At his trial in Spain on corruption charges, the former head of the IMF said his personal use of the funds of the banks he lead had been lawful.
From the dock, Rodrigo Rato, also a former economy minister in Spain, said: “It was completely legal”.
He is being tried for allegedly overseeing a “corrupt system” which enabled him and 64 other bank executives also on trial to access funds for their personal spending. In eleven years ending in 2012, including the depths of the economic catastrophe, it is alleged they spent €15 million in total, which was neither justified nor declared to tax offices.
Rato, 67, had been a leading light in the Popular Party (PP) headed by Mariano Rajoy who is desperately seeking a formula to return to power.
This trial is not Rajoy’s only courtroom headache. On the same day as Rato testified, another corruption scandal trial was beginning in the same Madrid court house. Billed as the “trial of the year”, this one sees a number of the party’s former politicians and high-ranking officials facing justice over charges of kickbacks, false invoices and secret Swiss bank accounts.
The “corrupt system” alleged against Rato had already been set up by his predecessor at Caja Madrid when Rato took charges in 2010. Rato then replicated it at Bankia, the product of the merger of Caja Madrid and six other savings banks.
On the first day of his testimony, Rato said the funds he spent “were part of my contract as a member of the board of directors” and was an addition to his salary. The use of bank credit cards, he said, were simply advances on salaries.
"I had a right to all the annual or long-term incentives that the management team received."
Other bank executives are accused of having spent more than Rato, but as one of the men who ran the system, prosecutors are asking for a sentence of 4.5 years, a €108,000 fine and €2.6 million in damages.
Bankia came close to collapse in May 2012 causing Rato to step down to facilitate a rescue plan. The breakdown caused an EU bailout of a number of Spain’s banks. Bankia’s is reported to have been in the region of €20 billion.
