Greek politicians launch inquiry into former finance minister

Helena Smith in Athens guardian.co.uk, Friday 18 January 2013 17.38 GMT

George Papaconstantinou faces investigation over claims he failed to crack down on tax evasion and protected relatives

Greece's former finance minister George Papaconstantinou, accused of removing relatives' names from a list of offshore accounts. Photograph: Icon/Reuters

A dramatic few weeks lie ahead for Greece after politicians moved on Friday to launch an official inquiry into allegations of misconduct by George Papaconstantinou, the former finance minister universally identified as the architect of the debt-stricken country's first austerity programme.

After a marathon 16-hour debate, Greek MPs voted overwhelmingly to investigate Papaconstantinou following accusations that he not only failed to crack down on tax evasion – widely blamed for the nation's financial woes – but deliberately erased the names of relatives from a list of possible culprits with holdings in the Geneva branch of HSBC.

The LSE-trained economist faces prosecution – and jail – if on the basis of their findings investigators decide by the end of February to try him before a special court.

In an atmosphere made shriller by public fury over belt-tightening, the beleaguered politician vehemently denied the charges, telling the 300-seat house that he had fallen victim to a vicious "smear campaign" and was clearly being made a "scapegoat".

"I did not tamper with the data. It is inconceivable that I would have acted in such a way that would so blatantly involve me," he said in a speech that was by turns poignant, angry and matter-of-fact.

On Friday he issued a statement saying: "The only thing that I want is to be given the opportunity to clear my name from the gross fabrication against me and for accountability to be attributed where it should be."

Highlighting the tensions the affair has unleashed, the debate preceding the 2am ballot was unusually intense, with the socialist Pasok leader, Evangelos Venizelos, who succeeded Papaconstantinou in the job, exchanging heated barbs with the main opposition Syriza leader Alexis Tsipras.

The party had proposed that Venizelos also be investigated for failing to act on the list, a dossier of more than 2,000 well-heeled Greeks with offshore accounts in Geneva that was first handed to Papaconstantinou in late 2010 by the then French finance minister, Christine Lagarde. Parliament rejected the motion along with the proposal of two other opposition parties that the former prime ministers George Papandreou and Lucas Papademos be similarly investigated.

"The Lagarde list is not an isolated incident, but the tip of the iceberg," Tsipras railed. "An iceberg that if revealed will show a lot that until now has been hidden under the surface of the waters." The leftist leader insisted the "kleptocratic" political establishment that had brought Greece to the precipice of economic collapse was in cahoots with wealthy tax dodgers whose interests it was determined to protect.

The catalogue of names was first handed to French authorities after a renegade HSBC employee allegedly stole the details of some 24,000 customers with offshore accounts in Switzerland. But while other countries, including crisis-hit Italy and Spain, acted on the list, Greece resisted the urge to rein in much-needed revenue with Papaconstantinou, who has since been expelled from the socialist Pasok party, admitting that he did not know what happened to the original list after his associates copied it on to a USB stick for "security reasons".

Wading into the furore, Lagarde, who now heads the IMF, said this week that she had handed over the data at Papaconstantinou's request because the moderniser seemed determined "to pursue every avenue" in the battle against tax evasion. "Not enough has been done," she told Greek reporters, addressing the issue of tax avoidance. "When we look at revenue it is not on target," she added, exhorting Athens's coalition government to get serious about rooting out tax dodgers if it wanted to receive further financial assistance from the IMF.

As Greeks endure their hardest winter yet, amid record levels of unemployment and poverty, the scandal the Lagarde list has unleashed looks set to deepen as demands mount for a political elite held responsible for the country's economic mess to be punished.

For many the list's mishandling has amplified, in the most egregious way, an indisputable fact: that while low-income Greeks and pensioners have paid a heavy price, enduring relentless cuts and tax increases since the debt crisis erupted, the rich have got off scot free.

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