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Spain court orders ex-IMF head Rato to be tried for fraud

A Spanish court on Friday ordered former IMF head Rodrigo Rato to stand trial for fraud over the failed 2011 listing of Bankia, a bank he led which later needed rescuing by the state.

Spain court orders ex-IMF head Rato to be tried for fraud
Rodrigo Rato is accused of falsifying information about Bankia's finances. Photo: Gerard Julien/AFP

Rato, a former Spanish economy minister, is accused of falsifying information about Bankia's finances to encourage investors to buy into its stock market listing.

He will stand trial along with 30 other former Bankia executives for investor fraud and for falsifying 2010 and 2011 accounts, Spain's High Court said in its ruling.

The court will also put Bankia itself and its parent company BFA on trial over the failed listing, as well as accounting firm Deloitte and one of its employees. Deloitte audited the lender's accounts.

Bankia was rescued in 2012, less than a year after it was listed, and tens of thousands of small investors who had converted their savings to shares lost everything.

The near-collapse of Bankia almost brought down Spain's whole financial sector, which was bailed out later that year by international creditors for 41 billion euros ($48 billion).

Last year, the Supreme Court ruled that “serious inaccuracies” in the information provided by Bankia misled investors.

When Rato was questioned in court in 2012 over the Bankia listing, he reiterated his claims that Spanish authorities held responsibility for events at the lender including the timing of its ill-fated stock market flotation.

Struggling financially

Public prosecutors in June asked that Rato, 68, be given a five-year jail sentence over the Bankia listing.

They have argued that as the bank's “main executive,” he was “fully aware of the inconsistency of the Bankia project and of its financial weakness” but still gave the green light for the listing.

Bankia was created in 2010 by merging seven regional savings banks, part of a financial sector shake-up brought on by the collapse of a construction boom that dragged Spain into a severe recession.

Last year, the bank said it had paid out €1.2 billion in compensation to 190,000 small investors, but added it still had about 30,000 claims pending.

Rato was sentenced in February to four years and six months in a separate case for misusing funds when he was the boss of Bankia, and Caja Madrid before that.

Rato and the other executives were accused of having paid for personal expenses with credit cards put at their disposal by the lenders, 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.

Outrage

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.

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

He was allowed to remain free and without judicial supervision pending a final verdict in the case.

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 the International Monetary Fund until 2007.

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, though she received no penalty.

By Emmanuelle Michel

HEALTH

Spain’s ‘2,000-tumour man’ sentenced for scamming donors

A Spaniard known as "the man with 2,000 tumours" who lied about having terminal cancer was handed a two-year jail term Monday for scamming donations from thousands, including celebrities.

Spain's '2,000-tumour man' sentenced for scamming donors
De Cedecejj - Trabajo propio, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=99402644

Paco Sanz, 50, appeared regularly on television and social media between 2010 and 2017, claiming to have nearly 2,000 tumours as a result of Cowden syndrome.

Saying he had only months to live, he appealed for donations via his web page, through text messages and even a charity gala.   

Although he did suffer from the syndrome, all his tumours were benign and posed no threat to his life.

Prosecutors say the former security guard collected just under €265,000 ($319,000) before being arrested in March 2017 in the eastern Valencia region.   

Among those who sent him money were popular television presenter Jorge Javier Vazquez and Spanish footballer Alvaro Negredo.    

Prosecutors accused Sanz of “taking advantage of his illness” to “obtain illegal funding”.

They said he presented the disease as being “much more serious than it really was” and of falsely claiming he could only be saved if he got experimental treatment in the United States.   

In reality, he travelled to the US to take part in a free clinical trial and “all his costs were covered” by the firm running it, prosecutors added.    

In video obtained by Spanish media at the time of his arrest, Sanz could be seen joking with his girlfriend and family members about the lies he was telling.

As his trial opened in Madrid on Monday, Sanz pleaded guilty to fraud, receiving a two-year jail sentence, while his girlfriend was sentenced to a year and nine months for being his accomplice.

But they are not likely to serve time behind bars, as sentences below two years are usually suspended in Spain for first-time offenders convicted of non-violent crimes.

The trial will continue so the court can determine how much money the pair owe in damages.

READ ALSO: Fraudster parents of sick girl jailed for charity scam

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