Greece May Sue Goldman Over Bank's Role In Greek Collapse

Tyler Durden's picture

It's Goldman Sachs' world, we just happen to live in it. 

That rather unfortunate, yet exceedingly accurate, characterization of the global financial and geopolitical landscape seemingly becomes more true with the passage of time and perhaps nowhere is it more evident than Europe, where the common currency experiment (which never had any hope of working without some semblance of a fiscal union) is on the brink of collapse. 

As we noted in "The Biggest Winner From The Greek Tragedy," the losers from the disintegration of the EMU are ordinary, common, taxpaying Europeans who enjoyed a few brief years of artificial prosperity, which in retrospect was entirely due to debt, masked well by the "currency swaps" and other financial engineering concocted by banks such as Goldman Sachs, in clear violation of the Maastricht treaty which is now a long-forgotten memory of the founding ideals behind the Eurozone.

As a reminder, Greece’s EMU membership was in no small part due to a Faustian bargain with Goldman.

Back in 2001, the bank swapped dollar- and yen- denominated Greek debt for euros using a possibly made-up exchange rate that effectively allowed Greece to artificially reduce its debt-to-GDP ratio. 

Now, with Greece teetering on the edge of economic oblivion, the beleaguered country could look to sue Goldman in an effort to recoup hundreds of millions in what are being presented as ill-gotten gains. Fittingly, it is a former Goldman banker who has apprised the Greek government of the possibility that they may have a claim. Here’s The Independent with more

A leading adviser to debt-ridden countries has offered to help Athens recover some of the vast profits made by the investment bank.

 

The Independent has learnt that a former Goldman banker, who has advised indebted governments on recovering losses made from complex transactions with banks, has written to the Greek government to advise that it has a chance of clawing back some of the hundreds of millions of dollars it paid Goldman to secure its position in the single currency.

 

Greece managed to keep within the strict Maastricht rules for eurozone membership largely because of complex financial deals created by the investment bank which critics say disguised the extent of the country’s outstanding debts.

 

Goldman Sachs is said to have made as much as $500m from the transactions known as "swaps" It denies that figure but declines to say what the correct one is.

 

The banker who stitched it together, Oxford-educated Antigone Loudiadis, was reportedly paid up to $12m in the year of the deal. Now Jaber George Jabbour, who formerly designed swaps at Goldman, has told the Greek government in a formal letter that it could "right historical wrongs as part of [its] plan to reduce Greece’s debt".

Jabbour was laid off from Goldman in 2008 (he apparently left on good terms although earlier in the year he described a $100 million deal the bank had orchestrated with the Libyan Investment Authority as "a bit scary" in an e-mail to a colleague) after which he started his own advisory firm. 

The NY Times has more on the former Goldmanite's post-Wall Street assignments:

In December 2009, Ethos won a contract to work with Metro do Porto, a Portuguese state-owned train and subway company. Mr. Jabbour’s assignment was to untangle a pair of offsetting derivatives contracts with Goldman Sachs and Nomura that were meant to help manage interest rate risk on 126 million euros of debt but instead, at different points, incurred expected losses greater than the amount of the loan itself, according to documents released in the parliamentary inquiry related to the contracts.

 

At the time, Goldman and Nomura told Metro do Porto that it would cost it €26 million to cancel the identical elements of the contracts. Mr. Jabbour helped to restructure them, and instead of paying Goldman and Nomura, Metro do Porto earned back nearly €20 million to cancel the offsetting parts of the trades, according to emails and presentations made available as part of the inquiry.

 

At Ethos, in addition to representing Metro do Porto, he reviewed swaps in the county Seine-Saint-Denis in France and did some work in Italy, according to media reports in Portugal. 

 

If the Libyan Investment Authority has its way, Mr. Jabbour will also play a role in the suit it has brought against Goldman.

In a 2013 interview with Público, Jabbour said the following about his new venture: "having worked in banking, I noticed that banks took advantage of public sector entities when dealing in complex and structured transactions, including swaps and derivatives, therefore, I set up my business, Ethos, in 2009 to alert, assist and increase the awareness of public sector entities when dealing in these transactions."

