Ex-IMF head appears in Spain court over credit card scandal

16th October 2014, Comments 0 comments

Former IMF head Rodrigo Rato is due to appear in a Spanish court on Thursday for questioning over allegations that he and other former banking executives went on spending sprees with company credit cards.

Audit documents submitted by prosecutors to Spain's National Court detailed a total of 15.2 million euros ($19.2 million) of spending by former managers of the bailed-out group Bankia, which Rato headed from 2010 to 2012.

Prosecutors said the credit cards were used for personal purchases with media reports detailing spending on safaris, meals at luxury restaurants, art, clothing and cash withdrawals.

Rato, a former Spanish finance minister, was due to be questioned by Judge Fernando Abreu of the National court, Spain's top criminal court, at around 5:00 pm (1500 GMT).

The judge also summoned Miguel Blesa, the former head of Caja Madrid which is part of the Bankia group, and Caja Madrid's former financial director Ildefonso Sanchez.

They face possible charges of misappropriation of company funds and embezzlement.

The prosecution's audit covered a total of 86 users of the credit cards, many of them connected to politics, trade unions and even the royal family, and it has put Prime Minister Mariano Rajoy's conservative Popular Party, which Rato belongs to, on the defensive.

The scandal has also fueled indignation in Spain, where one in four people are out of work, ahead of a general election expected by the end of next year.

The near collapse of Bankia in 2012 caused thousands of customers to lose their savings and pushed Spain to seek a 41 billion euro international bailout for its financial sector.

Rajoy defended himself in parliament on Wednesday, saying the government had "done everything it should do" to back the investigation of the scandal.

- Cash withdrawls and jewlry -

The 86 top managers cited in the audit received the credit cards between 1999 and 2012, first from Caja Madrid and later from Bankia, the lender that was formed in 2010, when Caja Madrid merged with a series of smaller troubled savings banks.

The cards were intended to be used to cover entertainment expenses but in some cases they were allegedly used for personal spending.

Blesa, who had an annual salary at Caja Madrid of around three million euros, used his card to pay for safaris in Africa and to buy 10,000 euros worth of wine, according to Spanish media reports.

Others reportedly used their cards to withdraw hundreds of thousands of euros in cash, sometimes in the middle of the night, to buy jewelry, luxury clothing, furniture and expensive restaurant meals.

Some have reimbursed the amount they spent after the scandal broke in the beginning of October while others have resigned.

Among the high-profile resignations is that of Rafael Spottorno, an advisor to King Felipe VI who was formerly a manager at a benevolent foundation run by Caja Madrid.

Prosecutors accuse Rato of spending 99,000 euros of personal spending with his card. He has repaid nearly 55,000 euros since the scandal broke.

Rato served from 2004 to 2007 as managing director of the International Monetary Fund, the worldwide lender that played a key role in tackling the euro zone debt crisis.

He was finance minister in the conservative government of Jose Maria Aznar, which was in office from 1996 to 2004. and served as chief executive of Caja Madrid before holding the top post at Bankia.

In July 2012, nearly three dozen former Bankia executives, including Rato, appeared in court as part of a criminal probe into whether they misrepresented Bankia's financial soundness as the bank was preparing a public stock offering.

The former Bankia executives deny wrongdoing in the case, which is continuing.

© 2014 AFP

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