BES accounts have been dodgy since 2008

An accountant within the BES Group claimed today that the company's accounts have been dodgy since 2008.

Francisco Machado da Cruz intimated that the former top man at BES, Ricardo Salgado, was responsible for la grande fudge regarding the €1.3 billion in liabilities recently unearthed at Espirito Santo International.

Da Cruz said the president of BES "has known that the accounts have not been correct since 2008."

In 2008 the management team knew the bank lacked the money to cover liabilities. Ricardo Salgado, José Castella, Manuel Fernando Espirito Santo and José Manuel Espirito Santo “all knew that part of the bank’s liabilities were not reflected in the accounts but they did not know the actual value," said Machado da Cruz who did not reflect on which part of his statement was worse.

Internal Espírito Santo Group documents show that after the 2008 crisis started Salgado wanted to save BES, the "crown jewel of the family," but appears to have found it necessary to employ subterfuge to fool the Bank of Portugal, his shareholders and staff.

"Only Ricardo Salgado and José Castella proof-read the annual accounts during their preparation and gave the OK for the final version before submission by the Management of Espirito Santo International," explaining da Cruz, adding that the accounts they did, added up, but that the "reporting did not correspond to the accounts."

"Every year there was a problem in consolidating the accounts. It was decided not to appoint an external auditor. This decision was made by the same people who knew that the liabilities of Espirito Santo International were not reflected in the accounts," claimed Machado da Cruz in a crushing criticism of Salgado whose image is very much linked to that of the bank.

In the May prospectus relating to the planned capital increase of BES which was sent to the stock market regulator, it was revealed that the audit the Bank of Portugal asked for into Espirito Santo International had concluded that the company "had a serious financial situation" after finding the irregularities in the accounts.

Regarding the errors, Salgado said in May, "We all make mistakes and I assume that the group made errors, but these errors caused by our structure and organisation at the top, which should have paid more attention."

Salgado went on to try and shift the blame onto the accountant Francisco Machado da Cruz, Salgado said he was surprised when all this blew up.

The €1.045 BES capital increase was completed this week, with strong support from institutional investors, and Salgado meantime has moved from steering BES to the chairmanship of the holding company, almost unscathed, while shareholders find themselves exposed to €1.3 billion in uncovered liabilities.

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