The prosecution claim of "inertia"
by Italy's Treasury in its handling of derivatives contracts
with Morgan Stanley that led to losses in 2011 "would have
resulted in the devastation of the financial market, brokers'
immediate loss of confidence in the Italian Republic, the exodus
of public debt dealers and the collapse of the economy with
irreversible and devastating effects," the lawyer representing a
former treasury official before the state audit court said on
Thursday.
Antonio Palmieri is defending the ex director-general for
public debt Maria Cannata against claims the treasury remained
"inert" and failed to carefully evaluate the consequences of
allegedly speculative derivatives contracts with the US
investment bank.
The object of contention concerns a recommendation allegedly
made by Cannata in 2004 to apply a termination clause to the
contracts that was overly advantageous to the bank.
This was allegedly activated by Morgan Stanley in 2011
following the global financial crisis.
The treasury denies the claim, saying it instead engaged on
long negotiations with the bank to restructure the debt,
amounting to losses of 3.1 billion euros rather than 6 billion
euros.
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