Prosecutors Call for Investigation on Greek Deficit

Mr. Peponis and Mr. Mouzakitis the two prosecutors that called for investigation on Greek deficit.

Πηγή: New York Times
By NIKI KITSANTONIS
Jan 22 2013

ATHENS — Greek prosecutors called on Tuesday for a criminal inquiry into the actions of the head of Elstat, the country’s statistical authority, and two of his subordinates over claims that they overstated the country’s budget deficit figures, forcing it to swallow unnecessarily harsh austerity measures.

The agency head, Andreas Georgiou, a veteran of nearly two decades at the International Monetary Fund, first came under scrutiny in the fall of 2011, when a former Elstat employee, Zoe Georganta, asserted that Mr. Georgiou had inflated the agency’s official figure for Greece’s 2009 budget deficit, saying it amounted to more than 15 percent of the country’s gross domestic product.

In an interview with The New York Times last year, the statistics chief said that some members of Elstat’s board represented vested interests that did not want the full extent of Greece’s dire finances to come to light. “We were faced with significant pressures through the board not to revise the deficit upwards on account of fully applying European Union rules, but to minimize it,” he said.

Greece’s governing coalition, headed by the conservative New Democracy party, has lately undertaken a campaign to stamp out lawlessness and corruption, in part to impress its European creditors that it is serious about dealing with the country’s deep-seated problems. However, critics contend that it is doing so by attacking a series of straw men while ignoring criminality and tax evasion among the business, professional and political elites that have run the country for decades.

This month, for example, the police raided a squatter house in Athens that had been occupied by leftists and a few anarchists for more than 20 years, even though the violence that had plagued the city for years had subsided in recent months. The opposition said that, far from a crackdown on lawlessness, the raid incited a new wave of violence and was, at base, intended to distract attention from a scandal that threatens to disclose rampant tax evasion by the wealthy and well connected.

The Greek financial crisis erupted in 2009, when an incoming Socialist government announced that the budget deficit was 12.4 percent of gross domestic product, more than twice the previous estimate of the former government, headed by New Democracy. To date, neither the Socialists nor New Democracy has prosecuted any officials responsible for the understatement of the deficit.

It was about a year ago that prosecutors first summoned Mr. Georgiou, following the assertions by Ms. Georganta that Elstat had inflated the deficit beyond the 12.4 percent figure. They further called upon Parliament to consider whether the former Socialist prime minister, George Papandreou, and the former finance minister, George Papaconstantinou, should be investigated for their roles in expanding the deficit beyond 12.4 percent. A parliamentary committee last year found no wrongdoing by the politicians, vaguely highlighting instead “a lack of institutional knowledge of the euro zone.”

Since then Mr. Papaconstantinou, who appointed Mr. Georgiou as chief of the statistics service in June 2010, has been ensnarled in the tax evasion scandal, accused of removing names of family members from a list of more than 2,000 Greeks with Swiss bank accounts that may have been used to avoid taxes.

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.