Bank of Portugal formally has accused 18 Banco Espírito Santo managers of ‘ruinous management.’
The regulator now has evidence that the BES chief executive Ricardo Salgado ordered that the accounts of Espírito Santo International should be doctored and that he lied to the parliamentary commission of inquiry.
This is just the first of five cases that the Bank of Portugal is investigating, all of which put Ricardo Salgado in centre stage.
Added to ‘ruinous management’ is the charge of ‘provision of false information with intent’ referring to the preparation of financial accounts before duping BES customers into buying commercial paper in soon to fail Espírito Santo group companies.
Around 2,500 BES customers fell for the trick and are €500 million out of pocket as a result of the connivance of senior BES staff and directors under the instruction of Salgado.
The objective of the Bank of Portugal inquiry is "to understand how the placement of Espírito Santo International and Rioforte commercial paper with BES customers between December 2011 and December 2013 undermined BES in material and reputational terms.”
The selling of duff bits of paper was a practice that "has injured depositors, investors and other creditors," according to the regulator, with rare insight.
Those in the frame alongside Ricardo Salgado are José Manuel Espírito Santo, Manuel Fernando Espírito Santo and Ricardo Abecassis.
This inner circle knew what was going on due to their seniority at BES or at other Grupo Espírito Santo companies and are charged with participating in, or being aware of, false accounting at Espírito Santo International and of allowing the sale of significant amounts of commercial bonds in group companies to in-branch BES clients.
Expresso today said that fines could go as high as €5 million for each corporate crime, and €2 million if a person is proved to be liable.
The transgressions, especially ‘willful misconduct’ if proved, could get the above family names prison sentences of up to 10 years each.
The Bank of Portugal has notified the accused that they have 30 days within which to respond to the charges.
Salgado today confirmed that he has been notified of an accusation which he will contest.
A statement from Salgado read, "As is well known, the Bank of Portugal does not meet the criteria of impartiality and independence to make any judgments on the BES case," with the "Dono Disto Tudo" going on to blame the regulator for the destruction of BES.
Those BES customers who have lost their money when tricked into transferring their savings into allegedly ‘safe’ BES deposits when in fact the cash went off to Espírito Santo Group companies, has said it is "disappointed" with the government for not yet solving their problem and that they may have to protest loudly during the forthcoming election campaign.
"From this moment on we start work on the government. We do not accept passivity from a government that does not defend its citizens," said Ricardo Ângelo, president of the BES losers association, addressing members in Sintra today.
When asked his view on the controversial re-appointment of Carlos Costa as the Governor of the Bank of Portugal, Ângelo said that he may have done good work for the bank, but for citizens he has done a poor job”
"If he believes in God, this is an opportunity to redeem the evil he has done to people. If he does not believe in God, here is a chance that the finance minister can give him to do some good.”
Comments
What is still woefully lacking in Portugal is any comprehension of 'whistle blowing for the public good'. These 'switching out of of safe deposit account' crimes must have been carried out at branch level. So implicating all 800 bank managers and whoever on their team did the job.
Although foreigners would have been switched effortlessly (as we now know from the Daily Mail) - HQ could not possibly tell if they were switching a Jose Santos - "Duggie no Mates" or a Jose Santos who is the brother of the local Municipal President. Whose money must be left safely ! Only local branch staff would know that.