Greek statistics chief hits back at criminal charges

Posted on August 14, 2016

Andreas Georgiou©AP

Andreas Georgiou

Statistics experts are open to criticism if the numbers fail to add up. But Andreas Georgiou, former chief of Greece’s statistical agency, says he is living in an upside down world where he is being prosecuted for consistently getting them right.

Mr Georgiou and two colleagues are to face trial on criminal charges of undermining the “national interest”, according to a ruling last week by the Greek supreme court overturning their acquittal by a lower court.

    The charges concern the alleged “inflation” of the budget deficit and debt figures for 2009, the year in which Greece plunged into an unprecedented financial crisis that prompted the first of three bailouts by the EU and the International Monetary Fund.

    The case has sparked outrage from economists and statisticians worldwide who believe Mr Georgiou has become a scapegoat for Greece’s political class, which refuses to accept responsibility for the country’s financial collapse or take ownership of a bitterly contested seven-year programme of fiscal and structural reform.

    Last week in a letter to the Financial Times, Pali Lehohla, head of South Africa’s statistics agency, called the decision to prosecute Mr Georgiou ‘a brutal blow’ which turned statistics into a “high-risk” career choice.

    Mr Georgiou, himself a former IMF official, strongly rejects the accusations against him. “I feel that I’m living in a paradoxical world where everything is standing on its head . . . Those who produce reliable statistics that have been validated many times over by international institutions are persecuted while those who oppose them and were responsible for the fraudulent statistics in the past go unchallenged,” he said by telephone from his home in the US.

    Mr Georgiou won the trust of Greece’s creditors by producing an accurate statement of the 2009 deficit within a few months of taking the helm at Elstat, an independent statistical agency set up as a condition of the bailout deal. His findings were validated by experts from Eurostat, the EU statistics watchdog.

    But Elstat’s revised figure for the deficit of 15.4 per cent of gross domestic product, compared with a finance ministry estimate of 13.6 per cent, sent shockwaves through Greek politicians and central bank officials.

    Mr Georgiou said the decision to reactivate the case should be very alarming for both the Greek government and the member states of the European Union.

    “If national officials cannot keep accurate statistics without fear of being dragged for years through the courts, the integrity of the EU and its economic system is critically undermined.”

    Mr Georgiou’s critics, from Prokopis Pavlopoulos, the Greek president and a former conservative cabinet minister, to senior members of the hard-left government of Alexis Tsipras, the prime minister, claim that Greece was forced to accept larger loans and harsher bailout terms because the deficit was revised upwards.

    Yet the accusation against Mr Georgiou of undermining the “national interest” also highlights a pervasive Greek policy of fudging economic statistics for political gain.

    If national officials cannot keep accurate statistics without fear of being dragged for years through the courts, the integrity of the EU and its economic system is critically undermined

    Greece gained entry to the eurozone by understating the budget deficit for 1999, the benchmark year to qualify for admission, then continued to massage the figures, brushing aside repeated warnings from Eurostat about the methodology used by the government’s statistics unit.

    Senior officials from the finance ministry and the central bank would meet to agree a final figure for the budget deficit and public debt to be reported to Brussels, paying scant attention to the official numbers, according to people with knowledge of the practice. “It was a smoke-filled room sort of operation repeated every year,” one such person said.

    Mr Georgiou met strong resistance to the adoption of EU statistical standards. Some Elstat board members demanded a discussion to finalise the 2009 deficit figure in violation of Eurostat regulations. The union staged strikes against updating methodological practices. The former deputy chairman, Nikos Logothetis, a political appointee, is due to face trial later this year on charges of hacking into Mr Georgiou’s work computer on a daily basis.

    The Tsipras government joined the campaign against the Elstat chairman, as part of a drive to win concessions on debt relief from Greece’s international creditors, even though the 2009 deficit figure was used as a benchmark for calculating Greece’s latest €86bn bailout.

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    Rather than examine fiscal mistakes, Greeks scapegoat a number cruncher, writes Philip Delves Broughton

    Nikos Pappas, minister of state and the premier’s closest adviser, last week called for an in-depth investigation of “how and if deficits were inflated in order to expedite pre-planned political decisions for bringing Greece into a memorandum [bailout agreement].”

    Mr Georgiou warned that if the court finds against him, Greece could run into problems with the forthcoming debt negotiations.

    “If the calculation of the government debt is judged to be wrong, can there be any discussion on debt sustainability and debt alleviation for Greece by the European partners? “ he said. “It’s not logical . . . the prudent thing would be to settle all this.”

    Having returned to the US when his five-year term ended last August, Mr Georgiou now faces a prolonged struggle to clear his name. Yet for all his travails at Elstat, he is still glad he returned to Greece to participate in the reform programme.

    “I don’t regret it one bit. I’d have done exactly the same again — in a heartbeat,” he said.

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