EX-IMF chief Rodrigo Rato goes on trial again in Spain
Madrid: A major trial harking back to the dark years of Spain's economic crisis kicked off Monday over the alleged fraudulent 2011 listing of financial giant Bankia, with former International Monetary Fund (IMF) head Rodrigo Rato in the dock. The Spanish state was forced to step in to prevent the bank's collapse and then to borrow 41 billion euros ($46.5 billion) from the EU to keep the rest of Spain's banking sector afloat.
The 69-year-old Rato, head of the bank at the time, is accused of falsifying the books and fraud to the detriment of investors. Prosecutors are seeking a five-year jail sentence for Rato, who in October began serving four-and-a-half years in prison for misusing funds when he was the boss of Caja Madrid, another bank, and of Bankia between 2010 and 2012.
Bankia was formed in 2010 when Caja Madrid and six other unlisted savings banks merged. Rato arrived at the court in San Fernando de Henares, a Madrid suburb, for the trial in a police van out of sight from the glare of the media.
A total of 35 people and companies including Bankia, its parent company BFA and Deloitte consultants are on trial. The opening day of the trial was dominated by procedural issues. Rato is expected to take the stand on Tuesday or Wednesday.
The image of a smiling Rato ringing the bell and sipping champagne on July 20, 2011 to mark the start of Bankia's listing has since become a symbol of the scandal. More than 300,000 small shareholders bought share packages for a minimum of 1,000 euros (USD 1,100), attracted by a major advertising campaign and the profits boasted by the bank.
But in 2012, after a disastrous year that saw its share value collapse, the bank admitted that in the year it listed it had actually made a loss of close to three billion euros. That forced the state to nationalise the bank to save it from bankruptcy by injecting more than 22 billion euros into Bankia.
That in turn required an European Union (EU) rescue plan for Spain's banking sector. The state, which still owns 61 per cent of Bankia and should in theory privatise the bank again, has recognised several times that it will never be able to recover much of the money it disbursed.
Rato was economy minister and deputy prime minister in the conservative government of Jose Maria Aznar from 1996 to 2004, before going on to head the International Monetary Fund until 2007.