EU wants answers on Wall Street role in Greek debt

15.02.10 @ 14:03

  1. By Andrew Willis

BRUSSELS - The European Commission has said it is seeking answers following allegations that Wall Street investment banks helped Greece hide the extent of its debt.

  • It has been alleged that Wall Street banks facilitated Greek government efforts to skirt European debt limits (Photo: wikipedia)

"Eurostat [the EU's statistics agency] has, following these reports, already requested from the Greek authorities an explanation by the end of February," said EU economy spokesman Amadeu Altafaj Tardio at a news conference in Brussels on Monday (15 February).

Over the last decade, Wall Street banks facilitated Greek government efforts to skirt European debt limits, reported the New York Times over the weekend. One deal created by Goldman Sachs helped obscure billions in debt from officials in Brussels, the paper alleges.

Goldman executives approached Greece as recently as last November with complicated financial instruments to push debt from the country's health care system far into the future, it continues, adding that similar arrangements have been struck in the past.

Athens says it did not purse the latest Goldman proposal.

Complicated currency swaps are at the eye of the latest storm. The commission said the swaps are a legitimate government management tool provided "they are calculated from observed market rates."

"This is something that we will have to assess based on the information we will receive," said Mr Tardio.

"There was an excessive deficit procedure methodological visit to Greece in 2008 and at the time Eurostat did not receive information about such transactions," he said.

The commission is to come forward shortly with a proposal to give Eurostat auditing powers, with the latest allegations emphasizing the need for greater scrutiny, said Mr Tardio.