Greece Seeks Taxes From Wealthy With Cash Havens in London “ source: New York Times

The London real estate market was abuzz. A wealthy Greek banker wanted to spend up to £60 million (nearly $100 million) for a home, and was in a hurry to make a deal.

Evangelos Meimarakis, the president of the Greek Parliament, is among the more than 30 Greek politicians under investigation for possible tax evasion and the illegal accumulation of wealth.

Real estate agents recall sifting the listings for some of the most prestigious, and expensive, properties in South Kensington, a favored area for London’s international set.

But the house hunter, Lavrentis Lavrentiadis, never made a purchase in the spring of 2011, agents say. Within months his failing institution, a small lender known as Proton Bank, was seized. The Greek government, suspecting that Mr. Lavrentiadis may have moved money out of the country, is now investigating his activities to determine whether he engaged in fraud and money laundering.

Greece, heavily in debt and desperate to track down money wherever it can, is leaving no stone unturned.

Mr. Lavrentiadis has denied the accusations, and his lawyer did not respond to questions about any interest his client might have had in London properties. But the Greek banker’s rumored flirtation with this city’s prime real estate market, and the frenzy it stirred among sales agents, is telling.

At the request of the Athens government, the British financial authorities recently handed over a detailed list of about 400 Greek individuals who have bought and sold London properties since 2009.

The list, closely guarded, has not been publicly disclosed. But Greek officials are examining it to determine whether the people named — who they say include prominent businessmen, bankers, shipping tycoons and professional athletes — have deceived the tax authorities by understating their wealth.

“These people have money and they are known — but it is not clear yet if they have violated any laws,” said Haris Theoharis, an official in the Greek Finance Ministry. Tax investigators have been examining the list to see whether there is any overlap between those who bought London properties and those already identified as being tax cheats.

The Greek government, under pressure from its international lenders to raise 13.5 billion euros ($17.4 billion) through tax increases and spending cuts, is intent on making the well-heeled share the burden. Studies have shown that the country may be forgoing as much as 30 billion euros a year in uncollected taxes, with a significant portion of that amount having been shipped out of the country as the affluent seek shelter from Greece’s financial storm.

This week, the government of Prime Minister Antonis Samaras opened an investigation into the bank accounts of more than 30 Greek politicians to determine whether they should be charged with tax evasion and the illegal accumulation of wealth.

The politicians on the list included the president of the Greek Parliament, Evangelos Meimarakis, creating an embarrassing distraction for Mr. Samaras’s coalition government. Mr. Meimarakis is a former defense minister who has also been implicated in accusations concerning a money-laundering network said to involve two other former ministers.

London, long a magnet for foreign real estate investors, has become a special focus for Greek officials trying to track down money taken from the country.

Bankers say that accounts in Singapore and even in the country of Georgia have become favorite destinations for fleeing funds, more so than the traditional haven of Switzerland, because the looser rules and regulations of those countries about accepting large sums of foreign money. But while Singapore and Switzerland have been reluctant to divulge information about its Greek clientele, the British government has been more cooperative in sharing its real estate records.

There is an air of desperation to this Athens fund-raising drive, which includes leasing out empty Greek islands and even putting up for sale the former residence of the Greek consul general in the tony London neighborhood of Holland Park. But with Greece’s membership in the euro at stake, every conceivable revenue-raising strategy is being pursued, even if it remains unclear how successful it will be.

For the better part of a century, owning a grand London home in Belgravia or Mayfair has been accepted practice for the wealthiest Greeks — shipowners in particular — looking to hedge their bets against their country’s volatile economy. Since 2008, when the country’s problems began to surface, a much broader spectrum of Greek investors has turned to London real estate.

“Greeks are panicking,” said Sandy Triantopoulou-von Croy of EPPC, a real estate firm in London that does a lot of work with Greek clients. “They just do not know what to do with their money.”

Mr. Lavrentiadis was not the only bank chief to dabble in London real estate. Theodoros Pantalakis, a former chief executive of Agricultural Bank of Greece, another ailing lender, caused a stir in Athens this year when it was revealed that in 2011 he transferred 8 million euros abroad with the intent of buying a property in London. Mr. Pantalakis has said that the authorities were informed of the transaction and that the appropriate taxes were paid.

Greek money, along with wealth from China, Russia and various other countries, has kept the high end of London’s property market buoyant despite — or maybe because of — the global financial turmoil. According to research by Savills, a London-based property company, £20 billion of foreign money has been invested in prime residential real estate here since 2006.

The biggest year on record was 2011, when foreigners snapped up £5.2 billion worth of new residences. With economic uncertainty in the euro zone increasing this year, demand for these properties in 2012 shows no sign of letting up, real estate agents say.

Investors from Italy and France have been most prominent in using London properties as a hedge against the euro. But the Greek influx has been especially striking.

Officials in Greece examining these transactions estimate that about 250 Greeks invested more than £100 million in prime London residences in 2009 and 2010, according to records collected with the assistance of the British government. As the crisis grew worse last year and this year, government officials say it is likely that the inflows increased.

Not everyone, of course, was looking for a £60 million manse as Mr. Lavrentiadis was said to have done. Even in London, with its enclaves of billionaire oligarchs and sheiks, such requests do not frequently roll around.

Ms. von Croy says that the average asking price from her Greek clients is about £1.5 million, which is still a significant enough barometer of wealth to attract the attention of the Greek tax authorities.

Experts say it is not only high rollers looking to make a splash. Many of the recent buyers hail from Greece’s professional classes, including lawyers, doctors, accountants and midlevel bankers who are paying £300,000 to £500,000 for modest apartments.

Notably, a recent study conducted by economists at the University of Chicago concluded that it was within this segment of society where most of Greece’s tax collection shortfall occurs.

By delving through bank records, the economists found that Greek professionals — not the truly wealthy, but the comfortably affluent — skirted as much as 28 billion euros worth of taxes in 2009. That would have been enough to cover a third of the country’s budget deficit that year.

Mr. Theoharis, of the Greek Finance Ministry, said London properties represented but a small portion of the billions Greeks had shipped out of their country since 2009. In 2011, according to government figures, Greeks sent 6 billion euros to foreign bank accounts. The data for 2012 is even more stark: for the first half of the year about 5 billion euros left the country, Mr. Theoharis said.

Much of that outflow came in the panicky months preceding the two rounds of Greek elections in May and June.

More recently, the effort by Mr. Samaras’s government to push through spending cuts and economic overhauls has somewhat calmed fears of an immediate Greek euro exit. In fact there was actually a rare increase, of 2 percent, in Greek bank deposits in July.

The harder trick to turn could be persuading Greek real estate money in London to come back home — especially now, with the tax man closely watching.