in Barcelona, says that based on the Spanish Inland Revenue’s own estimates, big business and banks are responsible for 74 percent—some 44 billion euros—of tax evasion in Spain. So far, the government has simply denied the validity of the documents published by El País.
* * *
Meanwhile, in Greece, the so-called kleptocracy has taken intimidation to another extreme in an attempt to silence those who dare speak out against elite tax evasion and economic injustice. Journalist Aris Chatzistefanou had already raised the hackles of the Greek oligarchy with the documentaries he co-directed with Katerina Kitidi, Debtocracy (2011) and Catastroika (2012), which denounce austerity, corrupt privatization and elite tax evasion. In January, though, he published a piece in the new magazine Unfollow that has sent shock waves around the Greek business elite.
Chatzistefanou and fellow journalis Lefteris Charalampopoulos addressed a notorious method of tax evasion by sections of the Greek oligarchy: the resale of contraband shipping fuel, which enjoys tax deductions as part of the Greek state’s traditional support for the shipping industry. “Shipping oil is tax free, so if someone sells it at the regular price, he can double his profits, while the state loses billions in taxes,” said Chatzistefanou in a recent interview. “The article mentions the names of two companies controlled by a couple of the richest men in Greece—Spyros Latsis from ELPE and Dimitris Melissanidis from Aegean Oil. Melissanidis owns the biggest oil supply fleet in the world, and he is a major contractor of the US 5th Fleet.”
In Greece—two years further along the road to economic and political collapse than Spain—the elite’s bullying of journalists denouncing tax evasion is much more brutal than in Spain. In early February, a man who claimed to be Dimitris Melissanidis called the magazine and threatened to kill one of the reporters and his family. According to Charalampopoulos, the voice said: “I am Melissanidis. You will not be able to sleep. You will not be able to go out. I’ll be your nightmare. Fear of me will haunt you. They will come to your house and blow you up in your sleep. I am used to talking to big journalists. I looked you up and I will tear you down.”
Soon after publication, Melissanidis’s lawyer contacted Unfollow, denying he had made the call and demanding a retraction. But the magazine stands by the story and says it has traced the call to Aegean Oil’s head office in the Port of Piraeus.
Whoever made the call, such a violent tone suggests how unaccustomed the Greek elite is to being publicly accused in the media. “Elite tax evasion is equivalent to about a third of our public debt,” said Angelous Kourous, a tax inspector who supports the Coalition of the Radical Left, or Syriza. But “the media here prefer to talk about old men with two pensions or blind people who receive a disability allowance without being entirely blind.”
This is not so surprising, he adds, since nearly all the big media outlets in Greece belong to members of the business elite, many of them ship owners. Aristidis Alafouzos owns the daily Kathimerini, a partner of The New York Times. A rival shipping magnate, Victor Restis, owns 40 percent of the weekly Proto Thema. The ship-owning family Vardinoyannis has an ownership stake in the TV channel MEGA, the largest station in the country, and owns another channel, Star.
Unfollow is one of a new generation of outlets in Greece that are breaking stories the traditional media have ignored. Late last year Kostas Vaxevanis, the editor of another new rebel magazine, Hot Doc, was imprisoned briefly for publishing a list of more than 2,000 elite tax evaders with Swiss bank accounts that had been delivered to the government by Christine Lagarde, then French finance minister and now head of the IMF. Until the Hot Doc revelations, the issue had been swept under the carpet.
Navarro, the Barcelona academic, cites a similar list of more than 500 wealthy Spanish individuals with Swiss bank accounts, which includes the aforementioned PP official Cospedal, former PP finance minister and IMF chief Rodrigo Rato, and Catalan president Artur Mas (top banker Emilio Botín, chair of Santander, is also on the list, but he reached a favorable agreement with the tax authorities in which he coughed up 200 million euros). While The New York Times has run several stories on the Spanish list, “it is not easy to publish articles like this in Spain,” he writes.
Incredibly, the “Lagarde list” of fat-cat tax evaders across Europe, from Britain to Greece and Spain, has not led to any prosecutions. “Many of them are offered deals and amnesties by tax authorities,” says John Christensen of the Tax Justice Network, which is leading the campaign against tax evasion and avoidance in Europe. “Corruption is eroding everybody’s confidence in democracy and people’s respect for tax laws, because we know that people at the top are being protected.” This is particularly true in Spain and Greece, where polls show that confidence in the old political parties and institutions is at historic lows. Only the unhindered action of an independent media and judiciary can restore faith in democracy, but that’s maybe the last of the ruling elite’s concerns.
Read The Nation's editorial on Democracy Imperiled in Greece.