Lisbon, Oct. 13, 2024 (Lusa) - The BES case comes to trial 10 years after the bank's collapse, which happened with a bang despite successive scandals, knocked Salgado off his pedestal as the "banking prince" and led to strong criticism of the Bank of Portugal.
Throughout 2013 and then in the first few months of 2014, the signs of trouble at Banco Espírito Santo (BES) and Grupo Espírito Santo (GES) became evident.
The tightening of the siege by the Bank of Portugal (BdP) revealed financial holes in the group's companies and the promiscuity between the financial and non-financial areas. Group companies had hidden debts and overvalued assets (the case of ESI - Espírito Santo International) and BES used its clients to finance group companies by placing debt, such as commercial paper.
It was also around this time that more scandals linked to the chairman of BES, Ricardo Salgado, came to light. It became known that he had received millions of euros (it was later learnt that it was €14 million) from the construction company José Guilherme and the power struggle with his cousin José Maria Ricciardi became public.
Despite the instability and the reputational damage, Salgado did everything he could to remain president of BES and publicly tried to give an image of confidence, helped by the theory that the bank was not affected by the non-financial part of the group.
Over the course of more than 20 years at the head of BES, the banker, born into a high finance family, has created a reverence around him and a tentacular power. The aura of the indefatigable worker, who arrived early and left late every day from his office on Avenida da Liberdade (decorated with 17th-century Flemish paintings), added to his elegance, sobriety, soft voice, and measured words, helped his charisma and earned him almost a cult following.
"You could tell that he was treated or seen as a prince in the sector," said Teixeira dos Santos, former finance minister in the PS governments (of José Sócrates), in a 2023 SIC report ("A agenda'). An idea shared by economist João Duque: "He was a lounge prince, he didn't walk, he glided... You could meet him at seven or eight in the evening and he looked like he'd just had a shower, shaved and washed up," he said.
However, the deterioration of the group and its image led to the BdP forcing him out of the chairmanship in June, just a few days before his 70th birthday.
At the beginning of July, the central bank said that "BES's solvency situation is solid". However, the collapse continues, the shares plunge on the stock exchange, the group's companies go into restructuring, the Swiss Banque Privée Espírito Santo delays reimbursing clients who invested in ESI debt and the flight of BES deposits begins. The scandal goes international, with the Financial Times and the Wall Street Journal reporting that international markets "are gripped by fears over the Portuguese bank".
The new management of BES (led by Vítor Bento) will discover that the situation is even more serious. On the night of 30 July 2014, the accounts for the first half of the year reveal losses of €3.6 billion and expose financial and legal irregularities.
Even so, that night, the governor of the BdP, Carlos Costa, wrote that the bank would continue. The bank and the group were still days away.
On 31 July, the European Central Bank (ECB) announced to the Bank of Portugal that BES would be suspended from monetary policy operations, which, in practice, means the bank's end. Carlos Costa informed Frankfurt of the resolution measure and liaised with the government about the process.
On Sunday, August 3, 2014, at around 11 p.m., the governor announced an "urgent" solution for BES. BES and the group went bankrupt in the public square, ending the centenary story that day.
BES became the "bad bank", where the assets were considered "toxic" and the deposits of directors and family members remained. The transition bank Novo Banco was created, where the "good" assets (many of which turned out to be problematic) and customer deposits were transferred.
The rapid and resounding fall leaves auditors, political powers, and, above all, regulators—especially the Bank of Portugal and its governor—in the crosshairs.
In the following months, he was accused of ineffective supervision, of not having removed Ricardo Salgado in time, of having made small shareholders and retail customers believe in the bank despite already knowing about the problems.
"At the weekend, I was called a crook. I didn't steal anything from anyone. The Bank of Portugal didn't steal anything from anyone," said Carlos Costa at the Parliamentary Commission of Inquiry in 2015.
On the other hand, Salgado began by defending himself in the public square - "When a leopard dies, it leaves its skin behind. And when a man dies, he leaves his reputation behind," he said in the parliamentary commission of inquiry. In 2015, in his defence of a BdP case, he said that the BdP acted "like a kind of modern-day COPCON" against "the rich and powerful" - but in recent years, he has presented himself as a lonely and weakened man.
In February this year, he appeared in court (EDP case) looking ill, walking slowly, and holding hands with his wife. In January, Maria João told the judge that her husband is dependent, gets lost at home and sometimes can't remember his grandchildren's names. "I had a fantastic husband, and today I have a big baby to look after," she said.
Salgado turned 80 in June and celebrated in Switzerland at the home of his daughter and son-in-law (multimillionaire Philippe Amon, owner of the ink company that prints the world's major banknotes), according to Correio da Manhã. According to the newspaper, his daughter Catarina also gives her mother €40,000 a month for expenses.
Ten years after the fall of BES, the main criminal case against Salgado (the BES/GES trial), in which he is accused of 65 crimes, begins next Tuesday (15 October).
As for the collapse of BES, according to calculations made by Lusa, it has so far cost the public coffers around €8 billion, mainly as a result of the initial capitalisation of Novo Banco and the recapitalisations made by the Resolution Fund in Novo Banco.
According to the Public Prosecutor's Office, the case that is now going to trial - considered the main one in a universe of six criminal cases - involves a value of more than €11.885 billion in advantages gained from the commission of the crimes.
Ricardo Salgado's defence invoked his Alzheimer's diagnosis to ask that the man who was once dubbed the "owner of it all" be excused from the trial. However, the court "didn't buy" the argument, and the judge presiding over the panel that will try the case, Helena Susano, ruled that Salgado will have to appear and answer in person for 62 crimes, including corruption.
IM/ADB // ADB.
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