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News agency picks a fight about ECB-secrets

What did they know, and why won't they tell?

Documents showing how Greece hid the size of its public debt for years, and a possible dubious role of the European Central Bank might still be disclosed to the public. Bloomberg News agency has decided to challenge the EU secrecy culture.

In spring 2010 Eurostat, the EU statistical office published a report indicating the Greece hade veiled the size of it public debt since for almost a decade.
Assets supposed to provide securities for loans were made up by interest-rate swaps (agreement on a future payment) between the National Bank of Greece and the government.
In this way the Greek economy seemed to be in a better shape than was the actual case.
In a reaction to these allegations two documents were prepared to Executive Board of the European Central Bank (ECB).
Gabi Thesing, reporter at Bloomberg News had seen a covering note to the two documents and requested access to the full content of the files. Her request was turned down.
The information contained in the two documents would undermine the public confidence as regards the effective conduct of economic policy,” Jean-Claude Trichet, ECB president at the time, wrote in a rejection letter.
This rejection was later rubber stamped by the General Court, the lower chamber of the EU-courts in Luxembourg but is now appealed to the European Court of Justice.

Contradiction of arguments
Disclosure of the content would ”undermine public confidence as regards the effective conduct of economic policy in the EU and in Greece,” the General Court concluded in its verdict in December last year.
The court said that the files only showed an out-dated snapshot of the situation in 2010 and that a disclosure could severely mislead the public in general, and the financial markets in particular.
When Gabi Thesing and Bloomberg now appeal this decision to the EU ”supreme court”, a finger is put on a contradiction of arguments:
The ECB claimed that the requested information is relevant to on-going decision-making, and at the same time that the information is misleading because it is out of date.
Quite simply, these two assertions cannot sit together”, Bloomberg lawyer Mark Stephens concludes.

If they knew and if they didn’t
Formally the appeal case will deal with the ECB rules of access to documents and its interpretations. But more is at stake.
The bottom line is not only if Greek governments mislead the market, the European authorities and the public at large. The case also raises questions about the ECB and its ability, or failure, to act as the crisis was building up.
If ECB knew about Greek officials cooking the books, why did the bank not react?
If ECB did not know about the tricks, did it not fail in fulfilling its obligations?
Adding to that, there are other questions in the margin, for example about the role of investment bank Goldman Sachs.
The American bank helped Greece carrying out the interest-rate swaps and – as it happens – has had the present ECB director Mario Draghi as vice chairman and managing director.


Three grounds for appeal
In the upcoming process Bloomberg will rely on three main grounds for the appeal:
• The General Court disregarded an overriding public interest in favour of disclosure.
• Rejection of access was based on the assumption that the market would have reacted to out-dated information, knowing well that the information was incomplete.
• The General Court did not consider recent decisions by the European Court of the Human Rights (ECtHR), stating that the right of access to information is an integral part of freedom of expression as laid down in article 10 in the European Convention on Human Rights (ECHR).


Right to take side
Although both the ECtHR and the ECHR are children of the Council of Europe, which is not a EU-institution, the EU makes references to the European Convention on Human Rights in the Lisbon Treaty, and intends to become a signatory of the Convention.
An interesting consequence of this appeal could be that the EU’s freedom of information regime – known as regulation 1049/2001 – needs to be shaped by Article 10 of the ECHR. Such an outcome would run counter to on-going negotiations where the Commission and some member countries have tried to amend the present regulation towards less transparency – previously covered by this website.
In the upcoming appeal case ”outside” organisations might be allowed to file observations and thus intervene by supporting any of the two sides.
Wobbing.eu intends to get back to this possibility later on.


For the decision by the General Court in December and the application by Bloomberg – see Documents above.


Staffan Dahllöf


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