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Spanish ex-IMF chief Rodrigo Rato gets jail sentence for embezzlement

Former IMF chief Rodrigo Rato was handed a jail sentence of four years and six months Thursday for misusing funds when he was the boss of two Spanish banks.

Spanish ex-IMF chief Rodrigo Rato gets jail sentence for embezzlement
Rodrigo Rato arrives at the High Court in San Fernando de Henares, near Madrid on September 26, 2016. Photo: AFP

Spain's National Court, which deals with corruption and financial crime cases, said he had been found guilty of embezzlement when he headed up Caja Madrid and Bankia, at a time when both groups were having difficulties.

The case caused an outrage in Spain, where it was uncovered at the height of a severe economic crisis that left many people struggling financially – made all the worse because Bankia later had to be nationalised and injected with more than 22 billion euros in public funds.

Rato, who is also a former Spanish economy minister, remains at liberty pending a possible appeal.

He was on trial with 64 other former executives and board members at both banks accused of misusing 12 million euros between 2003 and 2012 – sometimes splashing out at the height of Spain's economic crisis.

They were accused of having paid for personal expenses with credit cards put at their disposal by both Caja Madrid and Bankia, without ever justifying them or declaring them to tax authorities.

These expenses included petrol for their cars, supermarket shopping, pricey holidays, luxury bags or parties in nightclubs.

'Corrupt system'

According to the indictment, Rato maintained the “corrupt system” established by his predecessor Miguel Blesa when he took the reins of Caja Madrid in 2010.

He then replicated the system when he took charge of Bankia, a group born in 2011 out of the merger of Caja Madrid with six other savings banks, prosecutors said.

Blesa was sentenced to six years in jail.

Rato, 67, had always denied any wrongdoing and said the credit cards were for discretionary spending as part of executives' pay deal.

He told court last October that everything “was completely legal”.

Rato will not necessarily go directly to jail if he appeals the ruling, just like the Spanish king's brother-in-law Inaki Urdangarin who has been left free without posting bail following his sentence of six years and three months for syphoning off millions of euros.

Urdangarin's temporary reprieve, also announced on Thursday, made waves in Spain where people have long criticised what is perceived as the impunity of the elite.

IMF chiefs in the dock

Rato was economy minister and deputy prime minister in the conservative government of Jose Maria Aznar from 1996 to 2004, before going on to head up the International Monetary Fund until 2007.

His subsequent career as a banker in Spain was short-lived – from 2010 to 2012 – but apart from the case of the undeclared credit cards, it also led to another banking scandal considered the country's biggest ever.

Thousands of small-scale investors lost their money after they were persuaded to convert their savings to shares ahead of the flotation of Bankia in 2011, with Rato at the reins.

Less than a year later, he resigned as it became known that Bankia was in dire straits.

The state injected billions of euros but faced with the scale of Bankia's losses and trouble in other banks, it asked the European Union for a bailout for the entire banking sector and eventually received 41 billion euros.

Rato and others were put under investigation, accused of misleading small investors in the listing of Bankia, which has since paid out 1.2 billion euros in compensation.

He is the third former IMF chief to get into trouble with the law.

His successor Dominique Strauss-Kahn was tried in 2015 on pimping charges in a lurid sex scandal, and was acquitted.

And Christine Lagarde, who took over from Strauss-Kahn and is the current IMF chief, was found guilty of negligence over a massive state payout to a tycoon when she was French finance minister.

By Marianne Barriaux

BUSINESS

Amancio Ortega’s daughter to take over as Zara and Inditex boss

Marta Ortega, daughter of Spain's wealthiest man, will take over as chairwoman of the world's biggest fashion retailer in a generational shift for the firm, Inditex announced on Tuesday.

Amancio Ortega's daughter to take over as Zara and Inditex boss
Photo taken in 2016 shows the founder and chairman of the Inditex fashion group Amancio Ortega (R) with his daughter Marta Ortega. Photo: MIGUEL RIOPA / AFP

She will replace Pablo Isla, who has been chairman since 2011, in April, the company said in a statement. He was deputy chairman between 2005 and 2011.

Ortega, 37, has been working for the company in different areas for the last 15 years, even working anonymously as a shop employee at one point to learn the ins and outs of the company.

She is the youngest daughter of Amancio Ortega, 85, who founded fast-fashion giant Zara with his ex-wife Rosalia in 1975 in Spain’s northwestern region of Galicia.

He remains the firm’s largest shareholder with a 59 percent stake and is one of the world’s richest men.

“I have lived and breathed this company since my childhood, and I have learned from all the great professionals I have worked with over the last 15 years,” Marta Ortega said in the statement.

“I have always said that I would dedicate my life to building upon my parents’ legacy, looking to the future but learning from the past,” she added.

Inditex, which operates nearly 7,000 stores worldwide, posted a net profit of almost 1.3 billion euros ($1.5 billion) during its first half of 2021, which runs between February and July.

The fashion group owns seven other brands in addition to Zara, including upmarket Massimo Dutti and teen label Stradivarius.

It is the world’s biggest fashion retailer, ahead of Swedish rival H&M.

Stocking shelves

Inditex thanked Isla, who is resigning, for his “leadership and vision” during his 17 years at the firm, saying the group had become “the leading company in its sector worldwide” under his watch.

It also hailed Marta Ortega, saying she “has led the strengthening of Zara’s brand image and fashion proposition, an area she will continue to oversee.”

She studied international business in London and carried out months-long stays in the departments of finance, accounting, sales analysis and design when she began working at Inditex.

Marta Ortega also briefly worked as an anonymous employee at the group’s shops in 2007, reportedly stocking shelves, to get a better understanding of how they operate.

Oscar Garcia Maceiras, who had become the company’s general counsel and secretary of the board in March, will become CEO “effective immediately”, Inditex said.

Her will replace Carlos Crespo, who took the post two years ago. Crespo will remain chief operating officer.

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