Home News 2013 ‘Swaps’ blunder – no case to answer

2013 ‘Swaps’ blunder – no case to answer

Published on 23/05/2019

In 2013, in the midst of the financial crisis, alarm bells sounded when it was discovered that some public companies – such as Carris, Metro de Lisboa, Refer and Metro do Porto – had contracted ‘swaps’ with Santander Totta.

This complex financial instrument, a form of bizarre gamble to cater for possible interest rate rises, backfired badly when interest rates fell to historic lows, costing the companies millions in additional interest payments at upto 200%.

The Deputy Secretary of State for Finance at that time, Ricardo Mourinho Félix, said the sort of interest rates charged by the bank to public companies have reached levels that anyone sane would consider “unacceptable,” admitting that “no normal human being thinks it acceptable to pay 200% interest” in any contract and adding that there is nothing that can be done as the contracts have been validated twice in court in London.

These sharp rises had to be renegotiated on a case-by-case basis under Finance Minister, Maria Luis Albuquerque, (pictured).

Albuquerque ordered that interest payments be halted, which caused more pain after the deals were judged valid in a London court and accumulated interest was added back into the amounts owed.

These swaps contracts will continue burden taxpayers until the last one expires in 2027. Mourinho Felix told MPs in July 2017, that there currently was about €500 million interest due from 2013, plus a further €1.3 billion in future interest payments, until the end of the contracts.

The Pedro Passos Coelho government sent off a case file to the Central Department of Investigation and Criminal Action (DCIAP), to see who was to blame and which public official(s) had been so reckless as to enter into these arrangements without the full knowledge of the companies concerned.

This month, the DCIAP closed the process, stating that no crime had been committed.

The Department did say that there had been ‘some lack of prudence in contracting these financial instruments without evaluating all the risks inherent to them.’

So, seven years later, the DCIAP has managed to issue an opinion that shuts down a case file that, even if not criminal, represented a gross error of judgement that cost taxpayers tens of millions of euros with nobody to blame.

António Vieira Monteiro, the chief executive of Santander Totta, was asked in April 2017 if he was comfortable with charging such high interest to Portugal’s exhausted taxpayers. 

Monteiro replied that this was not his role, “I do not have to be comfortable or not,” he said, thus ensuring his name was added to a list of the names of sociopathtic bankers.