Yes, banks often do "take advantage of public sector entities" (and all manner of other entities and individuals for that matter) by using opacity and complexity to structure deals that overwhelming favor the banks' interests over those of the client and indeed that may have been exactly what happened in the Goldman/Greek deal, which is why, as we noted last week, it's particularly interesting that the man in whose hands some €110 billion in Greek deposits now rests was Vice Chairman and Managing Director at Goldman from 2002 to 2005.

We can only hope that if Greece does indeed decide to take Mr. Jabbour up on his offer to help clawback some of the half billion euros the bank reportedly pocketed from helping to hide Greece's debt - which in turn allowed the country to join a currency union it had no business joining thus ensuring its eventual expulsion and the attendant economic collapse - that the discovery process will help shed some light on whether the man now in charge of the ECB personally oversaw and endorsed the perpetuation of the Greek lie. 

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JustObserving's picture
Greece May Sue Goldman

If Greece sues in the US, it has virtually no chance of winning:  

US judiciary has been compromised by NSA spying as Snowden revealed.  

The stunning implication of this passage is that NSA spying targets not only ordinary American citizens, but also Supreme Court justices, members of Congress and the White House itself. One could hardly ask for a more naked exposure of a police state.

How the US Supreme Court Has Treasonously Destroyed America’s Democratic Republic

America is no longer a republic but an oligarchy where the power interests of the few dictate and control how our federal government votes and makes laws. Rather than pay any attention to its blatant conflict of interest in violating every democratic principle, the Supreme Court has also made it official – our government is up for sale to the highest bidder.

http://www.globalresearch.ca/how-the-us-supreme-court-has-treasonously-d...

garypaul's picture

I TOLD YOU this was coming, a few months ago right in these comments.

NEXT: Goldman et al. are declared a 'criminal organization' by Greece for their actions and the whole thing is up for nullification.

Sorry I don't mean to brag but...

Augustus's picture

Goldman Sachs was successful in doing exactly what the Greek government wanted them to do.  Greece applied for admission to the EU and that application was successful, in part because of the Goldman help and advice.  Now it is suggested that Greece sue Goldman because the firm did exactly what was asked of them.  And that brings cheers from ZH nutters? 

This is much the same as the silly Greeks now claiming that the only reason they have debt problems is that they were unfairly induced to take loans to fund their 20+ years of socialist nonsense.  The Greeks regularly say:  "Those lenders should never have agreed to loan us the funds we requested, promised to repay, and spent.  As stupid Greeks we could not know anything about making repayment of debt."  The money smelled fine when they took it.  Now it is considered odious and the loans illegal by many of the nut jobs.  Screwing their EZ partners is not a problem for the Greeks.

N2OJoe's picture

The blame lies on all sides. However, there is only one way to actually resolve the current situation. It rhymes with Grefault and Goldman should have just as much skin in the game for knowingly brokering a bad deal that was designed to fail.

Ofelas's picture

they can persue this via international organisations and ultimately issue an international arrest warrant...no where to hide then! If Greece needs support for this action, try Crowdfunding and I will chip in

HolyfieldsOtherEar's picture

The headline: "Greece may sue Goldman Sachs"

 

The story: "Some guy says Greece oughta sue Goldman Sachs."

Id fight Gandhi's picture

Same kind of people ruining countries for centuries now, hmm who are they?

Troy Ounce's picture

 

 

A total waste of time and money.

Villageidiot777's picture

So first Greeks ask GS to scam their way into EZ and when shit hits the fan they just sue GS? Nice plan indeed.

chunga's picture

Poor Goldman Sachs, the innocent scapegoat once again.

neon con's picture

Germany knew nothing of that, right? Greece just sent a file with fax and entered the euro

davidalan1's picture

And how are they goiing to pay for that?

ThroxxOfVron's picture

Put your wallet on the table, drop your pants, bend over and take firm hold of your ankles.

peanuts's picture

Yes, bring the lawsuit on.

disabledvet's picture

Goldman is in fact a PARTNERSHIP.

Those are very wealthy people there indeed.

Greece is a COUNTRY however...so this will be decided in Federal Court both here AND there.

The damages in a case such as this could be in the HUNDREDS OF BILLIONS.

Guess we'll find out shortly just who Goldman has as actual "friends" on Wall Street...

nickels's picture

"Fiduciary Responsibiliy". It's what's for dinner.

yellowsub's picture

Waited just a bit too long to sue?

disabledvet's picture

Nein!

