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: