Serious charges of a huge fraud against the financial interests of the European Union and the Greek State were brought after the arrests made by the Greek branch of the European Public Prosecutor’s Office (and in Greece) for a network of illegal import of millions of products from China, without duties and without paying VAT.
The unprecedented circuit of illegal trafficking of products, which was operating in our country, but also in many other European countries, caused, according to the official announcement of the European Public Prosecutor’s Office, damage to the financial interests of the EU of 700 million euros from evaded duties, while the action of the circuits of trafficking of illegally imported products, as it was revealed, had elements of organized criminal groups.
In Greece, under the supervision of the Greek team of the European Public Prosecutor’s Office and with the assistance of the Hellenic Police, the Department of Internal Affairs and the Independent Authority for Public Revenue, the operation codenamed “Calypso” had successful results, with seizures of assets, cash and significant revelations of the activities of the rings.
The five arrested in Greece, including two customs officials, a customs officer and owners of customs clearance offices, are charged with serious felonies for financial crimes against the European Union and the Greek State.
700 million euros in damage
The case that was revealed, as stated in a relevant announcement by the European Public Prosecutor’s Office, concerns illegal activity uncovered by the European Public Prosecutor’s Office (EPPO) in Athens (Greece), Madrid (Spain), Paris (France) and Sofia (Bulgaria). This raid dealt a significant blow to criminal networks that flood the EU market with products imported (via the port of Piraeus) from China, avoiding customs duties and VAT. The criminal system, which involved the mass import of textiles, footwear, e-scooters, e-bikes and other goods, is believed to have caused damage estimated at around 700 million euros.
These are various criminal networks, mainly controlled by Chinese nationals, which manage the complete circuit of products imported from China into the EU market.
The authorities seized €5.8 million (€4.75 million in Greece and the rest in France and Spain), in various currencies, including Hong Kong dollars, euros in digital wallets and cryptocurrencies. In addition, it was ensured that 7,133 e-bikes and 3,696 e-scooters, as well as 480 containers, will be subjected to further checks and verification at the port of Piraeus. 11 properties located in Spain were also seized, as well as 27 vehicles and luxury goods (bags, watches and jewelry). Preservation orders were also issued in Greece for the seizure of properties, boats and bank accounts.
The scheme and how it operated
This criminal activity begins with the import of goods from China into the EU, mainly via the port of Piraeus (Greece), with significant undervaluation or misclassification of the goods in order to avoid customs duties – using false documents to conceal the true value and nature of the goods. A network of professionals operating at the customs point of entry, such as customs brokers, service providers and accounting firms, facilitate the initial customs clearance, as well as the apparent purchase and transport of the goods by companies registered mainly in Bulgaria, but operating in Greece with a Greek VAT registration number.
The goods are then sold to companies established in other Member States, thus allowing the first apparent purchaser to benefit from the exemption from VAT on importation under customs procedure 42 (CP42), which also exempts importers from paying VAT in the country of importation if the imported goods are subsequently transported to another EU Member State.
Through a chain of shell companies, the products are sold to companies in specific Member States, where they are supposedly sold on the market. These declared destinations include Bulgaria, the Czech Republic, Denmark, Germany, Hungary, Italy, Slovakia, Slovenia and Spain. However, these fake final purchasers of the goods never receive the goods and act as missing traders, thus not paying VAT. In some cases, criminal organisations have used identity documents from legitimate companies, fraudulently stealing VAT numbers, to conceal the real destination of the goods.
In reality, once the goods enter the EU, they are stored in warehouses and premises controlled by the criminal organisations and from there transported, using false documents, to France, Italy, Poland, Portugal and Spain (the real countries of destination). These Chinese logistics centres, where all the goods are stored, operate as tightly controlled warehouse areas, operating almost like exclusive communities, accessible only to members of the criminal groups that manage them.
The transport documents are destroyed immediately after the goods are delivered and the goods are sold to the final customers, mainly on the black market, for cash, in a highly concealed parallel economy.
The proceeds of crime are transferred to China using various techniques, including providing money laundering services to other criminal organisations, through underground banking systems based on trade. In this way, organised crime groups control and conceal the entire criminal chain, from the initial fraudulent import to VAT fraud and from the sale of the goods to the laundering of the profits.
The total damage from the criminal activities under investigation is currently estimated at around €700 million: over €250 million comes from evaded duties (which are fully returned to the EU budget) and almost €450 million from unpaid VAT (which damages both the EU budget and the national budgets of the Member States).
