Greece to press ahead with criminal trial for ex-statistics chief

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[Brussels and ECB are concerned by the charge that Andreas Georgiou overstated the Greek deficit to justify harsh bailout. Georgiou "was recruited from the International Monetary Fund" *RON*]

By Eleftheria Kourtali & Arthur Beesley, Financial Times, 2 August 2016

A rally in protest against austerity measures outside the Greek parliament in Athens last year © EPA
The former chief of the Greek statistics agency is to face criminal trial for undermining the “national interest” after he allegedly overstated the country’s budget deficit.

Greece’s supreme court ruled that Andreas Georgiou should face charges that carry a prison term of up to 10 years despite concern inside Greece that the radical left government is politicising independent institutions.

The case has also prompted concern among officials at the European Commission and the European Central Bank, who accepted without reservation the accuracy of data produced by Elstat, an agency set up in the wake of Greece’s first international bailout.

“The situation is clear. It is not a pleasant case. The commission and ECB have been watching this and have reacted very negatively to the case,” said a high-level eurozone official.

The case against Mr Georgiou centres on claims that the reported high deficit for 2009 helped the country’s creditors to justify harsh bailout terms.

A minister in the hard-left Syriza government said the court proceedings would explore whether data were produced to support “pre-planned political decisions”.

Mr Georgiou, who has denied any wrongdoing, was recruited from the International Monetary Fund in 2010 to set up a national statistical body in the months after Greece was rescued following the election of a new Greek government in October 2009.

The incoming administration said the deficit that year would be more than three times the previous forecast. That led to the replacement of the old statistical office by Elstat as a condition of the aid package. Elstat later revised the size of the 2009 deficit from an estimated 12.8 per cent of gross domestic product to 15.8 per cent, a figure which underpinned years of swingeing retrenchment in a succession of bailouts.

There was no comment on the case from the centre-right New Democracy, the main opposition party. The opposition Pasok socialist party, which took office in 2009, said the case suggested that the people who uncovered the “fiscal derailment” were being prosecuted and not those responsible for the affair.

While Mr Georgiou has always said the decision to seek external aid came well before he took up the post, the charges state that the figures he and two other officials produced were used to justify a multibillion-euro loan programme with tough austerity measures and intrusive oversight.

In a judgment on Tuesday the supreme court overturned a lower court’s ruling that he should stand trial only on the charge of misconduct for not relinquishing the IMF post he held for 21 years before he joined Elstat.

Nikos Pappas, minister of state in the Syriza government, said on radio that the case “opens a wound” that needs to be explored in depth. “How and if deficits were inflated in order to have pre-planned political decisions, for bringing Greece into the memorandum?”

The bailouts are known in Greek political debate as memorandums, after the disputed policy requirements set out as conditions for loans in memos agreed with the European powers and the IMF.

“There will be a battle to explain and present the history of what exactly happened, and what and whose interests were served in the country’s path by previous governments, and where each political force wants to lead the country,” said Mr Pappas.