"If entered into under a false pretense upon what as exited?"

And indeed....if the entire Eurozone implodes here...

Anopheles's picture

Greece has no leg to stand on.  Goldman did exactly what they were hired to do, and they did it very well. 

 

 

Anonymous_Beneficiary's picture

Interesting view but wrong nevertheless if undue influence can be shown..

JJdog's picture

Wonder if Greece is paying the lawyers with Greek Yogurt!  Long Greek Yogurt! Goldman would agree! 

Totentänzerlied's picture

"As a reminder, Greece’s EMU membership was in no small part due to a Faustian bargain with Goldman."

Faustian indeed, but Greece, unlike Dr. Faustus, has still not been dragged to hell (the proper ending of the Faust legend, in my opinion).

" to recoup hundreds of millions in what are being presented as ill-gotten gains."

Goldman pays this token sum for alleged "damages" for which no evidence could ever be produced and no victim could ever be identified, not even hypothetically.

But if you really gave a single flying fuck about ill-gotten gains...

Greeks likewise must pay back every single euro that ever entered their economy, plus the assessed value of all other benefits accrued to Greece as a direct result of its fraudulent eurozone membership.

After all, it's only fair!

disabledvet's picture

We do not know if Greece was in fact "lied into the EU."

Goldman Sachs could of course admit to this...

johnlocke445's picture

Oh no! No, no, no, no...Greece will not take action against Goldman Sachs because it is the RIGHT thing to do and Tsipras has shown all along that he is a man that always does the WRONG thing for Greece. He will sell his people down the slave plantation river to stay in that STUPID, RETARDED EU. I see no reason as to why he wants to stay. He is the ultimate nutcase.

Savyindallas's picture

What a brilliant strategy? get a $300 billion dollar judgment against Goldman, and then we-the American taxpayers-have to bail out Goldman again. meanwile, Goldman cuts another secret deal with greece to get a third of all recovery, so Goldman colludes with the Greeks and makes a double recovery. Then Goldman helps the US get further into debt so we are like greece is now  -and they get us bailed out , over and over, and pretty soon Goldman and the banks own everything as we fork over our pledged assets and we are all slaves. 

disabledvet's picture

Well...the "Zio-Nazi's" have signed off on Generalplan Ost so....

I think "the taxpayer"'has other priorities right now...

The Delicate Genius's picture
The Delicate Genius (not verified) Savyindallas Jul 12, 2015 2:31 PM

http://www.goldmansachs.com/who-we-are/leadership/board-of-directors/

These assholes should be made to work in Greece's gyro mines.

The Delicate Genius's picture
The Delicate Genius (not verified) Jul 12, 2015 2:30 PM

Peter Sutherland sure doesn't look Irish....

Soul Glow's picture

About time.  Now leave the fucking EU under this pretense.

The Delicate Genius's picture
The Delicate Genius (not verified) Jul 12, 2015 2:37 PM

Regardless, Goldman and a large handful of other banks should be broken up.

https://en.wikipedia.org/wiki/Kleptocracy

And Dargi should be in the dock with Blankfein.

Not if_ But When's picture

I'd LOVE this.  It would be political suicide for any (body) in the US to help Goldman financially if this plays out the way it should.  This will get to the heart of the matter:  Goldman's business model is to do whatever it takes to manipulate UNSOPHISTICATED INVESTORS OF ALL SORTS to get involved with supremely complicated financial products so they can f*ck them over while maintaining that these UNSOPHISTICATED INVESTORS were supposedly SOPHISTICATED INVESTORS.  And so far their "absurd on the face of it" contention has been accepted by regulatory bodies since there has been no consequences.

Niall Of The Nine Hostages's picture

So a disgruntled former member of a pack of thieves offered to help another pack of thieves sue the first for stealing their money---minus a piece of the action.

You can't cheat an honest man, and nobody at Goldman stuck a gun to Athens' head and forced them to let Goldman help them cook their books.

Anonymous_Beneficiary's picture

Surely you've heard of the "revolving door" where goldmanites and other corporate elite go back and forth between all the "right positions" in corporate and government realms.

