A High Court judge on Wednesday indicted former Bankia Chairman Rodrigo Rato and 32 other board members of the beleaguered bank, as well as that of the parent company Banco Financiero y de Ahorros (BFA), as targets of an investigation into alleged financial crimes in the run-up to the institution’s collapse — the biggest financial débâcle in Spanish history.
What was the fourth-largest banking group in Spain went from supposedly posting profits of 304 million euros to requiring a state bailout of nearly 23.5 billion — around 500 euros per Spanish citizen. Shortly after Bankia’s demise the Spanish government announced it would formally request a European bailout of its banking sector.
Besides Rato, who is a former IMF managing director and economy minister, Judge Fernando Andreu has also indicted former Interior Minister Ángel Acebes and former Bancaja Chairman José Luis Olivas, who both served on the BFA board.
Like Rato, Acebes formed part of the Popular Party (PP) administration of José María Aznar. The High Court decided to open an inquiry into Bankia’s collapse after UPyD party leader Rosa Díez filed a criminal complaint against the board on June 11.
Díez alleges that Rato and the others may have committed up to five crimes in connection with the preparation of alleged fraudulent audits and prospectus audits that helped list Bankia’s shares on the stock exchange in July 2011. The shares, worth around 3.75 euros when Bankia was listed, are now barely worth one euro.
Judge Andreu has subpoenaed former Bank of Spain governor Miguel Ángel Fernández Ordóñez
Customers of many savings banks listed during the recent restricting of the sector have seen their savings lose much of their value after being persuaded to take shares ahead of the lenders’ launch on the market.
According to judicial sources, the crimes listed in the indictments include alleged swindling and document forgery.
Bankia, which was formed from the merger of seven savings banks, including powerhouse Caja Madrid, was taken over in May by the Bank of Spain. A subsequent audit found that Bankia would need at least 19 billion euros in government bailout money to cover holes dug deep by bad property loans. Rato was fired as Bankia chairman soon after the central bank takeover.
On May 28, the Attorney General’s Office initiated an investigation against the bank and its directors while activists from the 15-M protest movement and the obscure rightwing Manos Limpias union have also filed separate complaints against Rato and Bankia. The court has also requested a significant amount of information from the seven savings banks that formed BFA, as well as from the Bank of Spain and stock market watchdog CNMV. All parties must appear in court on July 23 for a hearing, after which the judge will decide whether to implement any of the preventive measures requested by UPyD, such as judicial intervention of Bankia to replace its managers with a bankruptcy administrator.
Additionally, Judge Andreu has subpoenaed former Bank of Spain governor Miguel Ángel Fernández Ordóñez; CNMV president Julio Segura and two others to testify as witnesses in court.
The High Court wants detailed information about early retirement plans, pension schemes, life insurance policies, compensation packages and other bonuses enjoyed by executives, as well as any loans or third-party guarantor operations favoring executives and their relatives or political parties.