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FACTDROP: Greece’s statistics chief faces criminal probe


Greece’s statistics chief faces criminal probe

Πηγή: FT
By Kerin Hope
Nov 28 2011

The head of Elstat, Greece’s new independent statistics agency, faces an official criminal investigation for allegedly inflating the scale of the country’s fiscal crisis and acting against the Greek national interest.

Andreas Georgiou, who worked at the International Monetary Fund for 20 years, was appointed in 2010 by agreement with the fund and the European Commission to clean up Greek statistics after years of official fudging by the finance ministry.

“I am being prosecuted for not cooking the books,” Mr Georgiou told the Financial Times. “We would like to be a good, boring institution doing its job. Unfortunately, in Greece statistics is a combat sport.”

The accusations against him, which are likely to shock European Union officials, come as eurozone finance ministers prepare to decide on Tuesday whether to release a delayed €8bn ($10.6bn) loan tranche to Athens, needed to pay public sector salaries and pensions next month. Over the past 18 months rows about the size of the Greek deficit have strained relations between Greece’s finance ministry and its international creditors.

Mr Georgiou is due to appear before Greece’s prosecutor for financial crime on December 12 to answer the charges. If convicted of “betraying the country’s interests”, he could face life imprisonment.

Debt swap controversy

A controversial off-market debt swap arranged by Goldman Sachs in 2001 knocked €2.4bn off Greece’s official debt, helping preserve the fiction that the country’s debt-to-gross domestic product ratio was declining in line with requirements for eurozone member-states, writes Kerin Hope.

Sorting out the truth hidden behind the complex financial instrument – which was later sold by Goldman’s to National Bank of Greece, the country’s biggest commercial bank – was among Elstat’s first and most important tasks. “Not only did the government not declare the swap when it was supposed to, it hadn’t applied the proper accounting methods,” said Andreas Georgiou, head of Elstat.

As a result of the re-adjustment Elstat has added “a bit over two percentage points to the debt” and the matter is now closed, according to Eurostat. Goldman says the swaps were legal, were used by other eurozone member states and were consistent with EU regulations at the time.

The investigation follows a public dispute over the 2009 budget deficit figure. Under Mr Georgiou, the figure was revised upwards from 13.4 per cent to 15.8 per cent of gross domestic product – a record for a eurozone member state. The revised figure was accepted without reservation by Eurostat, the Brussels statistical service.

The prosecutor cites a claim by professor Zoe Georganta, a senior statistician who was sacked along with other members of Elstat’s board by Evangelos Venizelos, the finance minister, earlier this year. According to Ms Georganta, the 2009 deficit was exaggerated by Elstat “so it would become larger than that of Ireland and Greece would be forced to adopt painful austerity measures”.

Elstat was established in August 2010 in an attempt to bring Greek statistics into line with EU standards. Before then, a committee of finance ministry and central bank officials came up with an annual budget deficit figure to be reported to Eurostat, based on numbers provided by the government statistics office. The finance minister was personally responsible for approving the final figure.

Since Elstat was set up, Eurostat has dropped its warnings about the reliability of Greek data on the public finances – formerly a regular footnote in Commission statistical reports. According to revised Eurostat data, Greece would have failed even to gain admission to the eurozone in 2001 because its deficit was too large.

Lawmakers from Greece’s five main political parties, from rightwingers to communists, have also contested the 2009 deficit figure. Elstat’s own trade union has demanded a say in approving figures on the public finances before they are sent to Eurostat, staging strikes and sit-ins in order to press its claim.

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