By Luke Baker and David Brunnstrom
BRUSSELS, Feb 15 (Reuters) – The European Union has asked Greece to explain reports that it engaged in derivatives trades with U.S. investment banks that may have allowed it to mask the size of its debt and deficit from EU authorities.
According to the New York Times, one contract in 2001 — carried out just as Greece was joining Europe’s monetary union — involved Greece selling forward future lottery receipts and airport landing fees in exchange for cash to write down debts.
The deal was treated as a currency trade rather than a loan, according to the newspaper, allowing Greece to hide it from public view while meeting EU deficit limits.
Greece’s finance minister, George Papaconstantinou, on Monday dismissed suggestions that his country may have played fast and loose with monetary rules, saying the transactions Greece took part in were permissible at the time.
“The kind of derivatives contracts reported by some newspapers were legal at that time,” he told reporters in Brussels. “Greece was not the only country to use them…They were made illegal; we have not used them since then.”