A forensic audit commissioned by the Bank of Portugal to delve into the activities at Banco Espírito Santo in the period leading up to its bailout this August will report formally later this month.
The consulting firm Deloitte which is carrying out the audit so far has been unable to identify the recipients of BES Chief Executive Ricardo Salgado’s largesse as hundreds of millions of euros were transferred to offshore companies in the lead up to the BES failure.
What has been leaked is that the team under Salgado will be accused of ‘practicing ruinous acts’ in the management of the bank, for transferring hundreds of millions of euros from BES via four off-shore companies.
According to SIC this weekend, "These four companies are located in the British Channel Islands. These off-shore vehicles were used in many hundreds of millions of euros of secret payments in the weeks between the announcement of the departure of Ricardo Salgado form BES and the entry of new team under Vítor Bento."
Salgado will be accused of "practicing ruinous acts in the management of Banco Espirito Santo for having organised these transfers."
These ‘ruinous acts’ drained the bank of liquidity and were in contravention of specific orders from the Bank of Portugal. Their recipients are unlikely to have legitimate purposes for offshore accounts and when they are uncovered will be asked to account for past deposits and interest.
We still do not know who received the money that was siphoned off but SIC is pretty sure that final report will kick up the names of members of Salgado’s extended family and other hidden Espírito Santo companies based in offshore havens. This massive outflow of money was designed to be hidden from the Bank of Portugal and the incoming BES management.
The ‘violation of prudential rules for the management of banks’ is enough for the Portuguese authorities successfully to demand that names are handed over as fraud on a grand scale is being investigated.
Then we can see the scale of Salgado’s nest feathering at the expense of his creditors. His previous excuse that missing funds were due to 'an accounting error' is unlikely to be believed a second time by the Bank of Portugal whose own reputation is at an all time low to due to its failure to regulate BES.
Ricardo Salgado issued a statement last Friday as the former management of BES has been called to a meeting about the audit’s findings so he could help clarify any information they had collected but which may be inaccurate.
Without revealing whether he will or will not attend personally, Salgado said that he had been told by Deloitte that the information it had collected may be used as evidence against the conduct of the directors.
Salgado clearly was miffed that the media knew all about the interim findings from Deloitte and the date and time of the forthcoming meeting, which he purported not to. He was even more incensed that SIC knew and broadcast the allegation that several hundred million euros had been spirited away.
Salgado said that the alleged findings of the forensic audit as reported by SIC were presented in a seriously defamatory manner" for himself and "the other former directors of BES."
The banker's statement complains of trial by media but these matters are of public interest and, as Salgado so far has refused to speak or issue a statement until last week, his expectation that the nation’s media will simply report nothing as it may be inconvenient to him, is a vain one.
Salgado’s spokesman concluded that "all this is hardly compatible with the finding of the facts and the principles that should govern the democratic rule of law."
