High Court Judge Ismael Moreno plans to put five former directors of the nationalized savings bank Novacaixagalicia on trial in connection with multi-million-euro golden parachutes awarded shortly before stepping down from the lender.
The judge sees possible indications of criminal mismanagement and fraud in the remuneration packages. The five in question, Julio Fernández Gayoso, José Luis Pego, Javier García de Paredes, Óscar Rodríguez Estrada and Gregorio Gorriarán, have 10 days to appeal the investigating judge’s decision.
Novacaixagalicia was formed through the merger in December of 2010 of the two Galician savings banks, Caixa Galicia and Caixanova. Novacaixagalicia was nationalized in October 2011 after becoming unstuck because of its exposure to the ailing real estate sector. The retirement packages were approved shortly before the merger.
Four of the five directors in question were directors of Caixanova, while García de Paredes came from Caixa Galicia. Former Caixanova chairman, and former co-chairman of Novacaixagalicia, Julio Fernández Gayoso, modified the contracts of the four directors to boost their compensation and failed to disclose this information to the board of administration and the Bank of Spain. In September 2011 Fernández Gayoso authorized the payment of the compensation to Pego, Rodríguez Estrada and Rodríguez Estrada when they left the bank. Later, Novacaixagalicia chairman José María Castellano did likewise with García de Paredes believing his contract was in order.
Pego received 7.7 million euros, García de Paredes 5.6 million, Gorriarán 4.8 million and Rodríguez Estrada 691,000. Gayoso did not benefit from the scheme but has been cited because he authorized the compensation packages, which amounted to 18.9 million euros, a sum Judge Moreno calculated was equivalent to 10 percent of the bank’s assets.
In his writ, Judge Moreno claims that the directors were “fully aware of the very difficult economic situation the bank was going through.” Despite this they opted “to fraudulently deprive the bank of its assets, hiding the amount of their retirement packages, to which in part they had no entitlement, from the board of administration and the Bank of Spain.”