The former BES chief executive Ricardo Salgado has been released on €3 million bail and is not allowed to leave the country while charges of fraud, breach of trust, forgery and money laundering are investigated further.
Salgado’s early morning arrest today was followed by a hearing in the Central Court of Criminal Investigation in front of judge Carlos Alexandre which lasted long into the afternoon.
The arrest was carried out as part of operation Monte Branco which is looking into an extensive international money laundering operation. Salgado has two weeks to stump up a bank guarantee (!), a cash payment or mortgaged securities to the value of €3 million.
Salgado released a statement which read that during the hearing he had expressed his full readiness to collaborate with justice in ascertaining the truth as he already had done during the (Monte Branco) investigation. Salgado believes that truth and justice will eventually prevail.
Many hope for the same result.
This afternoon the Prosecutor stated to the media, “after the court hearing the accused was subject to coercive measures to deposit the amount of €3 million, is not allowed to leave the national territory and is prohibited from contacting certain people. Under discussion is the possible practice of fraud, breach of trust, forgery and money laundering."
At a hearing in parliament this morning the head of CMVM, the market regulator, said that in his view the presumption of innocent until proven guilty should not apply in this case as those in leadership positions in banks should not prevail upon the presumption of innocence,
"Some argue that we should respect the principle of presumption of innocence in these cases but what I will say may shock defenders of human rights, in a financial institution, people have to be above suspicion,” said CMVM's Carlos Tavares.
The market regulator boss added that "the judicial system allows those who have more economic power to be able to postpone justice," and that Portuguese justice is expensive.
The government is maintaining its silence, but reiterated that this subject is exclusively under the jurisdiction of the Justice Department.
"This is in no way a matter for the government, much less for the Council of Ministers, it is only for the courts of justice," said Minister of the Presidency, Marques Guedes.
Operation Monte Branco is fast becoming legendary as the scale of the crimes being investigated is on the large side. It began as a result of the disturbing findings of an earlier operation which was looking at tax evasion.
Monte Branco then followed up investigating financial movements that occurred between 2006 and 2012 as part of a tax evasion and money laundering scheme by Swiss company Akoya, a wealth management company owned by Michel Canals and Nicolas Figueiredo, old hands at Swiss bank UBS, and by Álvaro Sobrinho, the non exec. former president of BES Angola.
The trail of money started in a foreign exchange shop in Lisbon's Rua do Ouro, called Monte Negro & Chaves. Francisco Canas, known as 'Zé Medelhas' was the first contact.
Money depositied was transferred to Akoya, and Arco Finance, which in turn deposited huge sums in the Swiss banking network from which deposits were transferred to an account at Banco Português de Negócios - Ifi SA in Cape Verde.
Between 2006 and 2012, influential people in the country, including lawyers, politicians and businessmen including our old friend Duarte Lima, used this route to avoid tax and to launder money. The scheme has caused a loss to the State of over €200 million.
This bank was managed by BPN in Portugal, which transferred the money to new accounts in BCP Milennium from which the money was returned to the original clients. Francisco Canas, was placed under house arrest as the suspected intermediary in Portugal for the bank transfers to overseas destinations.
The prosecutor claims that BES sent clients' money to the laundry between 2009 and 2011 and Ricardo Salgado and Amilcar Morais Pires, former financial administrator of BES, controlled companies to which the money was transferred.
Prime Minister Pedro Passos Coelho, and the Minister of Parliamentary Affairs at the time, known liar Miguel Relvas both were caught on wiretaps between September 2011 and February 2012 but no action was taken.
Salgado started to make mistaked and in 2013 had to correct his tax return three times from an original €182,765 to a more realistic €4.5 million.
Salgado also is being investigated for the use of insider information during the sale of EDP Renewables and the privatisation of REN when, as an advisor to the transactions, he knew what the offer price would be for the shares and made a quick buck by buying in at the lower market price and selling just after the prices were announced.
Above this seriously embarassing mess sits the Bank of Portugal and hard questions must now be asked of its chairman and about the central bank's ability, intent and attitude to favouritism as various BES Group companies appear to have been under significantly less scrutiny than other banks and financial institutions in Portugal’s financial sector.
A conveniently late audit by the Bank of Portugal spotted irregularities but when set against a background of Troika led rigour, it appears that the Espirito Santo family controlled businesses have been allowed to play around with public companies in contravention of a long list of serious laws. Ricardo Salgado may wish to reflect on this as he prepares his defence with the aid of no doubt eye-wateringly expensive lawyers.