London trader's email 'damaged Greek economy'

A London trader is expected to be questioned by police after being accused by the Greek authorities of sending an email designed to stir up rumours of a plan to restructure debt in the embattled country.

Paul Moss, of Citigroup, was said to have rattled nervous investors, leading to a drop of 4.6 per cent in Greek bank shares on Wednesday, after allegedly sending a message saying the country could restructure its debt as soon as the weekend.

Greece has been excluded from financial markets since it suffered a debt crisis last year. Authorities have insisted the debt is sustainable but its scale and a continuing slump in the country have led markets to anticipate a restructuring.

"We have located a computer terminal at a company in London from which is very damaging email was sent," said a police spokesman, Thanassis Kokkalakis. "It contained very confusing misinformation that is now the focus of an urgent investigation. This man will be questioned and the findings sent to a prosecutor."

Reports said that investigators from Britain's Serious Organised Crime Agency would be working with Greece's cyber crime division and speaking to the trader. Soca, however, refused to confirm any investigation last night. Meanwhile the US bank said: "We are co-operating with the authorities and do not consider there to have been any wrongdoing by Citi or its employees".

The email was believed to have been sent at 14.42 UK time, 20 minutes after an already declining market started losing ground more rapidly on Wednesday.

But the allegations come at an extremely sensitive time with Greece struggling to meet the conditions set by a110bn euro (£97bn) EU-IMF bailout package and poised to launch a privatisation programme to raise £44bn. The country is seen as the most likely to default on its debts, potentially sparking panic throughout the euro zone.

Speculation Greece will fail to pay back its borrowings has pushed interest rates on debts due for repayment in 10 years to 15 per cent, far higher than those paid by its fellow euro zone member Germany.

Greece's Finance Minister, George Papaconstantinou, insisted on Wednesday that it could deal with its debt mountain. Yesterday the ministry in Athens described rumours of an Easter restructuring as "devoid of any substance and verging on the ridiculous" and said it had forwarded the email to the prosecutor's office.

The message, the contents of which were forwarded to Reuters news agency and confirmed by Citi, cites "increased noise" over a Greek debt restructuring "as early as this Easter weekend", and notes how spreads in the bond market were widening.

A full version was published in the Greek newspaper Imerisia and said to have been sent from a man named by the Greek authorities as Paul Moss, 45. "The last few days the talks over Gr restructuring/ rescheduling have intensified, despite the ongoing denials by Gr and foreign officials.

"The prosecutor is investigating this particular email and the person who sent it because it spread false rumours with an effect on the stock market," a Greek court official said.

One trader said: "There's no way the rumours will stop with actions like this."

This is the second time in a few months that Greek prosecutors have taken drastic action on suspicion that unsubstantiated e-mails caused market jitters. Earlier this year, authorities arrested a jobless man on the charge of spreading rumours about a Greek bankruptcy in an e-mail he sent from an internet cafe to banks and media. He is facing misdemeanour charges.