The Portuguese prosecution of Dr Boone has been driven by a desire to suppress criticism of Portugal's financial situation.
1990 - 2009
Dr Boone’s Career before Salute Capital
Dr Peter Boone receives his PhD in Economics from Harvard University in 1990. From 1997 to 2004 he is a research director at Brunswick-UBS. Since 2005 he has been a trustee and chairman of Effective Intervention a charity which promotes, finances, and implements projects to improve children's health and education in troubled regions of the world. He also lectured at the London School of Economics for several years.
24 October 2008
Dr Boone and Professor Johnson's First Article on the Eurozone
In “Start by saving the Eurozone”, written long before the real troubles in Europe explode, they argue that Europe needs to take bold measures to prevent crisis. They recommend fiscal and financial reforms, alongside a 2 trillion euro bailout fund to support systemic institutions and debt markets.
Dr Boone and Professor Johnson continue to write over thirty blogs and articles related to financial crises and general economic policy between 2008 and 2011. None of these articles make investment recommendations, nor refer to specific securities.2009
Salute Capital Formed
Lev Mikheev, Genna Lozovsky, Tom Hickey and Peter Boone found Salute Capital. Dr Boone's role is "Portfolio Research Director – Head of Strategy". Dr Boone reports his affiliation with Salute Capital in his subsequent disclaimers to articles and blogs on economic policy.
1 December 2009
Trading Strategist Agreement
Salute enters into a Trading Strategist Agreement with a well-known and respected hedge fund. Salute agrees to provide advisory services for its fund portfolio.
18 December 2009
IMF Staff Report on Portugal
The International Monetary Fund describes Portugal's economic outlook as “bleak”. It predicts that Portugal's external indebtedness and public debt ratios would continue to worsen. It estimates the general government debt to GDP ratio to be 75.8 percent of GDP at the end of 2009 and predicts it to rise to 93.8 percent of GDP by 2012.2010
Eurozone periphery economic crisis
Scores of articles are published in the global press raising concerns about the economic consequences of high debt and low growth in the ‘GIIPS’or 'PIIGS’ countries (Portugal, Italy, Ireland, Greece and Spain) at the Eurozone periphery. Such views, often including the specific prognosis that Portugal would be the next to follow Greece into trouble, appear in prominent global media outlets including The Guardian, The Economist, the Jornal de Negocios, Fortune, der Spiegel, CNN, the Financial Times, the BBC, the Telegraph, and the New York Times.
10 February 2010
Meeting in London
Dr Boone meets with an employee of one of Salute's clients, for drinks in London. The prosecution allege, without any evidence supporting the allegation, that it was at this meeting that the conspiracy to manipulate the Portuguese market was hatched. The employee (whom the prosecution have never asked to interview) is a specialist in Asian economics who was not involved in trading in Europe. Salute had already begun advising its client to sell Portuguese bonds prior to this meeting.
24 February 2010
Commentary by Manuela Leite
Manuela Ferreira Leite, a former Portuguese Minister of Finance echoes the international commentary regarding Portugal's financial situation. She states:
“The truth is that, although we do not have the same numbers as Greece, we are strictly on the same path. And therefore, the evolution of our debts, the evolution of our public deficit is on exactly the same path as that of Greece.”
24 March 2010
Credit Rating Downgrade
The ratings agency Fitch reduces Portugal's credit rating from AA to AA- citing budgetary underperformance in 2009.
5 April 2010
Warning from Greece
Greek Deputy Prime Minister, Theodoros Pangalos, warns of the threat of contagion of the Greece's problems throughout the Eurozone. Of Portugal he says:
“You are the next victims ”
6 April 2010
Dr Peter Boone and Professor Simon Johnson publish an article on the Baseline Scenario Blog entitled Greece And The Fatal Flaw In An IMF Rescue. The 3500 word article mentions Portugal just three times.
11 April 2010
The Eurozone agrees a €30 billion rescue package for Greece.
11 April 2010
Dr Boone and Professor Johnson publish a second article on The Base Line Scenario blog entitled Greece Saved For Now – Is Portugal Next? The article comments on the Greek bailout and the remaining risk of contagion to other countries. It warns of the need for Portugal to make serious moves towards cutting their deficit, in order to avoid needing a similar bailout.
15 April 2010
The New York Times Economix blog publishes an article by Dr Boone and Professor Johnson entitled The Next Global Problem: Portugal. The article estimates Portuguese debt to be at 78 percent of GDP at the end of 2009 and predicts (based on publically available figures) that by 2012 it could reach 108 percent of GDP. However, the authors warn that Portugal was not preparing adequate cuts.
The authors criticise the Ponzi Game of selling new debt in order to keep up interest rate payments (and the European Central Bank's failure to control it). They predict that, like Greece, Portuguese politicians would not do enough to regain confidence in financial markets, and instead wait for the situation to get worse, but eventually would be backed with a bailout package.
