A group of utterly fed up creditors have lodged a lawsuit to block the imminent sale of Novo Banco.
The group, made up of 232 smaller depositors at the original Banco Espírito Santo, lodged the injunction on Wednesday at the Administrative Court in Lisbon. Drawn up by legal firm Miguel Reis and Associados, the defendants are named as the Bank of Portugal, the Ministry of Finance, Novo Banco, BES and the Resolution Fund.
In the 236 page document, the petitioners request that the injunction be deemed "proven due to evidence" and request that "the Bank of Portugal is ordered not to go through with the sale of Novo Banco. The Resolution Fund, which is Novo Banco’s sole shareholder, should refrain from selling Novo Banco until a final decision has been taken on this petition."
The court action, another embarrassment to the Bank of Portugal which should have anticipated and dealt with this sort of last minute rearguard action, also demands the seizure of a series of Novo Banco assets including real estate and furniture, and that sums raised should be used to pay off the failed bank’s obligations related to the fateful ‘commercial paper’ that depositors were duped into buying.
There is also the matter of a tax credit that mysteriously went from BES to Novo Banco which the litigants would like back, “since such credit had been generated only by BES activity."
In addition, the group wants to have statements from the Bank of Portugal "to be provided by the governor," as well as the chairman of the Board of Directors of BES, the chairman of the Novo Banco and the Chairman of the Board of Directors of the Resolution Fund.
It doesn’t stop there as the court action demands the presence as witnesses including Ricardo Salgado, Carlos Tavares (the former president of the CMVM), Vítor Bento (former president of BES and Novo Banco), plus Francisco Martins Jorge, Albano Martins de Sousa and António Veloso de Sousa.
The sale of Novo Banco to Minsheng has been held up as the Chinese bank has been unable to provide proof of funds, mainly due to the Chinese government’s temporary block on foreign exchange movements out of the country in its effort to support the fading yuan.
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Still, this consistent ability of the Portuguese leadership to shoot themselves so accurately 'in the foot' reminds us of Wellington's anecdotes from 200 years ago. The Great Duke fond of saying he often had 'no idea whose side the Portuguese were on' and on marksmanship - 'the safest place for the French was directly in front of any Portuguese who had turned up'.
We could report today to his Grace that on the first point the rest of Europe still has no idea whose side Portugal is on but, on the second, that the Portuguese leaderships accuracy had improved considerably.