The president of the Society of Strategic Assessment and Risk (SaeR) said today that the economic crisis was half responsible for the collapse of the Espírito Santo Group, with the remaining 50% of the blame attributable to management, the Government and the Bank of Portugal.
The 400 page tome was launched today, commissioned by none other than failed banker Ricardo Salgado (pictured on his arrest).
Poças Esteves introduced the book and pointed out the key findings of 'Caso BES, a Realidade dos Números.' (The BES case, the reality of the numbers’)
The book is based on an in depth study by SaeR, written by Esteves and university professor Avelino de Jesus, which in short concluded that the banking supervisor and the Government mishandled events last summer leading to the collapse of BES and subsequently many other of the GES companies.
"I would say the crisis is to blame 50% to 60% for the collapse of GES. The study shows that the crisis had influenced the outcome but there has been mismanagement that could have been avoided and there were mistakes from other parties who intervened, in particular from the government itself and the Bank of Portugal," concluded Esteves, unsurprisingly.
“The big question about management failure is that the BES Group and GES is a mixed conglomerate that has a financial and a non-financial area. In terms of finance, it can be considered a well-managed, solid, strong company, even in the international framework, but the non-financial side had many severe shortcomings in terms of management which tried to correct things but it was already too late."
Esteves added that the management failure was in not having monitored the non-financial side of the group and that it should have been anticipated that by putting the non-financial side of the business under pressure this would affect the good part, the financial part.
Regarding the intervention of the Bank of Portugal in the BES rescue, Esteves said that "the Bank of Portugal bothered too much about the financial system and forgot that the financial system is a part of the economy as a whole."
The August 3, 2014, the Bank of Portugal took control of BES, after it reported half-yearly losses of €3.6 billion and divided the bank into two parts: the 'bad bank' (a company that kept the BES name and holds the toxic assets and liabilities of BES,) and the good bank Novo Banco.
News that will delight Ricardo Salgado, awaiting trial on charges of negligence and money laundering, Esteves said that the Espírito Santo Group would have been sustainable if the Portuguese State had "helped the financial group," i.e. a bailout.
Esteves cited the PriceWaterhouseCoopers report commissioned by the Bank of Portugal which concluded that the group "had viability, sustainability and had a solution to solve the problem but the hasty sale of assets drove prices down and destroyed value."
The €2.5 billion request by the Espírito Santo for Group state aid was declined by the Passos Coelho government which had had no such qualms with supporting other problem companies in the past.
Esteves blames the government for not realising the importance of the Espírito Santo Group to the whole economy.
The government conversely blames Ricardo Salgado for running an intricate network of inter-dependent companies that were brought to their collective knees by his duplicity, lying and mis-management.
The problems that collapsed the group include property company Rioforte being unable to repay Portugal Telecom the €750 million it had borrowed because Salgado was PT's largest shareholder, and the gaping multi-billion euro hole in BES Angola's accounts when the purported 'guarantee' from President dos Santos which allegedly underwrote loans to Angolan companies was withdrawn.
If Salgado aims to use sections of this new book as mitigation in his forthcoming trial, he will have to hope that the judges don't ask him who commissioned it.
