EDP court case begins this week

 In Companies, EDP, Justice, News

More than a decade after the start of a nine month investigation into corruption fraud and money laundering involving Portugal’s electricity giant EDP, the defendants in the case are finally being brought to trial.

They are Manuel Pinho, former minister of the Economy during the José Sócrates government, Ricardo Salgado, former chairman of Banco Espírito Santo, and Manuel Pinho’s wife Alexandra Pinho.
The court case had been postponed twice because legal staff had been on strike. Portugal’s Public Ministry made the formal decision to prosecute Pinho and his wife on December 15, 2022.
The former minister of the economy is under house arrest and stands accused of passive corruption in an illicit act, passive corruption, money laundering and tax evasion.
Former BES boss Salgado has been charged with one case of active corruption and another of money laundering.
Alexandra Pinho stands trial as an accessory to money laundering and tax evasion with her husband.
The former leaders of EDP and EDP Renováveis, António Mexia and João Manso Neto are still under investigation in a separate case and have yet to be accused.
On December 5, 2022, the EDP Case was split into two cases. The case involving António Mexia and João Manso Neto is now called the EDP/CMEC Case.
Manuel Pinho will also be involved in that case for the decisions he took when minister in the case regarding the new 32 CEMCs (Contactual Equilibrium Maintenance Costs)
In 1995, it was necessary to attract investment for power plants that the country needed, but the government was unable to pay for at the time. So the government launched international tenders offering investors Energy Acquisition Contracts known as EACs (CAE in Portuguese).
The EAC’s bound investors to build and maintain the plants receiving a compensation rate in return. However, in 2003 with the creation of a competitive wholesale market in mind, the European Commission forced a change in rules.
In order for the Iberian market to exist, the EACs could not continue to do so. So, to avoid paying the producers the compensations foreseen in the EACs, the Portuguese government created the Contractual Equilibrium Maintenance Cost Mechanism or CEMC.
This mechanism foresaw that the power plants whose CAE ended before the expected date would only be compensated by the difference between the CAE value and the revenues they would obtain in the market.
For example, if in a given year a plant generated a net revenue of €100M on the market and was expected to receive €150 million through the EACs, the CMEC would be the difference or €50M.
But it is alleged that both Manso Neto and Mexia may have been involved in some irregularities over the CMECs in terms of corruption and economic participation.
The case that began on Tuesday, however, is the EDP Case regarding charges of tax fraud and money laundering by Pinho in a case correlated with monies from the Espírito Santo Group (GES).
The case – probably one of two cases that attracted a media circus because of the high level of political and economic standing of the defendants and witnesses concerned – will call 77 witnesses for the Pinho accusation including three former prime ministers Durão Barroso, José Sócrates and Pedro Passos Coelho, 22 of which were called by the Portuguese Public Ministry and 77 for the defence.
Ricardo Salgado is suspected of alleged bribes of over €5 million paid to Manuel Pinho when he was minister of the Economy in order to favour the interests of BES with the Sócrates government between 2005-2009.
In that time ES Enterprises allegedly transferred a total of €508,000 via a monthly transfer of €14,963.94 to Manuel Pinho.
According to the Public Ministry, the BES/GES group had interests in EDP because at the time it had a 2% share in the company.
There were other Public Ministry investigations over the planning permission and classification of the Herdades da Comporta estates owned at the time by GES and the Pinheirinho estate owned by the Pelicano real estate group as Projects of National Interest, both through BES finance.
Two other strands of the investigation concern the authorisation for Brisa to manage the Atlântico motorways, also involving BES finance, after having been rejected by the Competition Authority, the decision overturned by Pinho in another case of alleged favouritism.
Among the defendants in this case are Manuel Pinho, Alexandra Pinho, Salgado, Mexia, Manso Neto, Artur Trindade, ex-secretary of State for Energy under a PSD government, Miguel Barreto, ex-General Director of Energy, João Conceição, director of REN and a former consultant to Pinho, and Pedro Furtado, also REN.

Photo: António Pedro Santos, Lusa.