Inertia claimed in derivatives case (2)

(ANSA) - Rome, April 9 - 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.