The first five sections of the long-awaited forensic audit by accountancy firm Deloitte on the Banco Espírito Santo collapse has been delivered to the Attorney General's Office.
So far, 36 offences by the Ricardo Salgado management regime have been highlighted, with the bank’s administrators accused of ‘intentional acts of ruinous management’ and 21 deliberate instances of ignoring direct instructions from the Bank of Portugal in just seven months.
The Bank of Portugal’s instructions relating to companies controlled by the Espírito Santo Financial Group were treated with contempt, according to the first part of the report and there already are several criminal cases in progress which are likely to result in charges of fraud, mismanagement, manipulation of accounts, favoring creditors and diverting funds to third party accounts.
The second part will deal with the links between Banco Espírito Santo and BES Angola and should be ready in time for discussion at the parliamentary inquiry next week. The president of the Parliamentary Commission of Inquiry, Fernando Negrao already is studying the first section of the report.
The remaining three parts of the exhaustive forensic report should be delivered to the Bank of Portugal in late March.
The detail of the report makes saddening reading with allegations of "crimes of fraud, the favouring of creditors, potentially illegitimate disobedience" and "intentional acts of ruinous management" as it appears that Ricardo Salgado treated the Bank of Portugal's regulatory instructions as optional and the various companies under his control as one big family piggy bank with loans to directors and family members being issued outside of any recognised banking parameters.
Salgado's reputation already is in tatters and the Bank of Portugal Governor has been lucky to have kept his job so far. This report may spell the end of Carlos Costa's increasingly fragile tenure.
Ricardo Salgado (pictured) responded in a statement to the first section of the Deloitte report and called for a right to reply as only then can anyone get to the "discovery of the truth about the reasons that led to the collapse of BES, not based on pre-judgments or predetermined conclusions."
City newspaper i reported that Ricardo Salgado risks fines amounting to €10 million and could be banned from working in the banking industry for 10 years. Prison is not yet seen as an option but this may change as the charge sheet is drawn up.
The Attorney General's Office commented today that it had received the report and where there are instances of abuse or suspected crimes these will be investigated.
