It has been hailed as the end of one of the “most influential centres of power” in Portugal’s political, social and financial world. Minutes after former BES boss Ricardo Salgado was released on a €3 million bail facing charges of fraud, abuse of confidence, money-laundering and falsification of capital, the Espírito Santo holding company (ESFG) announced that it had requested protection from its creditors.
As Portuguese newspapers were declaring this morning, the two episodes translate “a turning of the page”. The end of a “process of decadence” in which one powerful family used one of Portugal’s largest banks (currently the country’s largest private bank) to fudge bad business deals and “create a web of political intrigue”.
For now, the Government is measuring its words, but there now seems no doubt that this scandal will seriously impact on Portugal’s fragile economic recovery.
Key to the whole story is a criminal investigation started three years ago, and dubbed “The Monte Branco Case”.
Monte Branco began on the tails of the BPN banking scandal, but took DCIAP investigators into a mind-boggling world of tax evasion and money-laundering on an international scale.
Parallel investigations threw up the use of privileged information in the sales of EDP Renewables and the REN privatisation – and Ricardo Salgado’s name was not long in popping up.
Bank dealings in Angola; millions of euros channelled into private accounts of Salgado and other bankers involved in offshore companies – a complex web of years of underhand dealings are now under investigation as the homes of a number of businessmen connected to the Grupo Espírito Santo have been searched.
Meantime, the financial implosion of the Grupo Espírito Santo is official. Based in Luxembourg, the Espírito Santo holding company – responsible for 20% of BES and 100% of the insurance company Tranquilidade – has declared itself unable to honour its debts and, according to Público, assessors have now moved in to the various companies involved: Espírito Santo International and Rioforte being the two main entities – with Rioforte being the owner of the Tivoli hotels.
As the paper points out, impacts could involve losses of well over a billion euros for “institutional investors who purchased debt through BES and clients of the Swiss bank Banque Privée”, but for now at least private investors have been assured they will all be reimbursed.
Salgado’s replacement at BES, Vítor Bento, now has his work cut out trying to restore customer confidence.
As Público explains, the crisis is still a far cry from threatening to bring down the nation’s economy, though interest on Portugal’s 10-year debt – which had been dropping – has now developed positively “caroussel-type” proportions. Damage control is needed – and fast.
As Bento is preparing a statement on damages at the bank – believed to exceed a billion euros – Ricardo Salgado is busy putting together his defence, under instructions that he cannot leave the country.
If he had not agreed to the €3 million bail demand, Público claims the man who lead BES for 23 years would have been held in jail.
By Natasha Donn
Former BES boss on €3 million bail as Espírito Santo group “implodes”
