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Last updated: July 27, 2015 7:18 pm
Yanis Varoufakis defends ‘Plan B’ tax hack
Peter Spiegel in Brussels and Kerin Hope in Athens
Greek Finance Minister Yanis Varoufakis announced his resignation on July 6, 2015, a day after Greeks delivered a resounding 'No' to the conditions of a rescue package. In a statement, Varoufakis said he had been "made aware" that some members of the euro zone considered him unwelcome at meetings of finance ministers, "an idea the prime minister judged to be potentially helpful to him in reaching an agreement."
Yanis Varoufakis has insisted he did nothing improper as part of a five-month clandestine project he ran as Greek finance minister that prepared for his country’s possible exit from the euro.
The scheme, which was almost completed but not fully implemented, involved hacking into Greece’s independent tax service to set up a parallel payment system — accessing individuals’ private identification numbers and copying them on to a computer controlled by a “childhood friend” of Mr Varoufakis.
Greece's finance minister Yanis Varoufakis
We’ve had a listen to the entire call, and transcribed most of it
It would have allowed transactions to continue in case of a prolonged bank holiday and the imposition of capital controls.
Mr Varoufakis described the project in a 25-minute teleconference with private investors on July 16.
A tape of the call was released on Monday by the London-based Official Monetary and Financial Institutions Forum, which hosted the session, after portions were published at the weekend by the Greek newspaper Kathimerini.
“We decided to hack into my minister’s own software programme in order to be able to bring it all, to just copy, just copy the codes of the tax systems’ website on to a large computer in his office, so he can work out how to design and implement this parallel payment system,” Mr Varoufakis said on the call.
“We were ready to get the green light from the prime minister when the banks closed in order to move into the general secretariat of public revenues, which was not controlled by us but is controlled by Brussels, and to plug this laptop in and to energise the system.”
Political opponents expressed outrage at the plan. Greek media reported that 24 MPs from New Democracy, the largest opposition party, had asked Alexis Tsipras, prime minister, whether Mr Varoufakis should face a judicial inquiry.
In a statement, Mr Varoufakis’s office said the project was conducted by a working group he was authorised to establish in order to prepare contingency plans in case Greece was forced out of the eurozone by creditors. The working group broke no laws, the statement said.
“The ministry of finance’s working group worked exclusively within the framework of government policy and its recommendations were always aimed at serving the public interest, at respecting the laws of the land, and at keeping the country in the eurozone,” said Mr Varoufakis’s office.
The disclosures about Mr Varoufakis’s “Plan B” come on the heels of revelations by the Financial Times and other media organisations that far-left members of the governing Syriza party were contemplating a far more radical plan to seize government reserves and take over the country’s central bank in a transition to a new currency.
James K Galbraith, the University of Texas economist and a longtime Varoufakis associate who worked on the finance ministry plan, issued his own statement saying their efforts never overlapped with the more radical efforts other than an “inconclusive” phone call he had with an MP from the Left Platform.
“We had no co-ordination with the Left Platform and our working group’s ideas had little in common with theirs,” said Mr Galbraith.
In his taped remarks, Mr Varoufakis said Mr Tsipras authorised him to prepare for a possible “Grexit”, even before Syriza won January’s parliamentary elections.
Audio
Former Greek finance minister tells delegates at an Official Monetary and Financial Institutions Forum event about proposals to set up a parallel payments system in the case of an exit from the euro
“I assembled a very able team, a small team, as it had to be, because that had to be kept completely under wraps, for obvious reasons,” said Mr Varoufakis.
“The difficulty was going from the five people who planned it to the 1,000 that would be implementing it. For that, I had to receive another authorisation that never came.”
The revelations were shrugged off by government officials, who said Mr Tsipras never gave Mr Varoufakis the go-ahead to activate his plan.
“I can’t imagine this [happened],” said Dimitris Mardas, the deputy finance minister in charge of revenues. “But what a government minister’s team proposes doesn’t constitute government policy.”
Mr Tsipras is known to have grown wary of some of Mr Varoufakis’s ideas, a concern that contributed to his decision to replace the outspoken finance minister with Euclid Tsakalotos, a more low-key loyalist, earlier this month.
Mr Varoufakis’s Plan B involved creating reserve accounts “surreptitiously” attached to every taxpayer’s ID that could be used to make payments to other taxpayers when the European Central Bank forced the shutdown of Greece’s banking system, as it did last month.
“That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space,” said Mr Varoufakis.
That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space
- Yanis Varoufakis
He insisted the hacking became necessary because the general secretariat of public revenues in Greece was under the control of the creditor institutions.
“The general secretariat of public revenues, within my ministry, is controlled fully and directly by the troika [creditors]. It was not under control of my ministry. . . It was controlled by Brussels,” he said.
The independent revenue office (IRO) was set up as part of Greece’s second bailout in an attempt to eliminate political interference that had helped vested interest groups with close connections to government to avoid meeting their tax obligations.
One person with knowledge of the government computer systems said it would “probably have been possible to hack into the IRO computer, but it would have destroyed the credibility of the revenue office and its mission”.
