Files the case for former president Emilio Saracho, ensuring that he took measures to evaluate the bank’s balance sheet
The judge of the National Court José Luis Calama has proposed trying the former president of Banco Popular Ángel Ron, twelve other directors and the consulting firm PwC for crimes of fraud against investors and accounting falsehood in the 2016 capital increase to which investors attended “deceived”, since the financial statements of that year and 2015 “did not reflect the true image of the balance sheet or the assets.”
In an order from this same Monday, collected by Europa Press, the head of the Central Court of Instruction Number 4 agrees to the provisional file for former president Emilio Saracho as he had not had any intervention in the violations of accounting regulations, but instead, On the contrary, the judge says, he took measures to check and evaluate the bank’s balance sheet.
Likewise, the instructor assures that it has not been proven that Saracho was responsible for the “serious leaks” to the press that accelerated the flight of deposits that Banco Popular suffered before its resolution.
In addition to Ron and PwC, the judge proposes to sit on the bench the former vice president of the entity Roberto Higuera, the former CEO of the bank Francisco Gómez, and the audit partners of the consulting firm Pedro Barrio, José María Sanz Olmeda. Also to the former directors of the bank Javier Moreno, José María Sagardoy, Jesús Arellano, Antonio Pujol, José Ramón Alonso, Francisco Juan Sancha and Tomás Pereira.
CAPITAL EXPANSION
Throughout 178 pages, the magistrate considers it proven that on May 25, 2016, the Board of Directors of Banco Popular, chaired by Ángel Ron, decided to carry out and execute the capital increase agreed upon at the General Shareholders’ Meeting on May 11. April. Prior to that meeting, he explains, a meeting of the Board’s Audit Committee took place that same day, whose second item on the agenda was “the approval of a favorable report for the capital increase.”
The resolution indicates that the Audit Commission issued a report favorable to the expansion, without having any detailed written study that could be the subject of debate. The external auditors PwC were present at that meeting, and they did not warn the members of said commission of any problem in Popular’s accounts (annual-2015- and quarterly-2016-) in view of the capital increase.
Regarding the capital increase brochure, the order explains, “consciously altered financial information is offered – which hid enormous provision deficits from investors – taken from the 2015 annual accounts audited by PwC and the financial statements as of 03/31/2016 with limited report from said auditor.
2,500 MILLION LOSSES
Calama assures that if the provisions not reflected therein had been reflected in the balance sheets of Banco Popular – as of December 31, 2015 and March 31, 2016 – “the accounting result of the profit and loss account would have shown at least 2,500 million losses, instead of the profits declared” by the entity, apart from substantially altering numerous ratios of the accounts, which are used by investors for their financial analysis.
The judge makes it clear in his resolution that PwC did not record any qualifications in its audit report on the 2015 annual accounts, nor in the interim financial statements as of March 31, 2016.
Regarding the marketing of the capital increase, the magistrate reports that veiled instructions were given to the commercial network by order of the CEO Francisco Gómez, in order to finance the purchase of shares for many clients, despite the fact that it was expressly prohibited in the Risk Policies Manual of Banco Popular. The amount financed, he adds, was not subtracted from the regulatory capital that affected the bank, which is why a distorted figure was offered to the market.
The order also refers to Thesan Capital, consisting of the creation of companies in Luxembourg with the sole purpose of channeling loans from Popular to these companies with the aim of subsequently transferring those loans to certain borrowers of Popular, in order to prevent were classified as doubtful credits and, therefore, avoid the provision of hundreds of millions of provisions.
The judge maintains that the hidden provision deficit in the entity’s annual accounts for 2015 was maintained during the interim financial statements for 2016 and was only partially corrected, he says, in the annual accounts for 2016.
INVESTORS “WERE DECEIVED”
Calama explains that the crime of swindling investors could have been committed through the capital increase that Banco Popular marketed in 2016. In his opinion, there is no doubt that the investors who came to subscribe to said increase “were deceived.” since the consolidated annual accounts of Popular for the year 2015 and the financial statements for the first quarter of 2016 “did not reflect the true image of the balance sheet or the assets of the entity, but rather the accounts hid a significant deficit in provisions.”
In this sense, the judge describes the bank’s operations, which consisted of refinancing a relevant part of large borrowers in a situation of non-payment of installments, granting them terms that avoided their formal default or using instrumental corporate structures based in Luxembourg in order to maintain them as viable. credits that were actually doubtful.
The magistrate emphasizes that if the doubtful credits had been correctly classified, Popular would have exceeded 2,500 million in accounting losses, a figure that is accredited “only taking into account the deficits detected in the two OSI inspections and computing the Thesan deficit.”
According to the judge, PwC’s conscious collaboration contributed to this situation, as it did not record any reservations in its audit report on Banco Popular’s annual accounts for 2015 or in the limited report regarding the financial reports for the first quarter of 2016. .
The judge of the National Court also charges those investigated with a crime of accounting falsification perpetrated successively in the annual accounts of 2015, in the interim financial statements of 2016 and in the annual accounts of this last year.
AN “IMPORTANT INSTITUTIONAL MISSION”
Calama explains that the actions of the supervisors – the National Securities Market Commission, the Bank of Spain and the European Central Bank – have been left outside the walls of the investigation, since from the beginning of the criminal investigation this was decided since it does not concern It is up to the judicial body to determine whether the supervision system worked correctly or not.
“It is not up to us to determine whether the supervision system worked correctly or not. It will be up to other areas to consider whether or not they lived up to their important institutional mission,” he argues.
Regarding the possible civil liability of Banco Santander, the judge explains that the operative part of the order does not mention this possibility and that, as suggested by the Criminal Chamber, it will be at the time of issuing the order to open the trial. orally when addressing this issue.
It should be remembered that the case began in October 2017, four months after the bank was resolved by the Single Resolution Board (JUR), making it one of the longest instructions of the National Court.
