Former Spanish deputy prime minister Rodrigo Rato has voluntarily requested to temporarily suspend his membership of the Popular Party (PP) until the case of the Caja Madrid credit card abuse is resolved.
The move by the man who headed the savings bank and its successor Bankia between 2010 and 2012 had been widely expected following intense pressure from the PP, which is seeking to distance itself from the scandal.
Last week, a court held Rato and his predecessor Miguel Blesa (1996-2010) responsible for the credit card abuse as the former heads of the lenders. Both were told to post bonds of €3 million and €16 million, respectively, to cover civil liabilities in the ongoing investigation into the case.
I never had the intention of engaging in irregular activities, Everything was in fact wrong, but I didn’t know it” Rodrigo Rato
Between 2003 and 2012, 83 executives and board members of both banks were given credit cards that drew money from a bank fund yet did not show up on any bank documents or job contracts. Recipients racked up €15.5 million in bills for personal items and the expenses were never declared to tax authorities even though bank bosses now say they counted as part of their salaries.
An audit carried out by Bankia’s new management following its 2012 bailout brought the abuse to light. A dozen people have resigned or been dismissed from their posts after details emerged of their expenditures while sitting on the Caja Madrid board. Most members were appointed by political parties, which have since raced to act tough against the alleged wrongdoers.
Like the Socialists and the United Left before it, the ruling PP has announced an internal investigation and the expulsion of members entangled in the scandal. Rato resisted the pressure until Monday, when he sent party secretary general María Dolores de Cospedal a letter seeking temporary suspension from the party but insisting on his innocence.
In the letter Rato writes that he always thought he was acting “within the bounds of the law” and that the cards “were for personal use and part of my salary.”
At a hearing last week, Rato told investigating judge Fernando Andreu of Spain’s High Court that the credit cards were an integral part of bank bosses’ salaries, while his predecessor Miguel Blesa held that they were more of a bonus to be used at one’s discretion.
A former head of the International Monetary Fund, Rato became chairman of Caja Madrid in January 2010 with support from Mariano Rajoy, then PP leader and now prime minister of Spain. These days, Rajoy will not even pronounce Rato’s name in public, instead referring to him before the media as “that man you are asking me about.”
But Rato claims that as chairman he did not make any decisions regarding the credit cards. In his statements to the judge, he said that when he took up the post, the financial director gave him two credit cards, one for business expenses and another one for personal expenses.
“I was told that the members of the board and the executive committee had the same card, with different spending limits. I figured it was part of my salary,” he said, according to sources present in the courtroom. “Before joining the savings bank I already knew this existed and that the cards had limits. I did not set these limits, they were already set.”
Yet court documents show that after Rato took over, half a dozen new members joined the board and were given credit cards with a new spending ceiling of €6,000, nearly twice the previous limit.
“I never had the intention of engaging in irregular activities,” said Rato. “Everything was in fact wrong, but I didn’t know it.”
Meanwhile, his predecessor Miguel Blesa, who was appointed with support from former prime minister José María Aznar, also of the PP, claimed to be ignorant about the irregular procedures as well.
“I was told that [the card] was a complement to my salary and meant to be used for representation expenses,” he told the judge.
As heads of Caja Madrid, Miguel Blesa and Rodrigo Rato awarded themselves annual salaries of nearly €3 million. The credit cards came on top of that. Blesa spent €423,000 on restaurants, trips, hotels, flowers, golf resorts, jewelry, shoes, and cash withdrawals. He went on an African safari and spent €10,000 on wine.
Rato spent €99,000 on restaurant meals, nightclubs, trips, jewelry, and health services, among other items. Both men also withdrew large amounts of cash on a regular basis.