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Phone calls from Moreno were. 40-minute-long ... out, a 1% monthly inflation rate works out at an annual 12.7% ... deman
Graciela Bevacqua Graciela Bevacqua found herself at the centre of astonishing pressures from the government of Argentina to manipulate official statistics. As head of the national statistics institute, she refused to publish falsified inflation indices; she faced fines and threats of imprisonment. Alicia Carriquiry spoke to her. Here is what it feels like to be harassed by the government whose people you are trying to serve.

When the Argentine minister wanted the inflation figures to look good he applied pressure on the statisticians. Graciela Bevacqua fought back 34

We met in Buenos Aires. Over wine, Graciela Bevacqua told me the story of how her principled stand for honesty in official statistics has led her into trouble. “I was born in Rosario, Argentina, in 1959 and I graduated from the Rosario Teachers’ College with a degree in secondary education in mathematics and physics. While I was working as a teacher I began an economics degree; that was where I was exposed to statistics for the first time. I began teaching statistics to high school students, and then got a position in an investment advice office that calculated economic statistics such as the gross national product. From there, I migrated to INTAL , an organisation funded by the Interamerican Development Bank , and in 1984 I joined INDEC, the Instituto Nacional de Estadística y Censos – the government’s national institute for statistics and the census. At first I was there as an independent contractor; I had imagined it would be a short-term position but, apart from two and a half years away raising my three children (the youngest is now 20, the oldest 24), I ended up staying there until 2007, when I was forced out.” From the start Graciela Bevacqua was part of the staff responsible for the calculation of the Consumer Price Index (CPI), the fundamental measure of inflation. In 1994 she was promoted to Associate Director of the CPI group of INDEC, and in 2002 stepped into the role of Director, filling a leadership void. “The december2012

promotion did not become official until 2005, when the then President Nestor Kirchner named me Director by decree. This was a rewarding time, not only because the promotion almost doubled my salary but also because it represented a recognition of my efforts over the several years during which I acted as Director with all the responsibilities but none of the benefits of the position.” At first all seemed well; but then pressures to falsify the statistics begin to appear. “In hindsight, it is now apparent that problems began as early as 2005, when a newly appointed Minister of Economics began questioning the CPI figures which we providing. For 2005 the CPI was estimated to be 12.3% and on an upward trend.” These initial questionings were a merely a preview of the enormous pressure that would be placed on INDEC from 2006 with the appointment of Guillermo Moreno as Secretary of Domestic Trade. “As soon as Moreno was appointed he summoned me and my immediate supervisor to his office. When we entered the room, I became scared. He had put on classical music, and I thought it was because he didn’t want people outside to hear what he was going to say. He began a tirade about how the consumer price index affected people’s morale and the effectiveness with which the government can successfully implement policies that increase confidence in the economic outlook.” He was © 2012 The Royal Statistical Society

an annual 12.7%, whereas 1.9% monthly compounds to 25.3%. The government wanted the public to believe the lower figures; the truth was the higher ones. And this of course was at the root of the Secretary’s pressure on her. “The initial goal was to get into the 2007 presidential elections without acknowledging the actual inflation rates”, Victor Beker, former Director of Economic Statistics at INDEC from 1984 to 1987, said in an interview with Bloomberg in May 2011 (http://www. bloomberg.com/news/2011-05-02/ argentina-firing-of-inflationexpert-signaled-start-of-dubious-price-data.html). “From that

point forward, reporting the real inflation would have shown that the official statistics had been previously manipulated.” Hence the unrelenting pressure on Bevacqua and on her colleagues – and also on the shops and small businesses that were the sources of her data on price increases. As Significance reported on our website in May 2012 (http://www.sig-

nificancemagazine.org/details/ webexclusive/2051071/Argentina---the-lies.html), they too were

Portrait: Tom Boulton

demanding that the official statistics that Bevacqua and her department produced should be more favourable to the government. “He said that if we didn’t aim for zero inflation, we were unpatriotic. He told us that the patriotic thing to do was to report a low CPI (or at least a CPI that was on a downward trend) and that it was the duty of INDEC to cooperate with the government to make sure that the CPI would be ‘favourable’. Then he proceeded to demand the list of businesses from which INDEC obtained the pricing information from which we calculate the CPI. This was something that clearly violated the law that establishes confidentiality to providers of data to INDEC and other statistical agencies.” It was no passing demand. She describes the period from then until January 2007 as one during which she was “permanently harassed”. “The demands from Moreno were daily. He challenged our data, our methodology and our results. Phone calls from Moreno were

40-minute-long shouting demands, asking for information to which, by law, neither he nor his office had any right. There was no stopping his bullying; even the Minister of Economics, who outranked Moreno, was cowed into serving as the go-between between Moreno and INDEC.” There were demands that she change her statistical methods: “There was unprecedented questioning of the technical aspects of the calculation of the CPI, in spite of the fact that neither Moreno nor his employees had the expertise or the professional preparation to produce CPI estimates, and even though the Argentinian methodology served as the reference for the rest of Latin America for many years prior to 2006. Some demands were almost silly. As an example, Moreno wanted INDEC to apply a rounding approach whereby 2.599 and 2.501 would both be rounded down to 2.5.” That may sound minor, but as the respected magazine The Economist pointed out, a 1% monthly inflation rate works out at

threatened and intimidated to persuade them to report lower prices than they were actually charging. “Moreno demanded confidential information about specific businesses in Buenos Aires and surrounding areas that contributed information to the CPI; he demanded that INDEC should change its methodology to methods developed by Moreno – this with no justification and against all protocols that had been in place for many years. An example was in computing bread prices: he demanded that we give greater weighting to supermarket prices over those in small bakeries, even though over 90% of all bread consumed in the Greater Buenos Aires area is sold by small bakeries. For clothing prices, he demanded that we emphasize cheap clothing over designer labels; for holiday prices, that we carefully trim the vacation package destinations included in the index. At that time there was what were called precios acordados, capped prices of certain goods that were negotiated by sellers and the government. Those agreements were, at least at the onset, purely voluntary, but Moreno wanted those agreements to be reflected in the index whether or not they applied in real life.” december2012

