Spanish court begins fraud probe against former IMF chief

Spanish court begins alleged fraud probe against former IMF chief

Houston News.net Wednesday 4th July, 2012

MADRID - Spain's high court Wednesday started a fraud probe into the role of top executives of Spanish bank Bankia including Rodrigo Rato, the former International Monetary Fund chief who was until recently chairman of the part-nationalized lender at the forefront of the country's banking crisis.

The probe, which will include Rato and 32 other top executives of Bankia, is the first step of a sweeping investigation that may encompass other prominent political and business stalwarts.

Once a powerful economy minister and a likely prime minister candidate, Rato now faces likely charges of fraud, price-fixing and falsifying accounts.

In May Prime Minister Mariano Rajoy forced Rato to quit Bankia ahead of its nationalization. It is now the biggest-ever failed Spanish lender which would require 23.5 billion euros ($29 billion) for revival.

Rato's proximity to the ruling Popular party such as Jos Luis Olivas, former PP head of the Valencia region, risks embarrassing the government which had rejected earlier calls for a public enquiry into mismanagement at the bank.

ngel Acebes, a PP interior minister under the government of Jos Mara Aznar and a director at BFA, is also named in the case.

According to the court filing Miguel ngel Fernndez Ordez, the ex-governor of the Bank of Spain who stepped down a month early from his term following the Bankia rescue, and Francisco Celma, a partner at Deloitte responsible for auditing the lender's accounts, are among those who will be called upon to testify.

Before its nationalization, Bankia had declared a profit of 309million euros for 2011, which was later restated to a 3-billion euros loss after Rato was removed from the bank and Jos Ignacio Goirigolzarri, a former BBVA banker, was installed in his place.

Julio Segura Snchez, chairman of the CNMV, Spain's stock market regulator, is among those who will be summoned by the court.

The organization has come under criticism for allowing Bankia to list, and be sold to retail investors, mostly elderly people, who suffered large losses.