Judge Carlos Alexandre quietly has been authorising the seizure of hundreds of properties ostensibly held by bankrupt Grupo Espírito Santo subsidiary Rioforte, but in reality many of them were held in the name of former BES chief wizard Ricardo Salgado.
This is another example of a pre-emptive strike by Portugal’s increasingly adept judiciary following on from the seizure last week of property and bank account balances in the name of João Rendeiro, former boss of Banco Privado Português who in a separate case is accused with others of defrauding investors of €41 million.
The Rioforte seizures involve over 586 properties with a sale value of around €1.8 billion.
Many are in Brazil and their identification and seizure are the result of good research and attention to detail by the Judicial Police keen to freeze anything saleable to repay in part the taxpayer who has underwritten much of the BES collapse by funding Novo Banco.
The case has not gone to court yet but the judge is taking no chances and by freezing these assets ensures a level of comfort that there will be something there to sell should the cases concerning Salgado deem that there was deliberate mismanagement, fraud, corruption, money laundering on a grand scale and an arrogant disregard for instructions from the Bank of Portugal.
The seized properties are part of a contentious piece of Portuguese legislation used to nab assets even before a defendant has been found guilty.
If Rioforte has assets of any substance which can be sold off, this could bring relief to investors who, through BES branches, were steered towards investments that they has assumed were in BES itself but which turned out to be in Grupo Espírito Santo companies, Rioforte among them.
In December 2013, the Luxembourg Court of Appeal rejected a petition from Rioforte to allow its directors to wind up the company in a controlled manner.
Rioforte is being run by an administrator appointed by the court and it is not yet known how Judge Alexandre’s action in seizing Rioforte assets will affect this administrator’s winding up process.
The US fund, Armory Merchant Holdings, which in early April was said to have bought into the Comporta Estate and tourism development on the Alentejo coast, confirmed later that it had only been reviewing a possible investment and that no money had changed hands.
Founding Partner of Armory, David Storper commented, "We have not made an investment other than a significant amount of time and money applied to analysing a potential investment. Our goals have always been to preserve the beauty and prestige of the Comporta properties and ensuring it will be properly managed while also improving the economic conditions of the local farmers, other workers and residents of the region."
The New York based fund managers were rumoured to have bought a Rioforte €100 million Caixa Geral de Depósitos defaulted loan, which would have given the Americans a slice of the action. Luckily the deal had not progressed.
Rioforte's creditors now are in the queue behind the Portuguese state for a share of any money raised from selling off Rioforte's property holdings.
