Caja Madrid board was paid an extra €15 million, says audit

Board members at failed Spanish savings bank Caja Madrid were paid nearly €15 million more than what they should have received during the years when Miguel Blesa served as chairman (2007-2010), according to an audit that has been carried out by Price Waterhouse Coopers.

Spain’s Orderly Bank Restructuring Fund (FROB), which asked Price Waterhouse to conduct “a forensic study” of Caja Madrid’s accounts, announced on Tuesday that it was sending the conclusions of the audit to state prosecutors. Investigators are already looking into allegations that various former bank executives misused undeclared credit cards, which were used for personal expenses.

According to sources with knowledge of the audit, the reported irregularities by former Caja Madrid executives “resulted in an estimated €14.8 million in losses.”

At least 80 percent of over-payments that were detected by the team of auditors were made to 12 top members of the Caja Madrid board, including Blesa, business director Matías Amat, financial director Ildefonso Sánchez Barcoj, board secretary Enrique de la Torre, and general manager Ricardo Morado Iglesias.

The reported irregularities by former Caja Madrid executives “resulted in an estimated €14.8m in losses”

The FROB had already named these five men in a report sent to prosecutors for using undeclared company credit cards for their personal expenses. In the credit card case, the High Court has already targeted a number of official suspects, including Blesa and Rodrigo Rato, a senior Popular Party (PP) figure who headed the International Monetary Fund from 2004 to 2007 and later served as chairman of Caja Madrid and later Bankia, the lender that emerged when the savings bank was merged a number of other banks.

According to the Price Waterhouse audit, in 2008 members of the Caja Madrid board voted to give themselves substantial raises – some as high as 26 percent – that were shared among “a minority” of executives.

The earnings would later be calculated for severance pay packages for top members who left Caja Madrid before it was reorganized. For example, De la Torre left the bank in 2009 with a €4.6 million package. A year later, Blesa was given €2.7 million and Morado paid €1.9 million.

The entire severance packages cost the bank some €9.1 million, according to auditors.