Botin refuses to answer questions in fraud trial

31st January 2005, Comments 0 comments

31 January 2005, MADRID-Spain's top banker, on trial for his alleged role in providing huge retirement packages to two colleagues, refused to answer questions from lawyers representing plaintiffs in the case.

31 January 2005

MADRID-Spain's top banker, on trial for his alleged role in providing huge retirement packages to two colleagues, refused to answer questions from lawyers representing plaintiffs in the case.

Grupo Santander Central Hispano (SCH) chairman Emilio Botin, one of the world's richest men, is accused of misappropriating bank funds in a landmark case that is shedding light on Spain's corporate practices.

This marks the first time that a case challenging payments and large retirement packages given to corporate executives has made it to court.

At the heart of the case is whether Botin used bank funds to resolve a management dispute, in the wake of a merger, and ease out his rivals so that he could have a free hand in running SCH.

The 70-year-old banker, whose fortune is estimated at more than USD 1.1 billion by Forbes magazine, made the payments to former SCH co-chairman Jose Maria Amusategui and former CEO Angel Corcostegui.

The two former executives are also charged in the case being heard in Spain's National Court.

The oral phase of the trial, which began last week but was postponed shortly after starting, began with a statement from Botin, who heads the largest banking group in Spain.

He is being prosecuted by the state and is also the object of a criminal complaint filed by private individuals.

It was questions from attorneys representing the latter that he declined to answer.

Botin told the court that he would not respond to questions from attorneys for former Banesto director Rafael Perez Escolar and shareholder Juan Francisco Franco Otegui, claiming the plaintiffs have had the "goal" of harming the bank since 1994.

Banco Español de Credito, popularly known as Banesto, collapsed amid a scandal over misuse of funds in the mid-1990s and was later taken over by SCH.

Former Banesto chief Mario Conde, who epitomized the 'get-rich-quick' 1990s Spanish financial culture, was eventually convicted and sentenced to prison time for his role in the bank's collapse.

Plaintiffs' attorneys asked Botin if the multi-million-dollar early retirement package paid to Amusategui, who was chairman of Banco Central Hispano, with which Botin's Banco Santander merged in 1999 to form SCH, was designed so that "he would not place obstacles in the way of the merger".

For more than an hour, Botin refused to answer questions from the attorneys for the plaintiffs.

Botin only responded - affirmatively - to the judge when he asked the banker if he remembered the date of the contract signed with Amusategui.

The patrician banker, whose family founded Banco Santander in 1857, negotiated the agreements with Amusategui and Corcostegui privately, but he later received the backing of SCH's board and shareholders for the "golden parachutes."

The two former executives left SCH in August 2001, and Botin took over the reins of the financial institution, which has assets of more than USD 415 billion.

The court has to decide whether to admit into evidence three new documents in response to a motion by the plaintiffs' attorneys made on Monday.

The attorneys also want 24 Bank of Spain experts to be summoned to testify in the case.

The attorneys for plaintiffs Perez Escolar and Franco Otegui requested admission of the new evidence after defence attorneys filed 20 motions for admission of evidence last week that were accepted by the court.

Perez Escolar himself was found guilty of fraud and misuse of funds in connection with the Banesto scandal. Although sentenced to four years in prison, the former Banesto director only served one month because of poor health.

The three defendants allege EUR 43.75 m (USD 56.87m) paid to Amusategui and the EUR 108m (USD 140.4 m) given to Corcostegui were retirement payments that in no way harmed the bank or its shareholders.

The criminal complaint filed by Perez Escolar and Franco Otegui alleges that the payments to the retiring executives were designed to allow Botin "a free hand" at the institution.

Botin, Amusategui and Corcostegui face prison terms of up to eight years if convicted.

The SCH chairman is also facing other legal problems.

Last October, a Spanish court ruled that Botin and three former executives would have to stand trial for alleged tax evasion.

Judge Teresa Palacios, of the National Court, issued an order for the trial of Botin, Rodrigo Echenique, Jose Ignacio Ucles and Ricardo Alonso Clavel.

The judge found that the Treasury was cheated out of EUR 84.9m (USD 101m) in revenue.

The men were ordered to stand trial on one count of falsifying official documents, three counts of falsifying commercial records and 30 counts of violating tax laws.

The case started in the late 1980s, when some 50 institutions began offering the investment products.

[Copyright EFE with Expatica]

Subject: Spanish news




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