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Yannis Varoufakis like Al Capone

26 July 2015 / 16:07:55  GRReporter
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Under the instruction of Alexis Tsipras last December, former finance minister Yannis Varoufakis had to draw up plan B. It was designed to create a parallel banking system, "which is linked to the euro, but could be transferred to the new drachma overnight".

On 16 July, at an international forum, an interesting exchange took place among investors and international hedge funds managers. It was hosted by Baron Norman Lamont, a well-known British Conservative politician and former finance minister in John Major's government. At the very beginning of the discussion, Varoufakis was advised that the talk was being recorded. Nonetheless, he described in detail not only his alternative plan, but also the intended hacking of the state revenue general secretariat's web page.

Kathimerini has published excerpts from Varoufakis' revelations: "I must admit we had no instructions to pull Greece out of the euro. We did have instructions to negotiate an agreement with the Eurogroup and the European Central Bank for keeping Greece in the euro area ...I believe that the Greek people had empowered us to continue these negotiations to the point where, if we failed to conclude a sustainable agreement, we could look into the possibility of leaving the euro."

At one point the former minister recalls: "We had no currency to devalue against the euro, we only have the euro." Then he drew a parallel between Schaeuble's Grexit plan and his own: "Schaeuble is determined to achieve Grexit, so it is not over yet. But let me be very precise on this topic. The prime minister, before becoming prime minister and winning the elections in January, gave me the green light to draw up a plan B. So I put together a very capable team, and a very small one too, because I had to work in extreme secrecy. We started work in late December. Let me describe the political and institutional obstacles, which hindered the plan's completion and its implementation. We had a plan B, but it was hard to make the transition from the five people who drafted it to the thousands who had to implement it. Therefore, I had to get another power, which I never got. But let me give you an example. Take the first minutes after the closure of banks. ATMs are not working, so there must be a system of parallel payments for the economy to continue functioning and for the public to feel that the state has a grip on the situation and a plan. 

What we planned was as follows: the tax office has a web page, both in the UK and elsewhere, where citizens come in, use their code and Internet-wire their funds to their tax accounts, to pay VAT, income tax, etc. We planned to set up secret accounts linked to each individual tax number, without telling anyone ... With the touch of a button, we could give a pin code to every tax number holder, that is, to every taxpayer.

Let's take for instance a case, in which the state owes €1 million to a pharmaceutical company for the purchase of drugs at the expense of the national health system. We could straightaway create a digital transfer on this tax account of the company and give them a pin code so that they could use it as a parallel way to pay anybody else. Parallel to this, tax payments could be made to the state. This would have created a parallel banking system and given us a breather, while the banks were shut down because of ECB's aggressive policy.

This plan developed fairly well, and we could have expanded it pretty quickly by using smart-phone applications. It could have grown into a parallel system linked to the euro, but it could be transferred to the new drachma overnight".

A little later, Varoufakis told a story he qualified as exciting about the difficulties he had encountered. "The chief secretary of the state revenue in my ministry was under the full and direct control of the troika. He was not under my control, even though I was the minister, but was instead controlled by Brussels. The secretary general is appointed by a specific procedure and is kept under control, as well as the whole mechanism. It would be the same if government revenues in the UK were under the control of Brussels. I am sure you get goose bumps the moment you hear this.

As the chief secretary of information systems was under my control as minister, I appointed a childhood friend of mine to the post. He taught at Columbia University in the US. I appointed him because I trusted him to develop this system. One week after we settled in the ministry, he phoned up and told me he only controlled the hardware, but not the software. The software belongs to the troika that controls the general secretariat of state revenues. What could I do?"

Varoufakis then adds: "We met up, only the two of us, no one else knew, and he told me: 'Listen, if I ask their permission to implement this plan, the troika will soon learn that a parallel system is being planned.' But I told him this didn't suit us because we were reluctant to disclose our plans at this stage. So I gave him the go-ahead and you shouldn't tell anyone, let this be between me and you... ". The host interrupts at this point to say: "Some might be listening at this point, but they won't tell their friends. Varoufakis continues, laughing: "I know, I know they won't do it. But even if they did, I would deny it, I will refute. We decided to hack the ministry's software, so we could copy the page codes on the laptop in my friend's office. Thereafter, he could plan and implement the parallel payments system."

Tags: Yanis Varoufakis parallel systems for banks payments hacking tax accounts
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