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BANKING SCANDAL

Ex-Caja Madrid chief leaves jail after posting bail of 2.5 million euros

Deputy PM says Blesa case shows the law is being applied “equally”

Florida bank purchase approved without expert report

Former Caja Madrid chief Miguel Blesa walked out of a Madrid prison on Friday after his lawyers posted the 2.5-million-euro bail set by a court investigating his mismanagement of the savings bank.

Blesa, who headed Caja Madrid between 1997 and 2010, made at least 12.4 million euros during the last three years of his tenure, which was marked by unbridled expansion despite the crisis. Shortly after his departure, the lender merged with six other savings banks to ward off bankruptcy. The resulting group, Bankia, required a record bailout two years later.

Once one of Spain’s most powerful business figures, Blesa is so far the only banker to see the inside of a prison because of his actions during the economic crisis. He might not be the only one, as an estimated 90 bank executives from nine savings banks are currently under investigation.

The Madrid judge investigating the case, Elpidio José Silva, believes that there are “highly relevant” indications that crimes may have been committed, including mismanagement, misappropriation of funds and document forgery.

A close friend of former conservative prime minister José María Aznar, Blesa was appointed to the post by the Popular Party (PP), yet the ruling party has shown no support for him during this predicament. On the contrary, it seems to be holding Blesa up as an example.

“For the government, the fact that the institutions are working normally and that the law is being applied equally is a very positive fact,” said Deputy Prime Minister Soraya Sáenz de Santamaría.

Judge Silva considers it an “aberration” that Caja Madrid should have bought the City National Bank of Florida for 1.12 billion dollars in 2008, during the economic "tsunami," and added that the “perfect storm” at the savings bank did not depend on the weather but on the “direct actions” of former chairman Miguel Blesa.

The operation lacked proper control mechanisms and caused a hole of 500 million euros in Caja Madrid’s accounts, the judge’s report reads.

 The magistrate found it odd that the purchase of the Florida bank was unanimously approved by the board of Caja Madrid without first requesting any expert report, even though more than one board member petitioned for it. There was no “minimally solvent viability and risk analysis,” the judge noted.

The fact that the board approved the operation is being used by Blesa’s defense to argue that their client is not directly responsible for the outcome. This particular transaction during Blesa’s 12-year tenure is one of the main reasons why the banker was sent to preventive jail.