State firm’s debt leads to arrest, illustrates greater problem

The parlous state of some of Greece?s public companies and the ongoing clampdown on tax evasion crossed paths on Wednesday as the head of the Hellenic Horse Racing Organization (ODIE) was arrested because the state-run firm owes about 84 million euros in unpaid taxes.

ODIE?s managing director Alexandros Zacharis, who has been in charge of the firm for two years, was arrested for failure to pay tax on almost 1 million euros in revenues gained from betting at Greece?s only racecourse in Markopoulo, southeast of Athens. He is also being held accountable for some 83 million euros of debts to the state that ODIE amassed over the last five years.

Zacharis told a prosecutor on Wednesday that he had tried to arrange for the payment of the outstanding amounts. However, ODIE, which is on the list of public firms that the government wants to privatize, has been making annual loses of some 30 million euros due to a decline in the betting market. ODIE reduced its staff from 1,230 in 2008 to 820 by the end of 2010.

The poor state of ODIE?s finances are symptomatic of the problems faced by numerous public enterprises, known as DEKO, which means that they have also become major debtors to the state.

The Hellenic Railways Organization (OSE), for instance, now owes 1.5 billion euros and Olympic Airways Services owes more than 420 million euros. These debts to the state exist at lower levels as well. A company set up by the Municipality of Ano Liosia in Athens to carry out infrastructure work owes almost 350 million euros.

However, Zacharias?s arrest also underlines the concerted effort being made by authorities over the last few months in their effort to combat tax evasion. The Financial Police have made 112 arrests nationwide since last November. Those arrested owe a combined total of 334 million euros.

The clampdown has yet to result in substantial revenues for the state as those arrested can be released if they pay a small amount of what they owe as part of a payment plan, while others file for protection from their creditors under Greece?s bankruptcy law.