View Full Version : Greek Deals Hidden From EU Probed as 400% Yield Gap Shows Doubt

09-07-2010, 11:48 PM
Sept. 8 (Bloomberg) -- Four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt.

“We have not seen the real documents,” Walter Radermacher, head of the European Union’s statistics agency Eurostat, said in a Sept. 2 interview in his Luxembourg office. Eurostat first requested the contracts in February.

Radermacher vows new toughness when officials from his staff head to Greece this month to come up with a “solid estimate” of the total value of debt hidden by the opaque contracts. “This is a new era,” he said.

Greece is the only euro country that lied about using these complex swap contracts after Eurostat told countries to report them in 2008, Radermacher, 58, said. It also likely signed a greater number of individual agreements than any other euro member, based on information it has provided to Eurostat, he said. Greece’s debt was 115.1 percent of its total economic output last year, second among the 16 counties that share the euro, behind Italy’s 115.8 percent.

“What the Greeks did was an absolute cardinal sin,” said Ruairi Quinn, former finance minister of Ireland who presided over the 1996 meeting where debt and deficit limits for countries joining the euro were set. “They deserve to be punished for it. I think they have been severely punished for it.”


“The swaps were part of the smoke and mirrors that were part of the mystique of the euro,” said Bill Blain, joint head of fixed income at Matrix Corporate Capital LLP in London. “There’s potential for Europe to trip-up again. It needs to provide full information and demonstrate that it’s in control of the situation.”

Changing Greece from a country that operates on hope to one that relies on hard numbers is Papandreou’s biggest challenge, said Ireland’s Quinn, who lived in Greece for a year in the early 1970s.

“Part of becoming modern Europe is shedding that tradition of being economical with the truth and not telling the full story,” he said.