‘Lagarde’s List’ brewing trouble for Greek coalition

“I won’t accept this fabrication of guilt which doesn’t exist nor will I become the scapegoat in this case. I have absolutely no connection to any account on that list. I have not tampered with the data in any way, which I had requested and received from the French authorities,” said former Greek Finance Minister George Papaconstantinou in an emailed statement yesterday. But his defending voice could hardly be heard amid the uproar caused by the shocking twist of events which has given the political establishment in Greece its toughest test.

Papaconstantinou, a close aide of former Prime Minister George Papandreou and a top negotiator during the country’s initial talks with the EU and IMF – which put Greece under a tough multibillion-euro bailout agreement – denies that he removed his relatives’ name from an electronic file which contained the names and bank statements of Greeks with undeclared Swiss bank accounts. The list of more than 2,000 names was first handed over to Papaconstantinou in 2010 by his then-counterpart, French Finance Minister Christine Lagarde, to help Greece in its fight with corruption. However, neither he nor his successor to the post, Evangelos Venizelos, initiated a thorough investigation into the legality of those accounts. Instead, testifying recently before a parliamentary committee, he had to admit that he “had lost the file.” But things turned nasty for him when a copy of the original list requested by the new Antonis Samaras government and which was sent to the Greek authorities last week was seen to have contained the names of Papaconstantinou’s cousins and their husbands. The most likely explanation was that the minister chose to remove them himself. Now, all three parties in the Samaras coalition government are asking the Parliament to set up an investigation process to discover who tampered with the original list.

Papacosnatntinou – if proved that he indeed was the one who tampered with the list to help his relatives – entered the political arena of Greek domestic politics as one of the “clean” faces next to a reborn PASOK under the new leadership of George Papandreou. Papaconstantinou’s contempt for the old regime and his overconfident admonitions of how Greece would soon “return to the markets” had initially found a lot of supporters. But he was quickly proven wrong for his policies and was accused by the opposition, led by present Prime Minister Antonis Samaras, for criminally mishandling the whole affair. Indeed, in a poll published in May 2011, 80 percent of the people surveyed said they had no faith in Papaconstantinou’s handling of the Greek economy. Indeed, he failed to be re-elected to Parliament in last May’s general elections and he was also been expelled from his own party last week after the “Lagarde scandal.”

So far it is not clear whether the recent scandal will be dealt by Parliament or whether the case will be shelved. But what is clear is that this could not have surfaced at a worst time for PASOK and ultimately for the Samaras coalition government, in which PASOK is a partner. So far, the battle against tax evaders is being lost. The Greek government will only be able to collect up to 20 percent of the 53 billion euros in outstanding taxes it is owed, and the country’s economy is expected to contract for a sixth year in 2013.

At a time when the Greeks are about to be asked to dip more into their empty pockets to pay for more taxes, the image of a perhaps incompetent but “clean” former minister protecting the Swiss bank accounts of his perhaps tax-evading relatives can only benefit the opposition.

And this is indeed what the official opposition of SYRIZA is trying to do. This scandal may have come at the right time for them as the latest opinion polls showed them somewhat stuck. People are asking them for concrete solutions to their problems, not protest rhetoric. SYRIZA is now asking for the leader of PASOK to be examined, as well as Papandreou. The ultimate aim seems to be to hit the coalition at a moment when society will be worst-hit by the government’s additional measures.