ECB asked to dismiss lawsuit on “smelly” Greek SWAP disclosure

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The European Central Bank apparently asked the European Union’s General Court on Friday –for reasons which one could only imagine- to dismiss a lawsuit seeking the disclosure of documents showing how Greece used derivatives to hide loans and triggered the country’s sovereign debt crisis. 

The ECB has complete discretion to decide what it should publish in the public interest, according to its defense to a lawsuit filed by Bloomberg News. 

Releasing the papers could damage the commercial interests of the ECB’s counterparties, hurt the region’s banks and markets, and undermine the economic policy of Greece and the EU, the central bank said. (What they failed of course to say, is what damage this sudden ‘cover-up’ on information has on citizens of Greece who are called on to pay for all these financial schemes.)

The documents don’t “provide information that would assist in informing the public debate in any meaningful manner,” the ECB said in its lawsuit. The files “contain ECB’s staff assumptions and hypotheses which were intended to feed the internal deliberations,” the ECB said in papers served today. The notes “were as such made on the basis of partial elements available at the time and not fully accurate information.”

According to the Bloomberg report, ECB President Jean-Claude Trichet is withholding the documents as EU finance chiefs prepare to meet in the forthcoming week to discuss additional support for Greece, which received a 110 billion-euro bailout ($155 billion) last year. According to a Bloomberg Global Poll, published yesterday, more than four in five institutional investors say Greece is probably going to default on its debt.

The central bank also said that the documents should also be protected to safeguard the effectiveness of the ECB decision-making process. (Predictable….)

The ECB also challenged the Bloomberg suit on technical grounds. The suit, which is based on the EU’s freedom of information rules, was filed in Luxembourg in December. It requested access to two internal papers drafted for the central bank’s six-member executive board in Frankfurt last year.

‘More Accountability’

“Greater transparency results in more accountability, and the investing public has the right to know more about the roots of Europe’s sovereign debt crisis,” said Matthew Winkler, editor-in-chief of Bloomberg News. The company intends to file a response.

Eurostat, the EU’s statistics office, last year provided sufficient information on its doubts about the impact of swaps on Greece’s debt, allowing the public to form their own opinion, the ECB said in its filing. The off-market swaps, which Greece hadn’t previously disclosed as debt, let the country increase borrowings by 5.3 billion euros, Eurostat said in November.

Source: http://www.businessweek.com/