An appellate level prosecutor on Friday again recommended throwing out an indictment against the former head of Greece’s statistics bureau, EL.STAT, on criminal charges of inflating Greek budget deficits.
The prosecutor, Ioannis Koutras, said he found no evident to support the indictment against Andreas Georgiou, who served as the director of the independent authority.
In a controversial ruling earlier in the summer, Greece’ Supreme Court overturned Georgiou’s acquittal by a lower court and order a new trial – given that the Greek legal system lacks the double jeopardy concept.
A final decision rests with a council of appeal court justices.
The investigation and subsequent indictment against Georgiou began after allegations by former top cadres at the authority, who claimed that figures for the 2009 budget deficit were unduly inflated.
The allegation was later exploited by the opposition, including today’s ruling leftist SYRIZA when it was in the lesser opposition, as part of a populist backlash against the first memorandum in 2010. Essentially, critics at the time claimed is that the figures for the deficit were “cooked” in order to seek recourse to the IMF.
An out-of-control annual deficit, as a percentage of GDP, was one of the primary reasons that sparked the initial sovereign debt crisis in Greece, i.e. an inability to borrow at reasonable rates from the markets. The situation rapidly deteriorated and developed into the worst economic crisis in Greece since WWII, necessitating three bailouts by institutional creditors, the last of which came during SYRIZA’s tenure last August.
The issue emerged on a European stage in August 2016, with the EU Commission taking the SYRIZA coalition government to task over insinuations that EL.STAT’s figures were fudged over the course of three bailouts and related lending terms (2010-2015), i.e. the memoranda.
One of Georgiou's main accusers was economics professor Zoe Georganta, who served on the authority’s board of directors.
In September 2011 Georganta publicly charged that 2009 deficit figures had been artificially inflated in order to portray the Greek deficit as the biggest in Europe, with a purpose of justifying the unprecedented austerity measures taken at the time.
Given that the deficit for Ireland in 2009 stood at 14 percent, Georganta claimed that a figure of 15.4 percent for Greece was deliberately inflated.
Her charges formed the basis for the indictment against Georgiou, which languished in court dockets throughout 2015 until revived by a Supreme Court inquiry.
Georganta also claimed that the EL.STAT board of directors did not sign off on the figures presented by Georgiou at the time.
The crux of the prosecution’s argument is that Georgiou included in the calculation for the 2009 Greek budget deficit – which ballooned to more than 36 billion euros – figures and data that were not included by other Eurozone countries.
On his part, Georgiou has strenuously maintained that he wasn't even the head of EL.STAT when the specific figures were collected and calculated, in 2009.
The issue generated a heated confrontation in 2011 between the then PASOK government under George Papandreou and the then main opposition New Democracy party, which was in power until early October 2009, and which drafted and oversaw the budget’s execution for most of the crucial year.
ND at the time also blamed the PASOK government and then FinMin George Papaconstantinou for inflating the deficit. ND pointed to the inclusion of figures to calculate the deficit – and by extension, the debt -- that were not mandatory, as well as to the tactic of listing obligations during the current year but “bumping” the collection of revenues for the next (2010).
The last annual budget draft tabled in Parliament by the New Democracy government and then FinMin Giorgos Alogoskoufis in November 2008 aimed at posting a budget deficit of 2 percent of GDP for 2009, or 5.266 billion euros in absolute terms.
What followed were successive revisions of the figure until it reached the stratospheric 15.6 percent of GDP, which came out to a 36.539-billion-euro budget “hole”.
The numerous revisions of the 2009 budget deficit were, in turn, due to repeated revisions of the year’s GDP, with the last estimate given by EL.STAT in August 2016 placing the now utterly controversial figure at 15.2 percent of GDP.
Georgiou is a former IMF economist who left an established career course in the United States to return to Greece and head up EL.STAT between 2010 and 2015