Last updated: July 27, 2015 7:18 pm
Yanis Varoufakis defends ‘Plan B’ tax hack
Peter Spiegel in Brussels and Kerin Hope in Athens
Greek Finance Minister Yanis Varoufakis announced his resignation on July 6, 2015, a day after Greeks delivered a resounding 'No' to the conditions of a rescue package. In a statement, Varoufakis said he had been "made aware" that some members of the euro zone considered him unwelcome at meetings of finance ministers, "an idea the prime minister judged to be potentially helpful to him in reaching an agreement."
Yanis Varoufakis has insisted he did nothing improper as part of a five-month clandestine project he ran as Greek finance minister that prepared for his country’s possible exit from the euro.
The scheme, which was almost completed but not fully implemented, involved hacking into Greece’s independent tax service to set up a parallel payment system — accessing individuals’ private identification numbers and copying them on to a computer controlled by a “childhood friend” of Mr Varoufakis.
Greece's finance minister Yanis Varoufakis
We’ve had a listen to the entire call, and transcribed most of it
It would have allowed transactions to continue in case of a prolonged bank holiday and the imposition of capital controls.
Mr Varoufakis described the project in a 25-minute teleconference with private investors on July 16.
A tape of the call was released on Monday by the London-based Official Monetary and Financial Institutions Forum, which hosted the session, after portions were published at the weekend by the Greek newspaper Kathimerini.
“We decided to hack into my minister’s own software programme in order to be able to bring it all, to just copy, just copy the codes of the tax systems’ website on to a large computer in his office, so he can work out how to design and implement this parallel payment system,” Mr Varoufakis said on the call.
“We were ready to get the green light from the prime minister when the banks closed in order to move into the general secretariat of public revenues, which was not controlled by us but is controlled by Brussels, and to plug this laptop in and to energise the system.”
Political opponents expressed outrage at the plan. Greek media reported that 24 MPs from New Democracy, the largest opposition party, had asked Alexis Tsipras, prime minister, whether Mr Varoufakis should face a judicial inquiry.
In a statement, Mr Varoufakis’s office said the project was conducted by a working group he was authorised to establish in order to prepare contingency plans in case Greece was forced out of the eurozone by creditors. The working group broke no laws, the statement said.
“The ministry of finance’s working group worked exclusively within the framework of government policy and its recommendations were always aimed at serving the public interest, at respecting the laws of the land, and at keeping the country in the eurozone,” said Mr Varoufakis’s office.
The disclosures about Mr Varoufakis’s “Plan B” come on the heels of revelations by the Financial Times and other media organisations that far-left members of the governing Syriza party were contemplating a far more radical plan to seize government reserves and take over the country’s central bank in a transition to a new currency.
James K Galbraith, the University of Texas economist and a longtime Varoufakis associate who worked on the finance ministry plan, issued his own statement saying their efforts never overlapped with the more radical efforts other than an “inconclusive” phone call he had with an MP from the Left Platform.
“We had no co-ordination with the Left Platform and our working group’s ideas had little in common with theirs,” said Mr Galbraith.
In his taped remarks, Mr Varoufakis said Mr Tsipras authorised him to prepare for a possible “Grexit”, even before Syriza won January’s parliamentary elections.
Audio
Former Greek finance minister tells delegates at an Official Monetary and Financial Institutions Forum event about proposals to set up a parallel payments system in the case of an exit from the euro
“I assembled a very able team, a small team, as it had to be, because that had to be kept completely under wraps, for obvious reasons,” said Mr Varoufakis.
“The difficulty was going from the five people who planned it to the 1,000 that would be implementing it. For that, I had to receive another authorisation that never came.”
The revelations were shrugged off by government officials, who said Mr Tsipras never gave Mr Varoufakis the go-ahead to activate his plan.
“I can’t imagine this [happened],” said Dimitris Mardas, the deputy finance minister in charge of revenues. “But what a government minister’s team proposes doesn’t constitute government policy.”
Mr Tsipras is known to have grown wary of some of Mr Varoufakis’s ideas, a concern that contributed to his decision to replace the outspoken finance minister with Euclid Tsakalotos, a more low-key loyalist, earlier this month.
Mr Varoufakis’s Plan B involved creating reserve accounts “surreptitiously” attached to every taxpayer’s ID that could be used to make payments to other taxpayers when the European Central Bank forced the shutdown of Greece’s banking system, as it did last month.
“That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space,” said Mr Varoufakis.
That would have created a parallel banking system while the banks were shut as a result of the ECB’s aggressive action, to give us some breathing space
- Yanis Varoufakis
He insisted the hacking became necessary because the general secretariat of public revenues in Greece was under the control of the creditor institutions.
“The general secretariat of public revenues, within my ministry, is controlled fully and directly by the troika [creditors]. It was not under control of my ministry. . . It was controlled by Brussels,” he said.
The independent revenue office (IRO) was set up as part of Greece’s second bailout in an attempt to eliminate political interference that had helped vested interest groups with close connections to government to avoid meeting their tax obligations.
One person with knowledge of the government computer systems said it would “probably have been possible to hack into the IRO computer, but it would have destroyed the credibility of the revenue office and its mission”.
