Make The Greek Collateral Deal Public (DJ/WSJ)

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FINNS PARTY'S SOINI: Make The Greek Collateral Deal Public

MARCH 9, 2012

Finland demanded collateral to participate in Greek rescue
Government declared collateral deal classified
Finns Party wants documents made public

(This is a column contributed by Timo Soini, chairman of Finland's Finns Party, a member of Finland's parliament and former Member of the European Parliament, and represents the views of the author.)

In return for its participation in Greek rescue, Finland demanded collateral. They got it. Maybe.

The truth is, we don't know what they got. Soon after the collateral deal was announced, the government declared it classified. Only parliamentarians were allowed to see it: in a special room, under observation, not allowed to take notes, trying to decipher hundreds of pages of complex ISDA [International Swaps and Derivatives Association] derivatives documentation.

The Finns Party has made an official request for the documents. If refused, we will take the government to court.

Secrecy in this matter is highly problematic, for three reasons.

First, we have reason to believe that, contrary to what the government claims, the deal does not provide full cover for Finland in case Greece defaults on its debts. This is probably the real reason why the document was classified. The government is reluctant to admit that it has broken its promises.

If they believe that going forward with the bailout was the best option anyway, they ought to have the courage to say it.

Second, we have reason to believe that the collateral deal costs Finland significant sums of money by way of interest costs--even in the unlikely case that all were to go well in Greece. This would explain why no other country wanted to participate.

Third, it is a matter of principle. In recent years, governments in Finland have increasingly concealed politically sensitive documents on legally dubious grounds. That is an extremely worrying trend in Finnish democracy. We must not let short-term political expediency corrode our traditionally open and democratic political culture.

The law is on our side. The Finnish Constitution demands openness and transparency as a general principle [section 12(2), pdf].

In particular, provisions of the law on transparency in public administration [pdf] cannot be reconciled with full-scale secrecy in a matter like this.

As a rule, all documents related to governmental activity are open and accessible to the public. This principle is particularly important when the documents contain vital information related to major government decisions that are being debated in the public square.

The collateral deal not only is related to a bailout package that could cost Finland billions of euros. It is also an essential aspect of the coalition agreement, and finance minister Jutta Urpilainen has repeatedly stressed that Finland would not participate in further bailouts if they incurred new risks to Finland. Therefore it is essential that the Finnish public--and not only MPs under a seal of secrecy--be allowed to examine the actual content of the collateral deal.

Naturally, there are exceptions to the principle of transparency. For example, business secrets must be respected as such.

However, the business secret exception really seems like the only possible argument for keeping the collateral deal secret. It is surprising that the government did not explicitly invoke it. The mere fact, given by the government as the grounds for secrecy, that the counterparty demanded confidentiality because they did not want their identity revealed, is not a legally valid exception according to Finnish law.

The identity of the counterparty can easily be concealed when the rest of the document is made public. Besides, the names of the four Greek banks have been leaked to the press already.

Further, even if the collateral deal were to contain business secrets, the law demands that other aspects of the deal be accessible to the public. The business secrets exception is interpreted narrowly; only those parts that are truly confidential can be classified as such.

In this case, there are several aspects of the deal that are unlikely to be business secrets. One of these is the general financial structure of the deal, i.e. whether it is a credit default swap, a total return of return swap, or something else.

There is a common problem in cases like these: asymmetric information. The public does not know whether and to what extent the document actually contains business secrets. The only way to find out is to take the relevant governmental body to the administrative court. We are prepared to do that--if necessary.

(Timo Soini is chairman of the euro-skeptic Finns Party, a member of Finland's parliament and former Member of the European Parliament.)