Former
IMF chief Rodrigo Rato stands a trial today accused of overseeing a
"corrupt system" that helped him and other executives misuse funds.
MADRID,Former IMF chief Rodrigo Rato stands trial Monday accused of
overseeing a "corrupt system" that helped him and other executives
misuse funds on hotels, parties and luxury shopping when he was a Spanish bank
boss.
Uncovered in 2013 by a journalist who saw a hacked email
alluding to "black credit cards," the case threatens to land the
former economy minister and onetime star of the ruling conservative Popular
Party (PP) in jail and with a hefty fine.
It is also another thorn in the PP's side after repeated failed
attempts to form a government following two inconclusive elections, due to a
lack of support that is in large part due to corruption scandals sullying the
party.
Rato will stand trial with 65 other former executives and
board members at Caja Madrid and Bankia, whose near-collapse sparked an EU
bailout of Spain's financial sector.
They are accused of having paid for personal expenses with
credit cards put at their disposal by both banks, without ever justifying them
or declaring them to tax authorities.
Altogether, they allegedly spent 12 million euros ($13.5
million) between 2003 and 2012 -- sometimes splashing out at the height of
Spain's devastating economic crisis.
According to the indictment, Rato maintained the
"corrupt system" established by his predecessor Miguel Blesa when he
took the reins of Caja Madrid in 2010.
He replicated the system when he took charge of Bankia, a
group born in 2011 out of the merger of Caja Madrid with six other savings
banks.
- Wider Bankia scandal -
Now 67, Rato was economy minister and deputy prime minister
in the PP government of Jose Maria Aznar from 1996 to 2004, and he then went on
to head up the International Monetary Fund until 2007.
His subsequent career as a banker in Spain was short-lived
-- from 2010 to 2012 -- but apart from the case of the undeclared credit cards,
it also led to another banking scandal considered the country's biggest ever.
Thousands of small-scale investors lost their money after
they were persuaded to convert their savings to shares ahead of the flotation
of Bankia in 2011, with Rato at the reins.
Less than a year later, he resigned as it became known that
Bankia was in dire straits.
The state injected billions of euros but faced with the
scale of Bankia's losses and trouble in other banks, it asked the EU for a
bailout for the entire banking sector and eventually received 41 billion euros.
Rato and others were put under investigation, accused of
misleading small investors in the listing of Bankia, which has since paid out
1.2 billion euros in compensation.
- 2.6-million-euro fine? -
As such, the trial on Monday is a separate, smaller part of
a much wider scandal involving Bankia.
But revelations that executives like Rato were spending
millions of euros of the bank's money sparked an outcry in a country plunged
into crisis since 2008 and forced into drastic austerity.
With his undeclared credit card, Rato is accused of having
spent 99,000 euros in two years on items such as luxury bags, five-star hotels
and alcohol.
Prosecutors are seeking a prison sentence of four-and-a-half
years and a 2.6-million-euro fine.
Rato, however, has denied any wrongdoing and said the credit
cards were for discretionary spending as part of the pay deal for executives.
As head of Caja Madrid, Blesa -- who implemented the system
-- is accused of spending 436,000 euros between 2003 and 2010, including more
than 100,000 euros in restaurant bills.
While many PP members are involved in the case, several
union officials and people from left-wing parties are also among the 64 other
accused.
Rato, meanwhile, is the second former IMF chief to be
dragged to court.
His successor Dominique Strauss-Kahn was tried in 2015 on pimping
charges in a lurid sex scandal, and was acquitted.
And Christine Lagarde, who took over from Strauss-Kahn and
is the current IMF chief, will be in the dock in December over a massive state
payout to French tycoon Bernard Tapie when she was finance minister.
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