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BPN fraud trials - stiff sentences handed out to former Directors

BPNOliveiraFormer minister Arlindo de Carvalho and the former president of Banco Português de Negócios (BPN), Oliveira e Costa, (pictured) on Monday were convicted of fraud and tax fraud in another case relating to their management of BPN.

Arlindo de Carvalho, Oliveira e Costa and his partner in a real estate company, José Neto, were found guilty and sentenced in in Lisbon. Ricardo Oliveira was acquitted.

The former minister was sentenced to six years in prison for qualified fraud and tax fraud and Oliveira Costa was sentenced to 12 years in prison for fraud.

Of the eight plaintiffs in the long-running case, seven were sentenced to imprisonment for fraud and tax fraud.

This conviction is just part of the overall BPN case in which Oliveira and Costa have already been sentenced to 14 years in prison, a decision that has not yet become final.

Arlindo de Carvalho, Oliveira e Costa and José Neto used "trusted third parties" to act as "fiduciaries" in investments that , in fact, belonged to Banco Português de Negócios.

Oliveira Costa and Arlindo Carvalho "played with the public’s money"

Judge Maria Joana Gracio classified the defendants as people who committed crimes with a "very high degree of unlawfulness" and that "played with the money of compliant citizens who had trusted the bank and its administrators."

The court also proclaimed that there had been a "mismanaging and shameless use of money and that such conduct can not go unpunished."

The court heard that in Oliveira e Costa, who was Secretary of State for Fiscal Affairs and who held positions at the Banco de Portugal, the fraud committed was "enormous", since it reached the top of the bank’s hierarchy and the facts had proved that he had acted, “shamelessly outside the law."

The lawyer of the former BPN president told the court that she would, "appeal to the Court of Appeal", explaining that her client was absent from the session because he is very sick and, “does not have the strength to be subject to these pressures.”

In the case of Arlindo Carvalho, a former Health Minister and former Secretary of State for Social Security, the court said that this defendant had "conduct that shows opportunism, greed and unscrupulousness," having benefited by almost two million euros by being involved in various businesses that defrauded the bank.

In relation to the other convicted defendants - Francisco Sanches, Luís Caprichoso, and António Coelho Marinho (former BPN directors), José Neto, Arlindo de Carvalho's shareholder in a real estate business, and José Monte Verde, a shareholder and debtor of BPN - the court convicted them of fraud and fiscal fraud, condemning them to effective prison sentences.

Real estate entrepreneur and shareholder of BPN Ricardo Oliveira was the only defendant to be acquitted of crimes of fraud and tax fraud, saying only that what he had suffered for ten years, was “indescribable.”

Ricardo Oliveira had to pay a security of five million euros and the court is to seize assets worth several million euros.

None of the convicted men will actually go to jail as they all are to appeal, thus remaining free for years more as their cases slowly wind they way through the intestinal meanderings of Portugal's upper courts.

 

_________

Banco Português de Negócios (BPN), was the bank that the government controversially bailed out in 2008 after reckless management and malpractice has created an initial debt of €1.8 billion.

José Oliveira e Costa, the former President of BPN, was held mainly responsible for the financial scandal that resulted in the bank being sold off to the Angola’s Banco BIC for €40 million in 2011.

At the end of 2012, the total damage to the Portuguese taxpayer had been around €7 billion.

Background:

Portugal's Finance Minister Fernando Teixeira dos Santos told a press conference after a special cabinet meeting that the government was to assure deposits in BPN, and that the management of BPN was to be given to the Caixa Geral de Depósitos (Portugal's public bank) under Bank of Portugal's (Banco de Portugal, the Portuguese Central Bank) supervision from November 3, 2008, to prevent a financial crisis chain reaction in Portugal.

Portuguese judicial authorities detained the former president of financially troubled BPN. José Oliveira e Costa, who was the CEO of BPN between 1997 and early 2008, was arrested on charges of suspected tax fraud, money laundering, forgery, abuse of credit and illegal gains.

In spite of having "a market share of around 2 percent", the case of BPN was particularly serious because of its political implications - Portugal's then current President Cavaco Silva and some of his political allies maintained personal and business relationships with the bank and Oliveira e Costa.

On the grounds of avoiding a potentially serious financial crisis in the Portuguese economy, the Portuguese government decided to give them a bailout, eventually at a future loss to taxpayers. Because of that, the role of Banco de Portugal in regulating and supervising the Portuguese banking system, when it was led by Vítor Constâncio from 2000 to 2010, has been the subject of heated argument, particularly whether Vítor Constâncio and the BdP had the means to do something or whether they revealed gross incompetence.

In December 2010, Constâncio was appointed vice president of the European Central Bank, for an eight-year mandate, being responsible for banking supervision. Shortly after, in April 2011, the Portuguese Government would request international financial assistance as the State itself would be declared insolvent.

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Comments  

+4 #2 J Davis 2018-11-13 10:36
There is something splendidly Portuguese about someone caught knowingly doing or heavily implicated in criminal behaviour to then trumpet along the lines of "this sort of thing must stop. I shall lead the way in clearing up this mess made by others" One example today is the ex-head of BES Angola - Álvaro Sobrinho. As with so many Portuguese 'scoundrels' - now running for political power. As the new saying goes - Politics is the last refuge of a scoundrel.
+4 #1 Hamilton 2018-11-12 20:45
Sounds great but there will be endless appeals and then these guys will get compensation for their wounded honour. One is already sick at the jaw dropping cheek of singling him out as having done something wrong when all the big Mafiosi were doing the same. So never be actually punished. But good to see Constâncio brought out of the shadows In time for his return from the ECB to Portuguese decision making.
What would be particularly revealing is the amount and direction of the assets of the likes of Cavaco Silva stripped out of BPN before being sold to the Angolans.

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