rss icon Subscribe
desktop mobile

EU Suspects Tax Fraud at China's New Gateway to Europe

© milangonda / Adobe Stock

By Angus Berwick, Renee Maltezou

European Union and Italian authorities are investigating suspected wide-scale tax fraud by Chinese criminal gangs importing goods via Greece's largest port of Piraeus, a trade gateway between China and Europe, officials said.

"The VAT is completely evaded, with enormous damage to the national tax authorities and to the community," Fabio Botto, of the Italian Central Anti-fraud Office's special investigative unit, said in an interview.

He said the suspected scam at Piraeus, part of China's vast Belt and Road infrastructure project, had cost Italy tens of millions of euros in unpaid value-added taxes (VAT), though the total could be far higher as the investigation was not over.

The European Anti-Fraud Office (OLAF) confirmed it was working with Italy on the investigation but declined to give details, citing confidentiality.

Botto said his agency had evidence that Chinese-owned firms run by the criminal groups were fraudulently avoiding import duties and VAT on large shipments of goods through Piraeus.

The groups import goods, often counterfeit clothing and footwear, and massively understate their value to EU customs to avoid import duties, he said. They also lie about the firms that receive the goods, enabling them to avoid VAT.

Greece's Financial Crime Unit is conducting a separate investigation into a suspected tax fraud case involving Chinese goods imported via Pireaus. The Greek unit has had little contact with Italian and EU authorities and has not been informed about the wider investigation, an official there said.

China's state-owned COSCO Shipping (601919.SS) (1919.HK) has majority-owned Piraeus since 2016.

China wants to transform the port into its "gateway to Europe" under the $126 billion Belt and Road initiative, which envisions a new "Silk Road" of land and sea routes with trading partners.

Botto and the Greek official said neither investigation had evidence of any wrongdoing by Piraeus port authorities. COSCO owns a majority stake in the Piraeus Port Authority (PPA) (OLPr.AT), which manages one container terminal, and a wholly-owned COSCO subsidiary owns and manages two other terminals.

COSCO said: "The company has in its global operations consistently and strictly followed local and international laws, and persevered to operate legally and compliantly".

PPA said it had not received any information about criminal groups using the port and it would alert authorities if it did. It said it took all necessary measures to ensure that goods had customs supervision.

"(PPA) is under no circumstances responsible for conducting checks for illegal activities," PPA said in a statement.

OLAF and national authorities in recent years have clamped down on customs loopholes used by Chinese smugglers, whose tax scams they estimate cost the EU billions of euros a year.

Italy began investigating the Piraeus case in late 2017 after seizing falsified invoices at customs offices, Botto said. Reuters has not seen this evidence and Botto declined to name the suspect firms as the investigation is ongoing.

Piraeus has become a major new entry point, Botto said, as northern ports have tightened controls and Piraeus's import capacity has leapt six-fold under COSCO.

"We are investigating the new routes developing with the Belt and Road project. Currently the predominantly beaten path appears to be through Piraeus," he said.


(Writing by Angus Berwick; Additional reporting by Lefteris Papadimas and Brenda Goh; Editing by Mark Bendeich and Giles Elgood)

Apr 20, 2018

 

Government Update

NSF Awards Contract to Continue Ocean Observatories Initiative

The research vessel Neil Armstrong arrived to recover a surface mooring that is part of the OOI Global Array in the Irminger Sea south of Greenland in 2016. (Photo by James Kuo, Woods Hole Oceanographic Institution)

A state-of-the-art marine facility delivering data and new insight to the ocean science community

Maritime and Port Authority of Singapore Holds Ferry Emergency Drill

Vessel to vessel transfer. Photo: Maritime and Port Authority of Singapore (MPA)

The Maritime and Port Authority of Singapore (MPA) conducted a ferry emergency exercise  to test

In Florence’s Wake, Flooding Still a Big Concern in the Carolinas

Coast Guard crews discuss tactics prior to conducting rescue operations in response to Hurricane Florence in North Carolina, Sunday, Sept. 16, 2018. The Coast Guard is working with state and local agencies throughout the affected region. Image: USCG)

Flooding is expected to worsen in the coming days as the Coast Guard continues its relief efforts.

Legal

INSIGHTS: John Rynd / President , CEO and Director, Tidewater Inc.

John Rynd / President , CEO and Director, Tidewater Inc.

Mr. John Rynd graduated from Texas A&M University with a Bachelor of Arts degree in Economics.

US Coast Guard Publishes Final Ballast Water Management Reporting Requirement

© tempakul / Adobe Stock

A Final Rule eliminating the requirement for certain vessels that operate on voyages exclusively

Gulftainer Signs 50-year Lease for Port of Wilmington

Peter Richards, Group CEO of Gulftainer; Delaware Gov. John Carney; H.E. Yousef Al Otaiba, Ambassador of the United Arab Emirates to the United States; and Badr Jafar, Chairman of Gulftainer’s Executive Board, at the ceremony marking the Port of Wilmington concession agreement signing. Photo by Gulftainer

Gulftainer, the world’s largest privately-owned independent port operator and logistics company

Maritime Apps