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Ex-IMF boss Rato: fallen star of Spain’s conservatives

Former IMF chief Rodrigo Rato, who was convicted Thursday of embezzlement, was once a leading light in Spain’s ruling conservatives, hailed for kicking off a decade of economic growth.

Now the reputation of the former Spanish finance minister is in tatters over his chairmanship of finance group Bankia, whose near-collapse sparked an EU bailout of Spain’s financial sector in 2012.

A Spanish court handed the 67-year-old a jail sentence of four years and six months after finding him and other ex-managers of Bankia guilty of going on spending sprees on company credit cards.

He faces another probe into Bankia’s failed stock market launch which left hundreds of thousands of retail investors nursing heavy losses.

Rato has denied wrongdoing in both cases but for many he is the face of Spain’s financial crisis and the alleged rule-bending that preceded the 2012 collapse of large parts of the Spanish banking market.

In 2010, former prime minister Jose Maria Aznar called Rato the “best economy minister” in Spain’s modern history.

– Alarm and outrage –

Under Rato many Spanish public sector companies were privatised, and the telecoms and energy sectors were deregulated.

But when asked by reporters about him after the credit cards revelations first broke in 2014, acting Prime Minister Mariano Rajoy would not even pronounce Rato’s name.

The allegations that Rato and dozens of others spent a total of 12 million euros, reportedly on luxuries such as nightclubs and safaris, have embarrassed Rajoy’s conservative Popular Party (PP) and sparked a string of resignations.

“It alarms and outrages us,” said the current party leader, Maria Dolores de Cospedal, who in 2014 had called Rato “the author of Spain’s economic miracle”.

Rato was thought a natural successor to Aznar and was expected to run for prime minister in 2004, but mistimed his bid. Rajoy beat him to the candidacy but later lost the election.

Rato promptly left Spain to become managing director of the International Monetary Fund, the global emergency lender that later played a key role in tackling the eurozone debt crisis.

He left the IMF in 2007 for “personal reasons” and was later handed the job of managing Caja Madrid, one of the regional savings banks that fused to form Bankia in 2010.

Rato oversaw the stock market listing of Bankia in 2011, seen as a triumph after the previous three years of financial turbulence. But the euphoria did not last.

In May 2012 the government had to nationalise Bankia to save it from ruin. Spain then had to turn to the eurozone for a 41-billion-euro bailout to save its whole banking sector.

– ‘No political future’ –

Seven months after Bankia was rescued, Rato found himself walking into court for questioning. Furious customers who said the bank had lost their savings yelled at him: “Thief! Go to jail!”.

Rato at the end of 2014 suspended his membership of the PP, a previously “unthinkable” move, according to political consultant Antoni Gutierrez Rubi.

“He has no political future,” said Rubi. “There is a feeling that Rato has destroyed his shining reputation. He had a halo of superiority and triumph everywhere he went. Now he has fallen.”

Rato was born in Madrid in 1949 to a wealthy family — his father owned a radio network and his mother came from a long line of mining magnates.

He earned a law degree in Spain and then a master’s in business administration from the University of California at Berkeley in the 1970s.

Rato married Spanish economic journalist Alicia Gonzalez Vicente in 2015 at a discreet ceremony held at a farm his family owns near Madrid. The couple have a shared interest in cooking and dogs.

He has three children from his marriage to his first wife, Angeles Alarco. They broke up in 2002.