Romania dismantles vast tax evasion network

Romanian authorities have dismantled a tax evasion network suspected of cheating the treasury out of 27 million euros ($34 million), prosecutors said Monday. Police raided around 40 locations in the greater Bucharest area and in the northeast as part of the crackdown on a group suspected of also embezzling 20 million euros in European Union funding, the prosecutor’s office in charge of battling organised crime said in a statement. Around 100 people faced questioning over the affair, the statement added. Investigators say the well-organised group, which had been in operation since 2010, had set up over 100 ghost companies to stash money from the authorities. The companies were set up in the names of poor people from Romania and neighbouring Moldova who were manipulated by members of the network, they added. The prosecutors withheld the identity of the group’s leader, who they said had also established companies in Australia and offshore tax havens. Tax evasion is seen as one of the biggest barriers to development in the EU’s second-poorest member state after Bulgaria. A report by the Council of Europe estimated that Romania’s shadow economy accounted for 28.4 percent of gross domestic product in 2013.