Scandal hits Spain’s most powerful banker

29 April 2004

MADRID – The most powerful banker in Spain has been ordered to stand trial charged with misappropriation of bank funds, it was reported Thursday.

Emilio Botin, chairman of Santander Central Hispano, Spain’s largest bank, has also been accused of irresponsible management, the BBC reported.

In a separate case, he will have to defend allegations that he helped clients to evade taxes.

Two former colleagues, Jose Maria Amusategui and Angel Corcostegui, are also accused of misappropriating funds.

One of the richest men in Spain, Botin is a scion of the Spanish banking world – his family has been running Banco Santander since 1857.

After he took control from his father 18 years ago, Botin built Santander into the 13th largest banking group in the world – with huge influence in Latin America as well as Europe.

In 1994 Santander acquired Banesto. It merged with Banco Central Hispano in 1999.

In August 2001, Amusategui and Corcostegui stood down after an acrimonious power struggle, leaving Botin as the manager of the merged corporation.

An agreement, reached in private, resulted in the two former employees receiving EUR 56 million and EUR 108 million  respectively.

A shareholder accused the men of receiving too much money, which was not justified under the corporate laws of the bank.

The bank’s board of governors are standing behind Botin, who has boosted the assets of the bank to EUR 350 billion euros through various mergers and the bank has enjoyed 15 consecutive years of profits.

“He is one of the personalities of Spain’s economic life and having him in the dock is rather surprising,” said Professor Pedro Schwarz, chief economist for brokers Fincorp in Madrid.

Botin is a large shareholder in the bank, but the traditional patriarchal practice of running a company in the manner he chose has become less popular in Spain.

“What he saw fit was very good for the bank until now,” Professor Schwarz said, “and people respect him.”

The bank itself has denied all charges levelled at Botin, pointing out that the shareholder who instigated the charges, Perez Escolar, was himself jailed for four years for fraud although he served only one month because of ill health.

In a statement, the bank said: “This Order has been issued despite the Public Prosecutor having requested the dismissal and shelving of the charges, on the basis of the finding that they do not constitute any crime whatsoever, and that the payments effected are entirely in accordance with the law.”

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Subject: Spanish news