A group of 120 investors in the failed Banco Espírito Santo have brought a court action to demand the annulment of the resolution that split BES into two, claiming that the process was illegal.
The action was delivered to court on Monday and cites the Bank of Portugal, the Finance Minister and the Resolution Fund which became the sole shareholder of Novo Banco and a beneficiary of 'confiscation.'
The action group’s spokesman Pedro Castro said "Essentially, what is required is the annulment of the resolution imposed by the Bank of Portugal and the annulment of the transfer of Banco Espírito Santo assets to Novo Banco."
"The assets should be transferred back to BES, this is what is required," added Castro, explaining that if the court agrees with the action, "the whole business is completely nullified" and "everything returns to zero."
The court action is backed by several lawyers, including Miguel Reis who is representing many of the small BES investors and is the man responsible for publishing the minutes of the extraordinary meeting of the Bank of Portugal in which the Novo Banco deal was cooked up.
"The damaging result for BES investors resulted from the process of dividing Banco Espírito Santo in two, leaving BES with all the toxic assets and Novo Banco with all the valuable assets, was illegal and should be annulled. What they should have done from the beginning was to notify BES to present a restructuring plan or else give it a deadline of 15 days to make such changes as determined by the Bank of Portugal," argued Castro, adding
“The Governor of the Bank of Portugal and the lady finance minister chose to go this way, which is clearly illegal and, in our opinion, is confiscation."
Therefore, the group argues, the deal should be cancelled, a deal which they consider to be "a scam in many ways."
The Financial Times reported on Sunday that the investment fund Third Point and bank BTG Pactual also are going ahead with a lawsuit to challenge the Bank of Portugal’s move that divided the assets into ‘good bank, bad bank.’
O Expresso also reported on Saturday that a group of investors are starting an action in the Lisbon Administrative Court against the banking supervisor.
This lawsuit refers to the unequal treatment of the creditors to BES which protected the large ones who were moved to the 'good bank' Novo Banco, while the junior creditors and shareholders were shovelled off to the 'bad bank' where the assets and liabilities were considered toxic.
The newspaper also said that the investors allege the actions were unconstitutional and violated the principles of equality and proportionality. A view endorsed by two law professors at the University of Lisbon Law School.
The whole BES fiasco came to a head on 03 August this year when the Bank of Portugal took control of BES after the bank filed shock half-yearly losses of €3.6 billion and was unable to continue as a bank under Bank of Portugal liquidity rules.
Comments
With the judge throwing out anything that connects Ricky to anything remotely dodgy and everything being dumped on minions misreading hs instructions ... he will walk.
The only court cases that stand any chance of success will be those placed in developed countries courts ... such as the US and in the EU the northern states like the UK and Germany. Which some of the BES contracts allows ...
Not least because a judge in these advanced country courts will impartially select what they hear. What they consider relevant facts.
Without any risk to them or their nearest and dearest being found embedded in motorway flyovers in 100 years time when renewing the bridge.
And if the upper limit is say 25,000 euros (roughly as in the UK (?) before it needs to be reported) - sophisticated software will be analysing for repeated payments of this 25,000. Regular payments that are therefore 'irregular'.
This being the scamming method of choice amongst the Portuguese to siphon EU structural funds out of the scrutineers view. So, a dodgy wanting payment for 100,000 would submit the necessary number of invoices (stage payments) to get this money.
And bigger dodgies with local government 'support' would be doing it for larger sums - in Madeira around 1 1/2 billion euros was lifted out this way with 2,000 invoices !!! To avoid EU regulations on scrutiny.
Such scrutiny only arriving, sporadically, a few years later on the specific instructions of the Troika.
Bravo, Troika ! Sempre Bay Window (Bem vindo) as some of us say here !
We will only know how much when Novo Banco is sold on at (presumably) a whopping loss largely underwritten by Joe Public.