Bank was “completely insolvent” by over €7Bn admits former BESI boss

 In Banks, BES GES, Justice, News

José Maria Ricciardi, Ricardo Salgado’s cousin and former president of Banco Espírito Santo Investment (BESI), told judges at a Lisbon court yesterday that by December 2013 BESI was completely insolvent to the tune of €7Bn.

According to business daily Negócios, Ricciardi also told the court that Ricardo Salgado, the CEO of BES, changed his attitude towards him and his role when he began to question the bank’s leadership.

“He was wary of me,” he said on the third day of a major corruption, fraud and money laundering trial which currently has Portugal in thrall.

Ricciardi was questioned as a witness, and spoke about the time that Ricardo Salgado joined the Superior Board, a bank governing body where the five branches of the Espírito Santo family were represented.

“The first time I arrived at the Superior Board almost all the members were already there and my father, who was the president, informed us that the board could not start (the meeting) because Ricardo Salgado was not there.

“It amazed me, because he was a member (of the board) like any other, but we had to wait. It was the beginning of a certain disagreement with Ricardo Salgado,” he said.

“Instead of starting to discuss issues, Ricardo Salgado began to lay down the law about what had been done and what was going to be done, both in the financial and non-financial sectors. I raised my arm and asked if we were there to discuss the issues or to hear Ricardo Salgado tell us what we were going to do… from then on he started to treat me warily, because he saw that I was not willing to fall in line as the others on the group’s Superior Board”, he stressed.

José Maria Ricciardi, who admitted at the beginning of the hearing that he was “neither friend nor enemy” of Ricardo Salgado, also explained the positions he held in various Espírito Santo Group (GES) entities, and what he did when he detected problems with the accounts.

“When it was realised that the accounts were falsified, on December 7, 2013, if I am not mistaken, I presented a paper for the minutes of the council saying that I had no knowledge of it and that I wanted an audit and that responsibilities be ascertained,” he said.

The former president of BESI also highlighted the moment when he realised that ESI would be in a situation of insolvency, when the former accountant of GES, Machado da Cruz, admitted that the ‘financial hole’ would be much bigger.

“There was a working group that had discovered this and said that the 2012 accounts had a difference of €1,2Bn euros in liabilities and, even so, Machado da Cruz said that in 2013 there was still more – I don’t know how many billions -, which meant that the liabilities were not about €3Bn but over €7Bn billion. For those who understand the area, they saw that we were completely insolvent”, he acknowledged.

José Maria Ricciardi went on to tell the court that “Ricardo Salgado did everything he wanted and more” on the third day of the trial of the BES mega-case.

Salgado’s cousin, who denounced irregular practices in the group, described how he realised that accounts had been falsified, namely in the way ESI was being used to raise capital in the group and also finance ES Control, the holding company where the Espírito Santo family’s holdings were.

Ricciardi explained that he only began to become aware of serious problems in the Espírito Santo Group between 2013 and 2014.

“I saw that the accounts were not real,” he said. “I realised that the liabilities were more than double. The non-financial sector was audited and had no problems. At that time I tried to start understanding where the money was going and I realised that it was going to Control and probably to other companies”. Even António Ricciardi, his father and Ricardo Salgado’s uncle, lost (money): “My father contributed to this (raise) and lost everything.”

The transfers were justified by Ricardo Salgado on the need to raise capital”, he maintained before the judges led by Helena Susano.

“It was discovered that the accounts were not correct in December 2013 but I only had proof in May 2014 with a document that I received and that I forwarded on the same day to the Bank of Portugal”.

But he was told by the then governor of the Bank of Portugal, Carlos Costa, that he “didn’t want to know” and told me to “keep quiet”.

“I told him that I felt completely uncomfortable with the governance of BES,” he said, even using the description: “there was a bank within the bank, there were many things that the directors had no idea about.”

At that meeting, Ricciardi informed Carlos Costa of his intention to resign, he recalled. Carlos Costa replied that I shouldn’t do any of that, that I had already done enough harm in the things I had said in the newspapers, and that this war with my cousin was unsettling the financial sector because BES was a systemic bank”.

The trial continues…

PHOTO: LUSA
Credit:EPA
Author:ANTONIO COTRIM