Rich Greeks balk at financial aid for homeland

Bad news just seems to follow bad news in the Greek press right now

Wealthy Greeks living abroad, including in Switzerland, are extremely wary about investing in their cash-strapped homeland to help create jobs and boost the economy.

This content was published on January 30, 2012
Gabriele Ochsenbein,

Switzerland is home to several ultra-rich Greeks, like the granddaughter of the legendary shipping magnate Aristotle Onassis, billionaire Spiros Latsis, who made his money through oil, housing and banking, and the heirs to shipping tycoon Stavros Niarchos.

The Stavros Niarchos Foundation funds a number of social programmes in Greece, including food aid schemes, to help people hit by the financial crisis. But few rich Greeks living abroad are rushing to invest in their homeland.

George Koukis, a successful software entrepreneur who lives on the shores of Lake Geneva, told German television he was proud to be Greek but he was not considering investing in his country.

“Why should I give my money to people I consider useless? Others here think like me, although they might not say so,” he said.

No place to invest

“It’s an honest answer,” Greek lawyer Ilias Bissias, an expert in cross-border legal cases between Switzerland and Greece, told He is also the legal advisor to the Swiss embassy in Athens, and works in Zurich.

“Maybe rich Greeks living in Switzerland should feel morally obliged to help their country. But at the moment there is a great deal of suspicion and caution over every investment project,” he said.

Harris Dellas, who has worked for 13 years at the Economics Institute at Bern University, said nobody was keen to invest in the current hostile environment.

“You never know when there might be a strike; the unions are very powerful, the government is slapdash and constantly changes the rules; there is huge bureaucracy and lots of corruption. The infrastructure is also a disaster,” he said.

In such circumstances it is not surprising that limited investments are being made both nationally and from abroad. And it is equally predictable that more people are transferring their savings overseas.

Swiss accounts

Bissias said over the past two years the number of clients wanting to open a bank account in Switzerland had risen sharply. But precise figures on how much money has flown to Switzerland are hard to come by.

Dellas said the SFr400 billion mentioned in the international press is exaggerated, however. Bissias, like the Swiss ambassador in Athens, Lorenzo Amberg, said the amount of Greek funds stashed in Swiss banks was more like SFr30-40 billion.

The problem is that Greece can do little against capital flight.

“The legal framework does not prevent the flight of foreign currency. You can’t stop money from flowing out,” said Bissias. “A ban on foreign transactions would be absurd. The next day you would have a revolution. Such a measure would also break EU law.”

The Greek lawyer acknowledged he could not exclude that some of his clients were trying to hide some of their assets from the tax man. 

“A lawyer is neither a detective nor a tax inspector. We advise clients on Swiss and Greek legal issues and make them well aware of the legal consequences if they violate the laws. We never really know 100 per cent whether we get an honest answer when we ask whether the assets have been declared,” he said.
The Greek state also lacks the appropriate infrastructure to know where declared and undeclared money is hidden, he added.

“There are loopholes,” said Bissias. “Over the past two years tax legislation has been tightened up and tax crimes receive tougher  sentences than previously. But I think it’s too late.”

The economics professor believes most Greek money in Switzerland is not “black money”.

“People are afraid of a return of the drachma and then, depending on the exchange rate, losing up to half of their savings,” he noted.

So it is understandable they want to put their money in Switzerland, he said, “it’s their right and not illegal”.

Double-taxation agreement

Since the start of the year a new double-taxation agreement between Switzerland and Greece has entered into force, which provides a legal basis for the exchange of information in possible tax evasion cases. The first exploratory talks about a withholding tax have also been held.
“We get numerous questions about this from people who have a Swiss account,” said Bissias.

“Many are toying with the idea of closing their accounts if, once the tax accord enters into force, the average retroactive tax rate in Switzerland amounts to 25 per cent of their balance held at the bank.”
Dellas expects Greeks who have lots of money in Switzerland to possibly transfer their money to Singapore or the United Arab Emirates.

“Many tax evaders have probably already done so. The Greek government is likely to be disappointed,” he noted.

Greek debt crisis

Greek officials are hoping to secure an important debt relief deal with private creditors this week.

An agreement is needed if Greece is to get the next batch of bailout cash to prevent a devastating debt default. Greece does not have enough money to cover a €14.5 billion bond repayment in March. The bond-swap deal is part of a second bailout agreed by eurozone

countries, worth €130 billion ($168 billion) in loans and support for banks.

Near-bankrupt Greece has been surviving on a €110 billion ($142.02 billion) rescue loan program from European countries and the IMF since May 2010, but requires additional help to meet its funding needs.

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There are just under 3,400 Swiss residing in Greece – the number is falling – who are generally dual citizens.

Every year some 350,000 Swiss tourists visit Greece.

Some 6,000 Greek citizens are registered residents in Switzerland.

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