http://www.algarvedailynews.com/news/2742-bes-directors-linked-to-secret-offshore-paymentsPortugal’s Finance Minister has involved herself in the BES scandal by assuring the public that the crisis within the Banco Espírito Santo Group does not threaten the financial stability of the country and that the state should not interfere.
Minister Maria Luís Albuquerque was reacting to news that the Luxembourg authorities now have launched an investigation into three businesses within the Espírito Santo Group due to alleged breaches of corporate law.
National newspaper 'Expresso' revealed today that outgoing BES boss Ricardo Salgado and Morais Pires, his odds-on successor, may have received several million euros each from Banco Espírito Santo Angola through offshore companies.
The three companies under the legal spotlight in Luxembourg are Espírito Santo Control SA, Espírito Santo Financial Group, and Espírito Santo International.
It was at Espírito Santo International that an audit ordered by the Bank of Portugal revealed certain ‘irregularities’ which turned out to be a huge hole in the accounts that successfully had been hidden since 2008.
Maria Luís Albuquerque, speaking for the first time about the BES mess, says she is not worried about the bank’s position, a sure sign that she is as she awaits her copy of a rescue plans that the banking group is putting to the Bank of Portugal to avoid its collapse.
The issue of more shares, for which the market had an appetite at the last release and which saw the controlling family’s shareholding drop below 50% for the first time in the bank’s history, seems to be an obvious solution. This needs to be accompanied by debt renegotiation and bond repayment date extensions with companies such as Portugal Telecom which holds €900 million in Ria Forte, a subsidiary of Banco Espírito Santo Group, an amount due to be repaid in full next month, plus interest.
The situation is a mess and there will be more to come. Perhaps more concerning is what has been going on behind the scenes involving the directors of the banking group.
If Morais Pires, touted as the successor to Ricardo Salgado as president of the group, has indeed received money into offshore accounts for which he has paid no tax, even the bank's rapidly cobbled together succession plans will come adrift.
'Expresso' claims that between 2009 and July 2011, Banco Espírito Santo Angola made 12 transfers to two offshore accounts at Credit Suisse totaling $27 million. The beneficiaries are named as Ricardo Salgado and Amilcar Morais Pires.
Let us not forget the trail of under-the-table payments in the Ferrostaal submarine corruption case where transfers through the BES system led to accounts in the Cayman Islands.
According to documents from Inteli, which later were not accepted by the court in the submarines trial, the first bank transfer was made on 29 December, 2004 when 'Escom UK received a payment from Ferrostaal at its account at BES in London in the amount of €21.3 million.'
The next day 'Escom UK transferred €19 million to an unknown account with a transaction reference - 'BES Cayman account.’
'On July 4th 2005, Escom UK received €1.2 million from Ferrostaal' and 'the next day Escom UK transferred €1.2 million to an unidentified account with BES with a transaction reference ‘Escom.’
It later turned out that these destination accounts were controlled by Directors of BES. The case conveniently collapsed as the main source of evidence was from financial investigators Inteli, which the judge said was biased against the defendants - hardly surprising if the defendents were in receipt of part of the €21.2 million that has been transferred to destinations unknown by the German submarine consortium.
Hopefully a full investigation into the banking group now will be started and Salgado's status as a senior, long-serving banker will be ignored as the dirty underbelly of Portuguese banking is exposed to the daylight.
