An Athens prosecutor has ordered an investigation into a scandal involving tens of Chinese investors buying homes in Greece after illegally sidestepping capital controls in their country with the help of a Greek businessman.
The Chinese investors are believed to have invested some 40 million euros in Greek property in a bid to secure a residency permit in Greece, under the country's Golden Visa scheme. The Greek businessman, Evangelos Papaevagellou, is vice president of Jumbo, one of the Greece's largest retailers and a company that has been doing business in China for years.
It emerged this week that Papaevagellou, has set up his own real estate company and was selling homes to the Chinese in a pyramid-type scheme. He was helping Chinese buyers get around capital controls by transferring funds via accounts set up at the National Bank of Greece. Homes were paid for by transferring hundreds of thousands of euros via roaming POS devices issued by the National Bank that Papaevagellou had taken with him to China.
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He denies any wrongdoing, while Jumbo said in an announcement that it has no involvmenet in the scam and that the vice president has resigned from the company. National Bank said it will look into how such large amounts were transfered through the POS electronic devices without being detected by the bank's monitoring mechanisms. Greek press has reported that several employees at the bank have been found to have taken part in the racket.
The news is a big blow to Greece's Golden Visa scheme that has become one of Europe's best performers. After a slow start to the program in 2013, foreign investors have been buying Greek property at a faster pace, drawn by cheap property prices and the five year residency offered to non EU nationals investing more than 250,000 euros in local real estate.
At a time when Greece is struggling to attract foreign investors, the Golden Visa scheme has drawn more than 1.5 billion euros, with most of the deals coming from Chinese investors. But critics of the program in Europe have been calling for countries to implement tighter checks on where this money comes from.
Real estate officials in Greecε said that it was a matter a time before a scandal like this would emerge, describing the process of how Chinese investors buy Greek property as being "shady."
"For this reason, few real estate agents that work legally in buying and selling apartments do business with Chinese buyers," said Giannis Revythis, president of the Greek Realtors Association.