BERLIN (Reuters) - The German government tried to deflect responsibility on Monday for a £47.5 billion accounting blunder that has exposed it to charges of ridicule for being inept and hypocritical after its steady criticism of Greek bookkeeping practices.
Finance Minister Wolfgang Schaeuble has summoned executives from the nationalised mortgage bank Hypo Real Estate (HRE) to explain how they made a simple accounting error that ended up raising Germany's total debt load by 55 billion euros.
Schaeuble, in the awkward situation of being humiliated by the windfall that will cut Germany's debt levels, will also demand answers at a Wednesday meeting from the PwC accountancy firm that signed off on the report.
Schaeuble's spokesman Martin Kotthaus tried to deflect any blame, saying the ministry received a certified statement from auditors that the balance sheets had been checked and approved. He said it was too early to tell exactly who messed up.
"It's annoying, to put it diplomatically, when corrections of this dimension are necessary," said Kotthaus, who was grilled at a news conference. "We had a certified audit of the annual accounts for 2010 and it said everything was in order."
Kotthaus said the bank itself was responsible for its annual report.
The German media nevertheless mocked Schaeuble, saying the 55-billion euro accounting error put Berlin in the same category as the Greek government for failing to report accurate figures. Inaccurate reporting of Greek deficits contributed to the euro zone sovereign debt crisis that has hit Europe hard.
"Incredible but true," wrote the Rheinische Post newspaper. "The nationalised bank HRE made a staggering 55-billion euro miscalculation. It's scandalous that bank managers, certified public accountants and government supervisors made an error of this dimension. This kind of sloppiness reminds us of Greece.
"Schaeuble needs to respond with summary dismissals -- otherwise he risks getting dragged into the debacle himself."
The Frankfurter Rundschau daily said the accounting blunder made the country's political leaders look like amateurs.
"Germany's political leaders could hardly demonstrate more convincingly that they are overwhelmed managing the financial crisis," the paper said. "This isn't only the most expensive gift ever for Schaeuble. It's also the most embarrassing."
The German public has long been grumbling about the growing size of the euro zone rescue measures, especially after state-spending cuts over the last decade led to some deep cuts in Germany's comparatively comfortable levels of state support.
In an era of austerity where their government has squabbled tirelessly for two years over a mooted 6-billion euro tax cut, Germans found it hard to fathom that their government was so suddenly and unexpectedly 55 billion euros better off.
Kotthaus, Schaeuble's spokesman, was quick to point out that correcting the error will not mean the government has an extra 55 billion euros at its disposal for new expenditures.
"There will be no changes in real world planning," he said.
The opposition Social Democrats (SPD) led the attack against Schaeuble, whose conservative Christian Democrats (CDU) often campaign on the slogan that the SPD can't be trusted with the public's money.
"It's an unfathomable blunder by Schaeuble's ministry," said Thomas Oppermann, a senior member of parliament for the SPD. "Either the Finance Ministry didn't realise how explosive this error was or they consciously concealed it.
"This is obviously Schaeuble's responsibility," he added. "This is a state-owned bank. There is no one else responsible."
The HRE-linked "bad bank" FMS Wertmanagement was set up after HRE was nationalised in 2009, so that HRE could transfer the worst non-performing assets to an off-balance sheet bank guaranteed by the German state.
FMS Wertmanagement was created when toxic loans and securities with a face value of 173 billion euros were transferred from HRE in October last year, creating Germany's largest bad bank.
As a result of the corrected debt, Germany now expects its ratio of debt to gross domestic product to be 81.1 percent for 2011, 2.6 percentage points less than previously forecast.
(Reporting By Erik Kirschbaum)