Athens: A dispute is unfolding about how long European Union officials have known that Greece used derivatives to conceal its growing budget deficit.
Greece turned to Goldman Sachs Group Inc in 2002, just after adopting the euro, to get $1 billion (Dh3.67 billion) in funding through a swap on $10 billion of debt, Christoforos Sardelis, head of Greece's Public Debt Management Agency at the time, said in an interview last week. Eurostat, the EU's statistics office, was aware of the plan, he said. Risk magazine also reported on the swap in July 2003.
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"Eurostat was not until recently aware of this alleged currency swap transaction made by Greece," spokesman Johan Wullt said by email on Monday.
The disagreement about who knew what and when comes amid the worst crisis in the euro's 11-year history. The existence of the swaps, which allowed Greece to delay payments and shrink its reported budget deficit, is fuelling questions about whether Greece used the contracts to mask the fact it was struggling to comply with the currency's membership criteria from the early days of its entry into the euro zone.
"Greece falsified deficit statistics, and that can't be legal," said Wolfgang Gerke, president of the Bavarian Centre of Finance in Mun-ich and honorary professor at the European School of Business. "Greece needs to be kicked out of the EU because otherwise there will be new copycats, and that could lead to the next catastrophe on financial markets."
EU regulators pressed Greece to disclose details of currency swaps after an inquiry by the country's finance ministry uncovered a series of agreements with banks that it may have used to conceal mounting debt.
One issue is whether Greece was legally obliged at the time to notify Eurostat.
