New Portuguese treasury minister resigns

Portuguese Treasury Minister Joaquim Pais Jorge resigned on Tuesday after only a few days in office over allegations that several years ago he was involved in an attempt to help Portugal dress up its public finances.

The resignation, coming just days after Portugal emerged from a crisis over previous resignations, relates to the 1990-2009 period when Pais Jorge was a senior executive for US bank Citibank in Portugal.

Pais Jorge, appointed at the end of July as a junior minister in the coalition government, is alleged to have been involved in so-called swap contracts.

These which would have enabled Portugal to camouflage the extent of its public deficit long before it needed rescuing by the International Monetary Fund and European Union in May 2011.

The recent government crisis cast doubts over Portugal’s ability to stick to a programme of budget cuts and reforms in return for the bailout funding, and Pais Jorge said in his resignation letter that he was leaving to prevent his past as a banker from being used “against the government”.

The weekly publication Visao reported recently that in 2005 Jorge was involved in proposals by the bank to the then socialist government for swap contracts which would have enabled the government to make it look as if the public deficit were 370 million euros less than the true figure in 2005 and by 450 million euros in 2006.

This was a similar method of reducing the apparent public deficit as US bank Goldman Sachs had organised for Greece a few years earlier.

Pais George first denied that he had been involved in such talks, saying that he had played no part in drafting the contracts which the socialist government had rejected in any case.

But private television channel Sic Noticias later revealed the existence of a written proposal by Citibank to the Portuguese debt agency which showed that Pais Jorge had been one of the main negotiators.

Pais Jorge, in resigning to prevent the controversy from building up, said that the document used by the television channel was a forgery and was part of “an intolerable political manoeuvre”.