By Simon Johnson
In its previous response to us, the the Bank of Italy pointed out that Mario Draghi (its current governor) did not join the management of Goldman Sachs until 2002 – hence he was not there when the controversial Greek “debt swaps” were arranged.
We agree that he joined Goldman only in January 2002 (this was in our original post). But the latest revelations regarding the Goldman-Greece relationship (on the Senate floor, no less) clearly indicate that Goldman was a lead manager of Greek debt issues in spring 2002, i.e., when Mr. Draghi was on board.
This raises three entirely reasonable and straightforward questions.
- Was Mr. Draghi involved in the Goldman-Greece relationship? Sources indicate that this was very much part of his set of responsibilities, but this may be disputed.
- If Mr. Draghi was involved in marketing Greek debt, did he at that time know the true Greek debt numbers – i.e., was he aware of the “debt swap” arrangement? Perhaps his Goldman colleagues concealed that information from him.
- And when/if Mr. Draghi became aware of the inherent misrepresentation involved this transaction, did he take steps to fully informed investors (and any relevant regulatory bodies)? Again, it is entirely possible he learned of this matter only recently and from the newspapers.
Keep in mind that Mr. Draghi is still regarded as a leading contender to become president of the European Central Bank – the most important policymaking institution in the eurozone. It will be hard for anyone to advance his candidacy without clear and public answers to these questions.