Portugal Secretary of State for Treasury Resigns Over Swaps

Portugal’s Secretary of State for Treasury Joaquim Pais Jorge resigned today following press reports that he helped try to sell derivatives contracts to the previous government that would obscure the state of the country’s accounts when he worked for Citigroup Inc.

“I took this difficult decision because I will never allow controversies created over my professional path, which I never hid, to be used as a political weapon against the government,” Pais Jorge said in an e-mailed statement today.

Pais Jorge’s decision to quit comes five weeks after a political crisis triggered by the resignation of the country’s finance and foreign ministers led to a government reshuffle. Maria Luis Albuquerque was named finance minister on July 1 and later appointed Pais Jorge to her former post as secretary of state for treasury.

Portuguese weekly magazine Visao reported on Aug. 1 that Pais Jorge, while working for Citigroup in Portugal, was in 2005 involved in trying to sell swap contracts to the government, which rejected the proposal.

A spokesman for Citigroup in London declined to comment.

Pais Jorge said in today’s statement that the report about a Citigroup presentation of the derivatives proposal more than eight years ago was “forged to include my name and reveals a level of political action that I consider intolerable.”

“I admit that the presentation existed but I have no responsibilities over the elaboration or negotiation” of it, Pais Jorge said at a press conference in Lisbon on Aug. 2.

Portugal’s parliament is holding an inquiry into derivatives contracts with state-owned companies. The government says it has reduced potential losses from a number of what it calls “toxic” contracts by about 50 percent, to 1.5 billion euros ($2 billion), after reaching settlements with banks.

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