Rumasa family may face fraud charges

The Spanish High Court has opened a case against Spanish businessman José María Ruiz Mateos, his wife, his six sons and one of their cousins for possible fraud and misappropriation of funds in the issue of high-interest promissory notes that were not repaid.

High Court Judge Pablo Ruz on Friday accepted a suit by 63 people who had acquired 9 million euros of the promissory notes issued by companies in Ruiz Mateos' holding company Nueva Rumasa. The promissory notes offered an annual return of between six and 12 percent.

A number of companies in the Nueva Rumasa group have gone into receivership, including Clesa, Carnes y Conservas Españoles, Hibramer, Grupo Dhul and Bodegas Valdivia de Cádiz.

The judge gave the Ruiz Mateos family 10 days to deposit a bond of 13 million euros to cover possible damages it may have to pay.

However, he rejected a request by the plaintiffs for the state to be named jointly liable because of alleged negligence on the part of the National Securities Commission (CNMV) and the Bank of Spain. The CNMV in fact issued several warnings to potential investors about acquiring the promissory notes.

The notes were supposedly issued to fund the imminent acquisition of companies, but most of the proceeds were diverted to pay off other creditors and to lend to money to firms in the group.

Anti-corruption prosecutors put the total amount of people who acquired the promissory notes at 1,017, with a combined investment of 90.4 million.

Ruz's ruling refers to the "opacity" of the Nueva Rumasa conglomerate, which is "very difficult to classify since it is not made up of a consolidated group whose structure allows one to identify a common parent company." The Tax Agency has identified 147 companies as belonging to Nueva Rumasa. The ownership of the companies is camouflaged by other companies in tax havens represented by frontmen.

Nueva Rumasa launched its high-interest promissory note program on February 23, 2009, the anniversary of the expropriation in 1983 by the Socialist government of the time of the old Rumasa, which controlled 18 banks and 400 companies, after finding a massive hole in its balance sheet.