The European Commission has imposed a fine of nearly €400 million on Greece over a major scandal involving the mismanagement of EU agricultural subsidies between 2016 and 2023. The total penalty reaches around €1.1 billion and stems from significant shortcomings in the oversight by the Greek Organization for Payments and Control of Community Subsidies (OPEKEPE), which was dissolved at the end of May following revelations about misuse of funds linked to fictitious pastures and sham agricultural activities, according to Kathimerini.

The EC’s decision is grounded in violations of European laws governing the financing of the Common Agricultural Policy. As part of its response, the Commission applied a horizontal correction, reducing the subsidies Greece will receive in coming years by 5%, reflecting the view that the problem is systemic, with persistent failures in subsidy management and supervision.

This correction has been intensified to 10% for payments made to support young farmers in 2018, 2019, and 2020. The heaviest penalties, however, concern subsidies allocated for agricultural land in 2021 and 2022, totaling €79 million and €76 million respectively.

Reports suggest that the fine of €392 million will most likely be covered by the Greek state budget, as directly cutting farmers’ subsidies by 5% would be politically sensitive and unfair. Greece was expected to receive approximately €1.9 billion in direct EU subsidies next year, but this figure is expected to shrink by about a quarter due to the sanctions for payments made in breach of rules and legislation.

Industry insiders quoted by the press warn this may be only the start, with further penalties anticipated as additional damages come to light.

The scandal’s origins trace back to criminal investigations launched by the European Public Prosecutor’s Office against about 100 individuals in Greece. Politico reported in February that many of those investigated had fraudulently claimed subsidies for pastures they neither owned nor rented, as well as for agricultural activities that never took place, supported by false declarations.

On May 19, the European Public Prosecutor’s Office, accompanied by Greek anti-corruption police, attempted to conduct a raid on OPEKEPE headquarters but faced obstruction from agency officials. Following the scandal, the Greek government dismissed the agency’s chairman and soon after shut down OPEKEPE, transferring its responsibilities to the Independent Authority for Public Revenue (AADE).