Abuse of official secrecy. It’s been one of the more corrosive but — by definition — shadier aspects of the eurozone crisis.
It can take the form of a report on money-laundering in Cyprus. Or the opaque process by which Troika debt sustainability analyses are drawn up. Emergency liquidity assistance to banks, even.
And after Greece’s second bailout in 2011 — it was the Finnish government’s ludicrously secretive demand for ‘collateral’ in return for its share of the new loans.
Well, strike one blow for transparency on Tuesday:
Finland’s finance ministry has at last opened documents of its Greek transaction to proper public scrutiny. (Go here for the credit support annex, for example. A before and after of a random page from the deal’s confirmation doc is also below, just to show how limited the government’s previous disclosure was…)
The finance ministry was ordered to stump up the docs by Finland’s highest court. There is nevertheless a catch: we still can’t officially know the identities of the Greek banks who are Finland’s counterparty in this deal, even though Reuters long ago named them as National Bank of Greece, Alpha Bank, Eurobank, and Piraeus Bank.
Nor for that matter do we know the identity of the trustee — a bank which is surely in a plum position for collecting fees.
Still, we might be able to tell a bit more about whether this deal was ever worth the hassle.
Finnish MPs and media had pressed for full information about the deal ever since it was signed. FT Alphaville also noted its murkiness here, here, and here.
After all, Finland later made more or less the same arrangement over its exposure to the Spanish bank bailout, without the Greek deal’s clandestine farce.
In any case the Greek ‘collateral’ was fishy from the start.
Finland couldn’t make a deal with Greece directly, on pain of triggering negative pledge clauses in some Greek bonds. So, the deal mutated into a total return swap with those unknown Greek banks, or we suppose something a bit like a CDS written on the Greek sovereign by those banks. The swap involved the exchange of Greek bonds under the protection of the unknown trustee, and then their transmuting into ‘safer’ securities.
The general way a total return swap works is hardly classified information, so it was possible to get an idea of how Finland’s deal operated once we knew it was a TRS. Though it was hardly the straight-up €880m cash collateral that the “anarchists in Helsinki” (to quote one pungent reaction from within the Greek debt restructuring at the time) had at first seemed to promise. And without real detail, it was hard to tell whether the Finnish taxpayer ultimately came out better or worse off here. (There are those fees…)
Now that the docs have been more or less properly released, there’s already some anger that they don’t directly mention ‘collateral’; though there’s also scepticism on the arguably more relevant question of whether the underlying guarantees are actually any good. We still have to look into the docs more for this (which run to hundreds of pages).
For now, our interest lies in what the Finnish Supreme Administrative Court said about the decision to censor the documents in the first place.
The suit in the courts was brought by a band of Finnish media and MPs, as we noted. Leading among them was Pirkko Ruohonen-Lerner, an MP of the True Finns party. Her argument to the court included the point that Finnish law was being subjected to Greek demands for secrecy — and it might one day be the same situation for (say) an arrangement with the Italian government. Weirdly, that’s echoed in the some of the Finnish government’s argument against full release, which implied that it was Greece that pressed for confidentiality.
Well the court seems to have treated this line of argument as not very relevant: it only really appears to mention the possibility that Finland’s international relations in general — in the management of the eurozone crisis or elsewhere — might be damaged by disclosure. They wouldn’t be damaged, the court concluded. It also appears to gives short shrift to the government’s argument that its financial interests would be hurt: the ‘collateral’ deal is so specialised that this is unlikely, it says.
Now, this is all in the context of Finnish transparency laws, and the court also cites the protection of “trade secrets” between contracting parties for continuing to redact the names of the Greek banks.
The general principle, however, is surely one for the eurozone to follow more…