Goldman Sachs admits currency swaps role in Greek crisis

23 February 2010 10:00 am | By Paul Thomas

Speaking to the Treasury select committee yesterday, Corrigan said that the currency swap deal was not solely limited to Goldman Sachs and Greece but did contribute to the country’s current debt crisis which, it is claimed, allowed them to mask additional borrowing.

He said: “It is true that a family of currency swaps that were entered into jointly by Goldman Sachs and Greece in the late 90s and the early part of the 2000s, were of a nature that they did produce a small, but not insignificant, reduction in Greece’s deficit and debt at that time.”

He added, however, that these were in line with the standards expected at the time. He said: “However, it is very clear today, based on the investigation that I have done over the past few days, those transactions were very much consistent with the standards of behaviour of measurements used by the European community.” When pressed by MPs, he said “with the benefit of hindsight… the standards of transparency could have been and probably should have been higher”.

When asked if it was possible that the UK had entered into similar deals, he replied “it is possible”, but that he did not know specifically if other had similar deals in place.

The swap deal that Goldman Sachs and Greece made in 2001 is now prohibited, with the EU modifying standards in 2007.

Corrigan suggested that the standards might have been too liberal at the time. He said: “Those standards were modified in 2007, which suggests that they were more liberal than they could have been back in 2001.”

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