Portugal's Public Prosecutor's Office has charged 22 individuals with economic crimes linked to a clothing import scheme that allegedly siphoned €4.3 million from state coffers through false customs declarations, according to court documents filed in Lisbon this month.
Scale of the alleged fraud
The 22 defendants stand accused of systematically undervaluing garment shipments from China, creating fictitious invoices to reduce import duties and VAT payments. Prosecutors say the operation ran for at least three years before tax authorities flagged irregularities during a routine audit of Lisbon port records in 2022.
The scheme allegedly involved seven companies registered in northern Portugal, a region responsible for roughly 35% of the country's textile manufacturing output. Investigators traced payments through three Portuguese banks, includingBanco Popular, which cooperated with the inquiry after receiving a formal request from prosecutors last autumn.
China connection under scrutiny
Customs data examined by investigators shows clothing imports from China to Portugal doubled between 2019 and 2022, reaching 89,000 tonnes annually. Prosecutors argue part of that surge reflects inflated shipments designed to generate commercial invoices far above the actual value of goods crossing the border.
The accused include three company directors based in Braga and Porto, two freight agents operating out of the Lisbon container terminal, and seventeen individuals described as "facade shareholders" in the corporate structure. None of the named defendants has entered a plea; their lawyers declined to comment ahead of the preliminary hearing set for March.
How the scheme operated
According to the prosecution filing, the method was straightforward: fabric manufacturers in Guangdong province shipped garments priced at €2–4 per unit on invoices, while actual transaction records obtained from Chinese banking partners showed prices of €8–12 per unit. The difference allowed Portuguese buyers to pay lower duties while pocketing the gap in unreported cash flows.
Tax authority inspectors traced the discrepancy by cross-referencing Portuguese import declarations against cargo volume data from port operators. The investigation expanded when financial intelligence officials noticed multiple companies using identical registered addresses in Gaia, a city across the Douro River from Porto.
Market ripples expected
The case arrives at a sensitive moment for Portugal's textile sector, which employs roughly 140,000 people and generated €3.1 billion in exports last year. Industry executives say the alleged fraud created unfair competition for businesses paying full duties, though they caution against assuming the scheme affected retail prices at consumer level.
Retailers sourcing from Portuguese manufacturers said they were monitoring the case closely. "Any distortion in the import market eventually works its way through to wholesale pricing," said one sourcing director at a Lisbon-based fashion chain, speaking on condition of anonymity because the matter remains sub judice.
Banking sector braces for fallout
Banco Popular, absorbed into a larger Portuguese banking group in 2022, confirmed it received inquiry requests from prosecutors but said it cannot comment on client matters. The bank's compliance team has been asked to produce three years of transaction records for the seven companies named in the case.
Regulators at Portugal's central bank declined to say whether they have opened a separate supervisory review. Banking sources told reporters that internal compliance reviews began last year when the initial inquiry became public.
What happens next
The preliminary hearing in the Lisbon Criminal Court will determine whether there is sufficient evidence to proceed to trial. Prosecutors are seeking asset freezes on company accounts holding approximately €1.2 million in traced funds. If convicted on all counts, the defendants face penalties including fines of up to three times the alleged fraud value and prison terms ranging from one to eight years.
The next scheduled court date is 18 March. Analysts will be watching whether the case triggers broader reviews of customs procedures for low-value textile imports from Asia, a concern already flagged by European Union trade officials in Brussels.
