Court decides BES was financially mismanaged
The Portuguese Constitutional Court last week ruled in favour of the Bank of Portugal that Banco Espírito Santo which collapsed in 2014 was the victim of “ruinous mismanagement”.
It is the first victory in a series of legal processes in which former directors Ricardo Salgado and Amílcar Pires stand condemned for ruinous mismanagement of BES.
The Bank of Portugal fined the two directors €3.7 million, but an appeal was later lodged with the Competition Court at Santarém which was forwarded to the Lisbon Court of Appeal, an appeal which Ricardo Salgado, the former president of Banco Espírito Santo, lost and which ruled in favour the Bank of Portugal on 8 January.Lawyer and former PSD party leader Marques Mendes called it an “important first step towards Salgado and all those responsible for the collapse of the bank being brought to justice” before congratulating the Bank of Portugal for being “so timely in its intervention”.
Amílcar Pires, Banco Espírito Santo’s former finance director had tried to sue the Bank of Portugal and the financial auditor KPMG demanding they pay the Portuguese State €4.3Bn for allegedly falsifying its accounts before the bank’s collapse in 2014.
He had said in 2018 that the Bank of Portugal and the consultancy had “imposed inflated losses” on BES stating that the auditor and central bank had recognised “excessive provisions and inexistent losses” which had led to the failure of BES.
BES collapsed in 2014 under a mountain of debts accumulated by its founding Espírito Santo family, forcing the central bank to launch a €4.9Bn rescue package which Novo Banco, the bank created from the ashes of the former bank, is still grappling with to this day.