Portugal’s Communist Party wants the Government to provide parliament with all the documentation on the judicial process between the State and Santander Totta in the swaps contracts fiasco.
The parliamentary group of the PCP already has submitted an application to the Parliamentary Budget and Finance Committee to request the documents from the Ministry of Finance. This request was unanimously approved today in parliament.
There are nine swap agreements involving Santander Totta and publically owned transport companies which in 2013, following guidelines issued by the Ministry of Finance, stopped paying interest due on the loans due to the escalating sums due.
On April 12th this year, the government and Banco Santander Totta announced that they had reached an agreement which halted the already lengthy litigation on the swaps contracts.
This agreement meant the State had to agree that the deals were valid, that Santander Totta had behaved professionally and that the State withdrew all outstanding litigation and appeals.
Santander Totta agreed that it "will withdraw from the action claiming damages from the State and from the Treasury and Public Debt Management Agency and will arrange a loan to the Portuguese Republic, which will result in savings in their financing costs."
This novel arrangement involves a €2.3 billion loan over 15 years, to be made "under more favorable interest rates, allowing interest savings."
These disastrous swaps contracts were hedging agreement that saw rapidly rising payments due as interests rates fell. The last government decided to stop paying, seldom a good idea with a lender as powerful as Santander Totta, leaving the current administration to clear up the expensive mess.
The Communist Party's request for full disclosure may uncover the reason behind these swaps deals that are as far from the ethics of public company management as can be imagined, risking eye-wateringly high payments as interest rates reached historic lows.
Still under the spotlight is the role of Maria Albuquerque who worked at the Public Debt Management Agency which authorised the swaps deals and later, as Minister of Finance, agreed that payments to the bank should be suspended.
At a first hearing in Parliament on 25 June 2013, Albuquerque commented that "While I was at the Public Debt management Agency I did not have any contact with swaps," adding that she might have heard the term but had nothing to do with the deals.
This seems odd as in June 2010, Albuquerque was a senior member of the Agency when it approved a swaps contract for Estradas de Portugal.
This agreement does not mean the contrats are cancelled - they are not and the taxpayer can expect to be drained further by Santander which may have won in court but has lost the moral high ground by gouging the taxpayer with gleeful ferocity.
