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Golden Visa: Authorities in Greece and China investigate illegal POS transactions

Greek and Chinese authorities investigate illegal payment transactions between a Greek real estate company and Chinese investors who have been targeting residence permission in an EU country via the Golden Visa program.

According to Greek media reports on Wednesday, the vice chairman of Greece’s biggest retailer “Jumbo” is investigated for alleged involvement in irregular transactions for Chinese real estate buyers targeting Golden Visa. Evangelos Papaevangelou is alleged to have violated capital controls restrictions in China regarding real estate investments abroad.

Papaevangelou had reportedly brought to China Greek POS with open roaming. He was selling properties belonging to his own real estate company to Chinese investors and he was accepting payments through the POS facilitating investors to transfer amounts of money out of China.

POS payments are not accepted for the Golden Visa program that allows payments only via bank cheques or bank transfer.

Some media report that it was Chinese authorities that discovered unusually high transactions via credit cards for the purchase abroad. Following the money, they found out that these transactions were done for the purchase of real estate in Greece with Papaevangelou’s real estate company and the aim to acquire “Golden Visa.”

According to cnn.gr, it was the Eurobank that discovered the scandal of the high transactions via the POS and informed first the Chinese and following investigations also Greek authorities.

Capital.gr, report that only a part of the payment for the real estate acquisition was made through the POS.

These transactions were violating the capital controls in China with authorities there to investigate also if and whether there was illegal export of money as well as money laundering.

It is worth noting that the Greek businessman had recently bought several real estates in Greece including the auctioned villa of a former publisher for 5 million euros, in.gr reports.

With express procedures Evangelos Papaevangelou was forced to submit his resignation from his post as vice chairman of  Jumbo S.A. Wednesday noon, just hours after the scandal became public and flooded local media.

In a statement to the Hellenic Capital Market Commission, Jumbo S.A. vehemently denied any knowledge about the alleged illegal activities of its ex vice chairman’ company as well as any direct or indirect involvement in any way. “Jumbo”, a specialist in children toys and home decoration items, has been imported its products form China.

Papaevangelou’s agency is “estimated to have earned 50 million euros in residential sales,” writes kathimerini.

Three employees of the Greek bank that provided the POS are under investigation as well and have been reportedly suspended. “40 million euros were transacted via the POS of the National Bank,” notes cnn.gr on Wednesday morning. According to newmoney.gr  the bank would get a 5% commission from these transactions. protothema notes that these increased transactions took place within three months.

According to Skai TV, Papaevangelou had previously used POS by two other Greek systemic banks that cut cooperation when they got aware of the transactions.

Chinese and Greek authorities but also the Bank of Greece and the European Central Bank are investigating the case, media report.

For a real estate investment of at least 250,000 euros non-EU nationals can acquire Golden Visa with a renewable 5-year residence permit that allows them also further travels through the Schengen area.

The practices of the soon ex vice chairman have violated not only Chinese capital controls but also Greek Golden Visa regulations. According to the Law of 2014, such transactions are only possible via bank cheque or bank trasnfer. A law modification in July 2018 clarified that other forms of payment are not acceptable and do not grand eligibility for the Golden Visa program.

So far there are no reports about reactions by Chinese investors, whether Golden Visas were granted despite the POS payments and if Golden Visas have been revoked. Neither if Beijing has prosecuted Chinese investors for violating the capital controls.

Chinese have topped the list of non-EU nationals taking advantage of the Golden Visa program in Greece.

“Of the 3,404 residency permits issued since the golden visa program started in 2013, almost 1,700 have gone to Chinese nationals, data from investment agency Enterprise Greece showed,” reuters said in a report about Chinese real estate investors in Greece.

“Inquiries about Greece doubled in the first quarter of 2018 and jumped three-fold in the second,” a representative of a Chinese website for global real estate told the news agency.

Published yesterday, Tuesday, the report noted among others “Beijing restricts overseas investment but Chinese investors are still finding ways to get money out of the country.”

Chinese are said to have invested €258 million in the purchase in residential real estate.

The scandal is a big blow to the Golden Visa scheme and the credibility of Greek banks, at least of some of them.

As for the Chinese investors… they drive real estate high and are often willing to pay much more than an owner would ask just for the shake of the golden Visa, a real estate agent told me a month ago. “Haven’t you seen the groups of Chinese walking with their sun umbrellas?” along the main avenue of our Athens suburb, the agent asked me.

It should be reminded that the POS fraud has been used by Greek businessmen to bring Greek capital abroad despite capital controls by using POS from Bulgarian banks. And to avoid paying taxes for revenues, as well.

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