Exclusive
information by Kostas Vaxevanis and koutipandoras.gr
According to
Kostas Vaxevanis, the American company Cleary Gottlieb Steen and
Hamilton suggested to the Greek government a way to avoid the new
Greek bonds to be governed by the English law and therefore, to avoid
mortgaging country's public property.
The
journalist reveals a document in his website koutipandoras.gr, from
the company to the then General Manager of the Public Debt Management
Agency, Petros Christodoulou, through which makes the suggestion. Key
parts of this document follow:
“The
dealer managers are insisting that all new bonds issued in connection
with Project Oak be governed by English law. Only a very small
percentage of Greece's existing debt stock is governed by foreign law
so this would amount to a wholesale switch of the governing law of
Greek public debt”
“The
dealer managers have argued that a continuation of the practice of
issuing Hellenic Republic bonds under Greek law places the
bondholders at the mercy of the Greek Parliament for the next 30
years. The Parliament could, they argue, change relevant Greek law in
the future in a way prejudicial to the interests of bondholders.”
[...]
“There
is a possible compromise that addresses the concern expressed by the
dealer managers while retaining Greek law as the governing law of the
new bonds. The new bonds could include a provision along the lines of
the following:
These
bonds shall be governed by, and construed in accordance with, the law
of the Hellenic Republic as such law is in effect on August 1, 2011.”
According to
Kostas Vaxevanis, although the American company has been hired by the
current government vice president and leader of the Socialist party
PASOK, Evangelos Venizelos, he is responsible for the rejection of
the alternative solution concerning the Greek bonds.
It is worth
to remember that in the recent "success story" of the Greek
president Samaras connected to the fact that Greece borrowed from the
markets, the country issued bonds which are regulated according to
the foreign and not the Greek law. More specifically, the bonds are
regulated according to the English law, which is the most protective
to the lender against the borrower:
As in all of these bailouts, the most vulnerable suffer and the connected ones prosper.
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