But
will they actually warm a bench in a Spanish prison?
The
unimaginable just happened in Spain: two former bank CEOs, Miguel
Blesa (CEO of Caja Madrid) and Rodrigo Rato (CEO of Bankia) were just
awarded prison sentences of six years and four-and-a-half years,
respectively, for misappropriation of company funds.
Rato was
also Managing Director of the IMF from 2003 to 2007. He was succeeded
by another luminary, Dominique Strauss Kahn.
Now, the
question on everyone’s mind is will Blesa and Rato actually serve
the sentence (more on that later).
Dozens more
former Caja Madrid senior executives, most of whom are closely
connected to either, or both, of the country’s two main political
parties and/or unions also face three to six years in prison. They
were found guilty by Spain’s National High Court of misusing
company credit cards. Those cards drained money directly from the
scarce funds of Caja Madrid, which at the height of Spain’s banking
crisis was merged with six other failed savings banks into Bankia,
which shortly thereafter collapsed and ended up receiving the biggest
bail out in Spanish history, costing taxpayers over €20 billion, to
date.
Between 2003
and 2012 Caja Madrid (and its later incarnation, Bankia) paid out
over €15 million to its senior management and executive directors
through its “tarjeta negra” (black card) scheme. According to
accounts released by Spain’s bad bank, FROB, much of that money
went on restaurants, cash withdrawals, travel and holidays, and the
like.
The amounts
– which did not show up on any bank documents, job contracts, or
tax returns – may be small, given the magnitude of the misdeeds
that led to the Spanish bank fiasco, but it’s the principle that
counts.
Only 4 out
of 90 Caja Madrid senior managers, executives, and board members had
the basic decency to turn down the offer of undeclared expenses. For
the rest, it was an offer they could not refuse.
In his last
few months at Caja Madrid – just before the whole edifice came
crumbling down – Blesa went on a mad spending binge. In one month
alone he made purchases on his black card worth €19,000 – more
than many Spaniards’ annual salary.
Full
report:
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