EU ECONOMICS Commissioner Olli Rehn has said suggestions that Greece used off-balance sheet deals with Wall Street banks to flatter its public finances would raise serious ethical issues for Goldman Sachs and other banks if proved true.
Mr Rehn said a preliminary review by the EU statistical agency, Eurostat, suggested other euro members did not deploy the same tactics. However, he said the EU authorities had not yet examined data for the years prior to 2003.
The commission initiated a inquiry into Greece's dealings with Wall Street institutions after a New York Timesreport that the banks arranged swaps which allowed Athens to raise funds to trim its budget deficit. While the report said payments were pushed well into the future, the transactions were not classified as loans.
Greek finance minister George Papaconstantinou has said the contracts were legal at the time, adding that Athens does not use them now. He has described the deals as “completely Eurostat legal”.
Speaking to reporters in Brussels, Mr Rehn said EU finance ministers discussed the matter at their regular monthly meeting, which was dominated by the financial emergency in Greece.
“If confirmed that some investment banks have been involved in these kind of exercises – we have to see whether the rules have been respected, of course – I think the banks themselves should also ask, not least after the financial crisis, if this has been in line with the code of ethics of these investment banks,” he said.
“Over the weekend I was reading the memoirs of Hank Paulson, the former [US] treasury secretary, also a former chairman of Goldman Sachs, and he underlined very strongly the need for ethics and integrity in business and banking. I think that’s a very forceful message, and I trust that this will be also practised in the banks.”
The commission will seek information from other states if it has reason to suspect they used similar techniques.
“The information I have received from the Eurostat so far is that this has not been the case concerning other member states. But that is still to be verified, because this investigation is at a rather early phase today,” he said.
“The commission has, in context of the excessive deficit procedure in 2008, requested this kind of information for the years 2003 to 2006, but this has not been done earlier, so that is the reason why we don’t have automatically information for the earlier years for the euro area member states.”