The Delicate Genius's picture
The Delicate Genius (not verified) Niall Of The Nine Hostages Jul 12, 2015 3:15 PM

Goldman's profits for their fraud came out of the pockets of taxpayers, ultimately.

fuck 'em.

ajax's picture

 

 

"Goldman's profits for their fraud came out of the pockets of taxpayers, ultimately."

Damn right. Let's all sue Goldman Sachs: a worldwide tax-payers' class action suit against GS.

I'm in the mood for it.

 

MsCreant's picture

If they could make it stick, IF; then Italy would be next in line, they did the same shit there. Wonder how many others? This has the same domino potential as the derrivatives do. 

The Trioka needs to make it look like they have worked out something the rest of the F/PIIS DON'T WANT to happen to them. 

cherry picker's picture

They can make it stick.  If the Department of Justice had any balls Goldman and a few others would have lost their license to operate years ago as they all paid billions in fines for wrong doing.  They are self admitted criminal organizations.

They could have disolved GS, JP Morgan and other banks could have shared the depositer base.

There is a mountain of evidence out there that the CIA is criminal in nature and guilty of attrocities, but the hypocrites in charge won't touch them with a ten foot pole.

The world has to find a way to disarm the USA to find out what rot the system is hiding.

Anonymous_Beneficiary's picture

The Department of Just Us.

Not the world, but the people of the states united are going to have to find a way to hold these parasites accountable on their own...take matters into their own hands using every reasonable and conscientious means available, including but not limited to the law and equity.

Anopheles's picture

Lets see now.  Greece "hired" Goldman Sachs to hide their deficit, and they did an outstanding job of it. 

So now Greece is saying that it's Goldman's fault for doing exactly what they were paid to do?  Socalists, it's NEVER their OWN FAULT. 

 

 

MsCreant's picture

What if the script looked more like this:

[Greece]: Golly, sorry, we can't afford to join the EU, the numbers just don't add up.

[Gold sacks]: No, baby you got it all wrong. We can restory those books with other creative, off the books accounting gimicks. We did it for Italy, we can do it for you too. 

[Greece]: I dunno...

[Gold sacks]: Do you really think France, Spain, Portugul, Ireland, and Italy are solvent? Really? It's okay. The EU knows what's really going on. They want you in. Come on now...

[Greece]: Are you sure?

[Gold Sacks]: Let me show you how we did it over here...

[Greece]: Oh, wow, is that legal?

[Gold sacks]: Sure it is, and everyone is doing it. They would have to come after everyone if they came after you...

Anopheles's picture

"the losers from the disintegration of the EMU are ordinary, common, taxpaying Europeans who enjoyed a few brief years of artificial prosperity, which in retrospect was entirely due to debt, masked well by the "currency swaps" and other financial engineering concocted by banks such as Goldman Sachs, in clear violation of the Maastricht treaty which is now a long-forgotten memory of the founding ideals behind the Eurozone."

Goldman Sachs isn't a member of the EU and the Maastricht Tready doesn't apply to them.  They just did what they were hired to do by Greece.  

Everyone seems to be putting the blame on GS, but the real culprit is Greece. 

The Delicate Genius's picture
The Delicate Genius (not verified) Anopheles Jul 12, 2015 3:14 PM

Goldman deliberately and with malice aforethought used and presented false numbers and profited from it.

This was a fraud on everyone in the eurozone, and Goldman ought to be disgorged.

Shirley Swanepoel's picture

Good luck with that!

 

Joebloinvestor's picture

They should have done this 5 years ago.

Notice they are not going after ex-government criminals, because that would require prosecuting fellow Greeks.

neon con's picture

The whole thing goes way deeper. Goldman Sachs along with ex-Greek PM Kostas Simitis and GERMANY fixed the numbers. It was Germany in the game too.

Who is Kostas Simitis and his 'beloved' brother? Traitors working for Germany. The way Germany to invade financially in Greece.

Costas Simitis was born in Piraeus to Georgios Simitis, a Professor at the School of Economic and Commercial Sciences, and to his wife Daphni (née Christopoulou). He studied Law at the University of Marburg in Germany and economics at the London School of Economics. He is married to Daphne Arkadiou (b. 1938)and has two daughters, Fiona and Marilena. His brother Spiros Simitis is a prominent jurist specializing on data privacy in Germany.