The head of the European Public Prosecutor's Office (EPPO) sent a clear message during her visit to Slovakia at the end of last year: "There is no hiding it: Slovakia has become a major transit destination for criminal money flows," Laura Kövesi told the European Affairs Committee of the Slovak Parliament in November. Slovakia is thus becoming an “important country for criminals who invest money from VAT fraud in drug trafficking, human trafficking and arms trafficking“, she added, and her words were widely reported in the Slovak media.
Kövesi's office has uncovered “a large-scale and previously underestimated system of fraud”, among which VAT fraud poses the most serious threat.
“After comparing information from all our cases, we found that over 4,700 suspicious companies related to 172 of our ongoing VAT fraud investigations have a connection to Slovakia. In other words, one in three VAT fraud cases investigated by us has a connection to Slovakia,“ Kovesi told Slovak MPs.
Damage of 50 billion euros per year
It sounds incredible that this is happening in Slovakia, whose population of just 5.4 million makes up about 1.2% of the total EU population. The information provided makes it clear that in the investigated fraud cases, almost 300 million euros are related to recovery funds - money provided by the EU to help member states recover from the Covid pandemic.
“VAT fraud is at the top of the criminal pyramid in the EU. "This is probably the most profitable and least risky criminal activity at the moment," the chief prosecutor said, adding that VAT fraud alone costs the EU around €50 billion a year.
Slovakia is a "central hub" for this criminal activity
This money is diverted from public services and used to undermine the rule of law and finance organised crime. The Slovak government's reaction has been rather restrained. "One of the main priorities of this government is the fight against tax fraud and VAT-related criminal activity, which often goes beyond Slovakia's borders," Justice Minister Boris Susko said after a meeting with Kovesi. He assured that the Slovak government is ready to adopt additional legislative measures if necessary.
VAT fraud is an old problem
Observers are not surprised by the shocking data presented by Kövesi. “Slovakia has had a problem with VAT fraud for a long time“, commented investigative journalist Zuzana Petkova from the “Zastavme korupciu“ (Stop Corruption) foundation to DW. She claims that during successive Fico governments, laws were changed in favor of fraudsters: “For example, tax fraud up to 20,000 euros is no longer a crime, and tax fraudsters are not subject to any punishment. "Even for larger amounts, the penalties were reduced," says Petkova.
At the same time, Fico's government abolished the Special Prosecutor's Office, which dealt with corruption and economic crimes. The National Criminal Agency (NAKA), which dealt specifically with corruption, organized crime and tax fraud, was also dissolved. As a result, the police and prosecutor's office hardly investigate this type of criminal activity anymore, says the investigative journalist.
This gives reason to the deputy chair of the opposition party “Freedom and Solidarity“ (SaS) Marian Viskupic to tell Radio Slovakia International that “Robert Fico is turning the country into a laundry for European money“.
Ministers try to shift the blame
The leading commentator for the Slovak daily “Sme“ Beata Balogova is convinced that the situation is as serious as the European Public Prosecutor's Office describes it. "I fully believe Kovesi when he warns that Slovakia has become a center for the flow of money originating from criminal activities," she told DW. According to Balogova, ministers in Fico's government have tried to shift the blame to their predecessors in power. "With its reaction, the government shows that it is trying to downplay the serious nature of VAT fraud in Slovakia, instead of proposing real measures," Balogova added.
The murder of Jan Kuciak
There is another worrying aspect to this story. Investigative journalist Jan Kuciak was murdered along with his fiancée in February 2018. One of the topics he was working on was VAT fraud and the links between organized crime and senior civil servants associated with Robert Fico's "Smer" party.
“I have worked with Jan on many cases“, Zuzana Petkova told DW. “One of the suspects we wrote about was the politically connected businessman Marian Kočner, accused of ordering the murder.“ Kočner, who is serving a long sentence for various financial crimes, has already been acquitted twice in the Kuciak murder case - due to lack of evidence. The prosecution has appealed the decision and the case will be heard again later this month.
“Kocner was not only following Kuciak, but also me and several other investigative journalists. He used information obtained from corrupt police officers“, says Petkova. The investigative journalist says that even today she continues to receive public threats from politicians and government officials.
Author: Rob Cameron