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He used to call Bevacqua’s superior every day and keep her on the phone for about 40 minutes. “My boss would put him on speaker, and while Moreno yelled like a madman and argued for his own calculations, I in the background would be telling my boss what to respond. These sessions were exhausting”, she says. It sounds like an understatement. Many of us have had bosses from hell; this was more serious. The pressures on Graciela built up. “As the person in charge of the CPI, pressure applied to INDEC was pressure applied to me. I was afraid my phones were bugged; I feared for my safety when shortly after my suspension I heard from somebody high up in administration that ‘Kirchner wants your head’. For someone who is a relatively lowranking government employee to hear that the President of your nation might be targeting you personally can be very intimidating.” Another understatement: “terrifying” might be another description. The pressure was coming directly from Moreno, who at the time enjoyed enormous power thanks to his close association with the President. At first her reaction was disbelief. “I began to doubt my sanity until I discussed what was happening with colleagues outside Argentina. They assured me that Moreno’s methods were more typical of an authoritarian dictatorship than of a democratically elected government. Moreno went as far as pressuring the government of Uruguay against offering me a position in their national statistical institute, with which I had had a close professional association for many years.” Professionally, Graciela was compelled to trim the list of businesses from which INDEC took price samples. When Moreno did not get the list from INDEC he began his own witchhunt to find the establishments from which INDEC obtained price information. “For some sectors such as groceries the field is very large and identifying individual merchants was impossible. But for others, such as travel agencies, almost all of them were included in the INDEC sample.” Moreno began putting pressure on several agencies to provide “convenient” information to INDEC. “Since the price data were no longer trustworthy, I took several of them out of the index, something that again infuriated Moreno.” In January 2007, she was suspended from her job. “My superiors at INDEC heard that I was to be ‘separated’ from my position.” Her

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boss, trying to fly under the radar, told Graciela to take a month’s vacation, lie low and wait for the storm to pass. “I believed that after my holiday I would be back in my office. I was so convinced that I did not even take my personal effects from the office.” To her shock, she was never allowed back into the building and received the news of her demotion from her boss, in a café two blocks away. “I never received a formal notice.” Since then she has been almost jobless. But her troubles were far from over. In a sense they had hardly begun. In February, Argentina reported prices for January 2007 had risen 1.1% from the previous month, compared with her estimate of 1.9%. “It was clear that the

The only thing I own is my house where I live with my children. I feared I would lose it

numbers had been cooked to look like inflation was lower than it really was.” Undeterred, Bevacqua began, with 20 volunteer economics students from Buenos Aires University, to produce a more valid consumer price index, which she distributed free. She was not alone in trying to produce genuine figures for Argentina’s inflation and gross domestic product. Around a dozen independent consultancies researched and produced such figures for those who wanted – or needed – them. In March 2011 seven of these companies were each fined 500,000 pesos – around $125,000 – for producing statistics the government said did not comply with “appropriate methodological requirements”. In other words, for producing accurate, as opposed to cooked, statistics. Bevacqua received the same fine. “The others are companies or foundations”, she says, “but we don’t have clients or assets. The only thing I own is my house where I live with my children.” She feared she would lose it. She has had to give up movies, dining out and her gym membership. Her experience has also affected her morale, causing her family to worry about her health. She avoids going near her old office “because I get too upset”.

There was even worse to come: criminal prosecution and the threat of jail. The charge, filed by Moreno last year, was that Bevacqua and a colleague published two indices based on false technical information in order to cause price rises in the domestic market and distort the market. It carried a potential sentence of 2–6 years in prison. That prospect continues to hang over her. It came to court in September this year. The judge dismissed the charges stating that the publication of inflation calculations was not a criminal offence, but Moreno appealed the ruling. Private estimates of inflation began to diverge from Argentina’s official inflation statistics from January 2007, when Bevacqua was sacked. In February this year The Economist took the unprecedented step of refusing to include Argentina’s official figures in its monthly summaries of the world’s economies. Its editorial said: “since 2007 Argentina’s government has published inflation figures that almost nobody believes…. From this week, we [The Economist] have decided to drop INDEC’s figures entirely. We are tired of being an unwilling party to what appears to be a deliberate attempt to deceive voters and swindle investors.” In October 2011 the American Statistical Association protested in a letter to the United Nations against the harassment of Argentina’s statisticians: “the Government of Argentina has been systematically harassing and endeavoring to punish a number of individual statisticians and research organizations that … collect, compile, and/or disseminate price statistics”. The attacks, which first took the form of fines, “more recently have escalated to multiple fines and, reportedly, to threats of imprisonment”. The letter concludes: “We fear that, unless the Government is dissuaded from acting on the threats that they have so far made, considerable harm may befall a group of statisticians simply carrying out their work in accordance with the highest professional and ethical standards and that a great disservice will be done to civil society in Argentina.” Why did she take her stand? “The only thing I don’t want to lose is my prestige and credibility”, she says. “If I stop now it would be like admitting that they are right and my fight over the past four years has been in vain.” Dr Alicia Carriquiry is at the Department of Statistics at Iowa State University.