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Ex-IMF boss Rato on trial over bankers' luxury sprees

Tuesday, September 27, 2016 - 06:56
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Former IMF chief Rodrigo Rato went on trial on Monday accused of overseeing a "corrupt system" that helped him and other executives misuse millions when he was the boss of a major Spanish bank.

[SAN FERNANDO DE HENARES, Spain] Former IMF chief Rodrigo Rato went on trial on Monday accused of overseeing a "corrupt system" that helped him and other executives misuse millions when he was the boss of a major Spanish bank.

Protesters shouted "thief" and "fraud" at the former economy minister and ex-deputy prime minister as he arrived at the courthouse outside Madrid.

Rato is standing trial with 64 other former executives and board members at Caja Madrid and Bankia, whose near-collapse sparked an EU bailout of Spain's financial sector.

Rato, 67, entered the courthouse without saying a word at the start of the trial, which is expected to last until December.

Uncovered in 2013 by a journalist who saw a hacked email alluding to "black credit cards", the case threatens to land the one-time 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, who led the International Monetary Fund from 2004 to 2007, and the other executives are accused of having paid for personal expenses with credit cards put at their disposal by both Caja Madrid and Bankia, without ever justifying them or declaring them to tax authorities.

Altogether, they allegedly spent 12 million euros (S$18.4 million) between 2003 and 2012 - sometimes splashing out at the height of Spain's devastating economic crisis.

The money was used on items such as luxury bags, five-star hotels, alcohol and even petrol.

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.

Rato 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, prosecutors say.

With his undeclared credit card, Rato is accused of having spent 99,000 euros in two years.

Prosecutors are seeking a prison sentence of four-and-a-half years and a 2.6-million-euro fine for Rato.

He has denied any wrongdoing and said the credit cards were for discretionary spending as part of the pay deal for executives.

Prosecutors are seeking the longest prison sentence for Blesa - six years.

Blesa, 69, a former tax inspector and close friend of former PP prime minister Jose Maria Aznar, is accused of spending a total of 436,000 euros with "black" credit cards between 2003 and 2010.

The first day of the trial was dedicated to procedural issues. Blesa is expected to take the stand on Friday, with Rato following.

During a break in the proceedings Blesa - who stands accused of charging over 100,000 euros in restaurant meals to "black" credit cards - bought a sandwich from a vending machine in the courthouse.

Online newspaper eldiario.es broke the scandal at the end of 2013 after it received 8,000 e-mails that were hacked from Blesa's professional account by a handful of anti-corruption activists.

During Rato's career as a banker, Spain was rocked by 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.

He is the third former or current IMF chief to face trial.

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 in France.

AFP