NEWS

Bond blame doled out

An executive of the US bank JP Morgan told a parliamentary committee investigating the purchase of an overpriced bond by four Greek pension funds that the financial institution had been misled by one of its former employees during the sale of the 280-million-euro Greek government paper. Jakob Stott, JP Morgan’s chief operating officer for Europe, the Middle East and Africa, told the parliamentary committee on economic affairs that the bank sold the structured bond to London-based hedge fund North Asset Management (NAM) at 92.95 percent of its face value but had no idea that the note would be sold on. Stott blamed Mike Savvides, a JPMorgan banker, who was part of the team responsible for underwriting the 12-year bond. «This sale was approved internally on the basis that North was a buy-and-hold investor,» Stott told MPs. «We have subsequently discovered that a member of the core deal team at JP Morgan knew that North intended to on-sell.» Savvides has since been fired for «failure to promptly share his knowledge of aspects» of the sale. Stott also claimed that the Economy and Finance Ministry’s general secretary, Giorgos Kouris, had been directly involved in negotiations for JP Morgan to trade the bond and then buy it back from the pension funds. Meanwhile, Louis Plowden-Wardlaw, a managing director of NAM, told the deputies that the hedge fund had never stated it would hold the bond and not sell it on. NAM sold the bond to HypoVereinsbank, which then sold it to the Acropolis stock brokerage at 99.95 percent of its face value. Acropolis sold the bond to the pension funds at 100 percent of the value, prompting claims that the funds had been taken advantage of. The preliminary probe into the purchase of the bond by the four pension funds is set to wind up early next week, sources said yesterday. Approximately 40 people have been called in to testify by prosecutors. It is thought that most of those questioned will be charged. The main suspects, including members of the boards of the four pension funds as well as representatives of JP Morgan and NAM, are likely to be charged with fraud, money laundering, tax evasion and forming a criminal gang.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.