image: Louis Vuitton

Situated amongst a swath of olive trees, just steps away from the Aegean Sea, sits one of Louis Vuitton’s newest outposts. The Paris-based brand’s swanky seaside base in Nammos Beach joins those of Christian Dior, Gucci, Christian Louboutin, and Oscar de la Renta, all of which have opened their doors, albeit temporary, in order to court the well-heeled consumers that descended upon the Greek Island of Mykonos for a seasonal sojourn.

While fashion brands were securing real estate for their popup shops and packing their bags for Mykonos early this summer, Greece’s law enforcement units were busy, as well. Together with the country’s Independent Authority for Public Revenue, the entity tasked with safeguard public revenue by promoting tax compliance, special financial police were planting the seeds for a large-scale effort aimed at cracking down on what has been called one of Greece’s “national sports,” tax evasion.

The joint effort – which was established for the purpose of cutting down on the tens of millions of dollars of sales per year that are not properly declared in Greece – would come to be known as Operation Triaena, or Trident, and it would not take long for Louis Vuitton to find itself in the crosshairs.

Last week, dozens of tax inspectors fanned across Mykonos to identify instances of tax violations, and Louis Vuitton was one of the most prominent names on the list of alleged offenders. According to reports from Greece’s official state-owned news agency ANA-MPA, the brand was engaged in a scheme to avoid paying local taxes on sales of its pricey garments and accessories, including an exclusive “Mykonos LV” collection.

In particular, Louis Vuitton allegedly failed to link a number of its point-of-sale systems in its temporary popup shop, as well as in its permanent Mykonos retail outlet, to Greek financial institutions. Greek law required that all point-of-sale systems in Greece must be linked to Greek banks to ensure that sales are properly documented and that value-added-taxes were collected, and thereby, prevent companies from evading taxes.

Greek financial police asserted that Louis Vuitton was actively running afoul of the law by linking its stores’ POS machines to Switzerland, instead. “The Louis Vuitton POS machines were linked to Swiss banks, bypassing the Greek system all together and effectively cheating the Greek tax authorities,” local media reported last week.

Neither Louis Vuitton nor its parent company LVMH have commented on the Greek financial police’s charges.

The operation –  which has extended to “all types of business on the island,” from hotels and nightclubs to permanent and temporary retail outlets, and that forced the temporary closure of certain outposts and issued fines to others – comes as the Mediterranean nation continues to work to reform its economy following almost a decade of debt crisis paired with lasting political fissures.

At least part of Greece’s precarious financial position – which saw its economy shrink by one-quarter and the disposable income of its citizens by one-third over the past 9 years – is due to “government economic mismanagement, including widespread fraud and an absence of public accountability,” including “massive tax evasion,” according to global finance association, CFA Institute.

Next week, Greece will exit its third bailout program, in what the prime minister Alexis Tsipras is  calling a transcendent moment for the debt-stricken nation, as growth is slowly returning to the country, tourism is booming, and unemployment is down. And still yet, reforms, as required by the three rounds of economic bail outs, such as efforts to cut down on deep-rooted problems of tax evasion, are in effect.