The analysis is similar to much other commentary drawing parallels between Portugal and Greece starting in January. The New York Times newspaper on the same day featured an article by Landon Thomas, Jr., entitled “Debt Worries Shift to Portugal, Spurred by Rising Bond Rates”. In Mr Thomas’s article, he cites three additional analysts who all concur that Portugal is already understood to face serious financial troubles ahead.
15 April 2010
Portuguese Rebuke of Dr Boone
The Boone/Johnson article drew a sharp rebuke from Professor Fernando Teixeira dos Santos, then Minister of Finance. Professor dos Santos criticised the “ignorance” of the authors and called the article:
“nonsense without any foundation ”
20 April 2010
Portuguese President Joins in the Rebuke
The President of Portugal criticises Simon Johnson's analysis. He stresses that Portugal is not Greece and states:
“I think he did a very incomplete and not always correct analysis of our situation ”
“We can't compare our situation to Greece or Iceland or even less to Ireland, because our situation is much better than those countries. We want to make it clear that we are different from Greece, but I know very well that sometimes speculators strongly attack a country in this way in order to make extraordinary amounts of money ”
20 April 2010
The CMVM (Portuguese financial regulator) commenced an investigation into Dr Boone and Professor Johnson's article and sent a letter of request for international assistance to the UK Financial Services Authority (FSA) to obtain further information on CMVM´s behalf.
23 April 2010
Dr Boone and Professor Johnson publish an article on The Base Line Scenario blog entitled Greece, the IMF and What Comes Next. The article comments on the rising yields on the sovereign debts of the peripheral countries compared to the diminishing yields on German sovereign debt as being a symptom of the risk of contagion. The article does not focus on Portugal in particular.
27 April 2010
Further Eurozone Credit Rating Downgrade
Standard & Poor's reduces its rating of Greece to 'junk' status. It reduces Portugal's credit rating from A+ to A-. The following day it reduces Spain's rating from AA+ to AA.2011
6 April 2011
Portuguese Prime Minister José Sócrates asks the Eurozone for financial assistance. The eventual bailout amounts to €78 billion.
7 April 2011
First Investigation Report
The CMVM issues its first report regarding the investigation into the 15 April 2010 article. It concludes that the article was “exaggerated and biased, by considering that Portugal would be the next to need assistance”. It alleges that Dr Boone conspired with Salute's client to write the article to manipulate the market, intending to benefit from their potential exposure to the Portuguese public debt.
11 April 2011
Investigation into Ratings Agencies
Portugal opens a criminal investigation into the credit ratings agencies Moody’s, Fitch, and Standard & Poor’s; it accuses them of “market manipulation crimes” for decreasing Portugal's credit rating.2012
23 March 2012
Second Investigation Report
The CMVM issues a revised investigation report. It no longer asserts that the information contained in the 15 April 2010 article was false, exaggerated or biased. Instead, it accuses Dr Boone of attempting to manipulate the market by failing to include a disclosure about Salute's client's financial interests in Portuguese sovereign debt. It also complains that the use of the term “Ponzi game” (a common term in economic policy discussions) in the April 15, 2010 blog implied the then government led by former Prime Minister Sócrates was a “criminal organisation”.
Read more about disclaimers here.
End of 2012
Portuguese Debt-to-GDP Ratio Reaches 126.2 Percent
The latest available data from the April 2016 IMF Fiscal Monitor (Table A7, page 81) shows that Portuguese general government debt was 83.6 percent of GDP at the end of 2009 - and rose to 126.2 percent in 2012. This is even worse than Dr Boone had predicted (108 percent) and well surpassed the Portuguese government’s own estimates at the time the blog was written.2013
Dr Boone Interviewed
Dr Boone travels to Portugal to meet with the Portuguese Public Prosecutor. In interview and in a detailed written statement Dr Boone explains that his article was simply an analysis and commentary on a significant economic issue, in line with commentary made by others at the time.
He points the prosecutor to the evidence directly contradicting the alleged conspiracy, clarifies multiple points of confusion on the part of the CMVM, and explains the economic rationale behind Salute's actions.
Over the course of 2014 and 2015, in response to subsequent CMVM and prosecutor reports, Dr Boone submits clarifying statements to the Portuguese Prosecutor an additional three times.2014
September 2014 - June 2015
Further Witness Interviews
In addition to Dr Boone the Public Prosecutor interviews four people in connection with its investigation: the former Minister of Finance, Teixeira dos Santos, who voiced the initial criticisms of the blog; the two CMVM authors of the investigation reports; and an individual involved in debt management for the Portuguese government. They do not speak to Professor Simon Johnson, any employees of Salute or its clients, or any market participants.
12 September 2014
Investigation into Ratings Agencies Dropped
The Portuguese criminal investigation into the ratings agencies Moody's, Fitch and Standard & Poor's is dropped.20152016
29 January 2016
Dr Boone files a detailed request for a pre-trial hearing to quash the prosecution.
Read it here.