A Liquidation Commission investigating Banco Espírito Santo’s 2014 collapse has pointed the finger at Ricardo Salgado and his entire management team.
The blame lies with 13 people for the collapse of the institution, according to the findings of the Committee whose opinion formally will be evaluated by the Public Prosecution Service within 60 days.
The management of the Banco Espírito Santo, a once proud high street bank, is totally responsible for its collapse due to endemic bad banking practices carried out a team led by the bank’s chief executive, Ricardo Salgado.
Eye-watering losses of €5.9 billion led to the insolvent bank’s collapse in August 2014.
The committee's opinion is that "gross negligence" was prevalent with 13 people responsible, including a management team which included, in addition to Salgado, José Manuel Espírito Santo, Amílcar Morais Pires, José Maria Ricciardi, António Souto, João Freixa, Joaquim Goes, Jorge Martins, Rui Silveira and Stanislas Ribes and also Manuel Fernando Espirito Santo, Pedro Mosqueira do Amaral and Ricardo Abecassis.
These names had varying levels of involvement and decision making responsibility but all were part of the downward spiral that led to the fall of BES, concludes the report.
One clanger was the signing of ‘letters of comfort’ sent to Venezuelan creditors, in which the bank assumed the debts run up Espírito Santo International and Rioforte, both Grupo Espírito Santo companies. This action breached BES's legal regulations and also contravened strict rules laid down by the Bank of Portugal.
The sale of Espírito Santo International and Rioforte commercial paper through BES branches to unwitting customers, was another. A third major breach was the granting of financing to group companies, such as Esfil, Rioforte and Escom, on the say-so of Ricardo Salgado without any due diligence or assets being pledged to cover the loans.
Ricardo Salgado also granted credits of €463 million, without any guarantees, to Espírito Santo Financière S.A. (ESFIL), an Espirito Santo family company providing banking and financial services for corporate, institutional and private customers in Switzerland and France.
"The total amount of ESFIL's debt to BES as a result of Interbank Money Market operations in euros between June 26, 2014 and July 7, 2014 amounted to €463 million," reads the report from the BES Liquidation Committee.
On July 7, BES granted a €100 million loan to ESFIL, which was due on the 14th of that month but was not paid. On the same day, which also was Ricardo Salgado's last day at the helm of BES, he authorised two new loans to ESFIL - one of €100 million and another of €115 million, which also were not paid then, and never have been.
The committee’s report concludes also that Ricardo Salgado and Amílcar Morais Pires both would have been fully aware of the financial difficulties at Grupo Espírito Santo's web of companies as far back as 2013 yet continues to lend unsecured sums.
The report contains no great surprises but adds another nail in Salgado’s reputational coffin.
Salgado's defence to date has been to deny everything and blame others. Reality will catch up with him in court where he will face charges as part of Operation Marques where he is accused of bribery, among other tricky ones such a money laundering and tax evasion.
The Dono Disto Tudo's latest assurance, during a court hearing to handle his objection to a €4 million Bank of Portugal fine, was that "I can assure you that I have never bribed anyone in my entire life and 73 years have gone by and my lawyers have already said that I have committed no crime. So when the investigation comes to an end, I am sure I will be cleared of this monstrosity," said Salgado who says he is having trouble struggling by on €1,114 a month after his pensions were nabbed by the State, on account of the money the banker already has cost the State.
