Salgado picks up third fine from banking regulator – €1.8 million

The Bank of Portugal has condemned the disgraced former banker, Ricardo Salgado, to pay yet another fine, this one is €1.8 million and relates to his management, or mismanagement, of BES-Angola whose appalling financial condition led to the collapse of the Espírito Santo empire.

This is the third time Salgado has been found guilty of professional misconduct during the period he ran Grupo Espírito Santo. These golden years ended abruptly in 2014 with the collapse of Rioforte, BES and then many other companies in the sprawling group.

Six former directors also have been convicted, three from the former BES and three from the Espírito Santo Financial Group.

So far, eight convictions have resulted from the BES-Angola case: two companies, BES and ESFG, and six individuals.

Ricardo Salgado, Amílcar Morais Pires, the head of BES’s finance department, and Rui Silveira, who was in charge of the bank’s legal department, all have been condemned.

The remaining three were directors of Espírito Santo Financial Group, BES’s largest shareholder, and the entity through which the Espírito Santo family controlled the bank: Gherardo Laffineur Petracchini, José Castella and José Caldeira da Silva.

Salgado collects a fine of €1.8 million, Amílcar Morais Pires has been told to pay €1.2 million and Rui Silveira has to pay €400,000. Petracchini has been fined €150,000 and Castella and Caldeira da Silva both must pay €120,000. 

BES itself, whose assets still are being liquidated, has been fined €3.4 million and ESFG must pay €1 million. In both these corporate cases, the fines have been suspended so as to leave any money released during the liquidation processes, available to creditors.

The regulator cited the failure of BES and ESFG to comply with normal internal control standards when dealing with transfers to BES-Angola.

There was no adequate system of management, no evaluation and control of risk, nor was there any continuous monitoring of the relationship with the Angolan subsidiary.
 
BES’s exposure to BES-Angola, of which it controlled 55.7%, exceeded €3.3 billion in 2014 after the Angolan bank had granted credits to beneficiaries whose identities were not even registered. Many of these loans were not secured, something that became clear to BES in November 2013 whose directors were under an obligation to inform the Bank of Portugal, which they did not.

This is just another day in the life of the failed banker, these fines are for misconduct, so can be challenged in Court.