Ricardo Salgado: nine lawsuits, 21 crimes so far

Ricardo Salgado faces nine lawsuits in total. ECO gathered all of the cases the head of BES was indicted for.

The criminal accusations were mostly connected with Operação Marquês (a corruption scandal, involved money laundering and corruption crimes, ended up putting the ex-prime-minister Socrates into custody), Monte Branco, CMEC,  with both the Bank of Portugal and the Portuguese Securities Market Commission (CMVM) presenting charges against the banker. It has been four years since the bank’s collapse, and ECO gathered all the info regarding the open cases against the former leader of the bank.

With a massive amount of unrecoverable debts, BES had to be bailed out on the third of August of 2014, marking the end of the long-lasting Espirito Santo family’s supremacy in the Portuguese banking system. Some days before the bail-out, Ricardo Salgado was indicted by the Central Court for Criminal Prosecution, having been arrested at home. He had to pay a three million euros bail to be released.

On the 30th of July, BES publicly announced all-time record losses of €3,6m during the first semester of that same year.

Novo Banco was then created to recover BES, having then received an injection of €4,9bn from a Resolution Fund (public entity). Four years have passed, and we can now look at all the lawsuits for which Salgado might be judged.

Operação Marquês

A short background note about the case Operação Marquês is utterly necessary. It all started with the arrest of Sócrates in November 2014, indicted for money laundering, tax evasion and corruption crimes, which put him into custody.

Sócrates was accused of having perpetrated 31 crimes between 2006-2015. He was the Portuguese prime-minister during two mandates, between 2005 and 2011, as leader of the Socialist party (PS), a centre-left party which has been re-elected to the government in 2015.

28 people were identified as suspects, amongst them Carlos Santos Silva (LENA Constructions), PT’s (telecom company) administrators Zeinal Bava and Henrique Granadeiro, Armando Vara (banking administrator and member of PS), and last but not least, Ricardo Salgado.

On the third of September 2018, Ricardo Salgado will have his last appeal with the Portuguese justice system, regarding Operação Marquês, as his defence attorneys will be able to present his defence to the judge, one last time.

Sócrates was accused of having perpetrated 31 crimes in total, with the suspicion of having embezzled at least €34m through exchanging favours with Ricardo Salgado, who has been accused of 21 crimes in this case, through use of his influence at PT and BES.

What are the nine lawsuits he is facing?

There have been four cases presented by the Public Prosecution Service of Portugal, but he has only been indicted to answer before a court regarding one: Operação Marquês and the 21 crimes he is accused of within this case alone.

From the cases presented by the Bank of Portugal, only one has reached a similar ruling, in April this year, which will imply the payment of a €3,7m fine. Although the defendant’s lawyers presented an appeal to the decision, which is now pending. CMVM’s indictments haven’t had any conclusion yet.

Public Prosecution Service of Portugal

1. Monte Branco

• July 2014
• Criminal charges filed: None
• Final court decision: None

This case started being investigated because of some breakthroughs during the inquiry to BPN (Portuguese Business Bank), which showed evidence that there was a money laundering scheme in the bank. The investigation was done during 2011, and it shed light on the money circuits between swiss accounts and their Portuguese clients. The funds being diverted amounted to around €230m.

Ricardo Salgado’s name popped up during the investigation, amongst suspicious corrections — three, in total — to his IRS (tax) declaration, having, in the end, paid €4,3m more than what he had initially declared to the government.

In December 2012, given the accusations, Salgado volunteered for questioning. The scheme was frankly simple: through a store registered in Rua do Ouro, in downtown Lisbon, a suspect named Francisco Franco Canas proceeded with the money-washing: all the Portuguese clients that had been identified as holders of one of those Swiss accounts had at a certain point been at his store. The money would always then be transferred to Switzerland, without a trace. Canas’ payment fee for the handling business was deposited on accounts he owned with BPN in Portugal and Cap Vert.

Salgado started off as a witness in this case, and the Portuguese Attorney’s General Office did not indict him as a defendant stating there was no proof of tax evasion. The year after, he became a defendant, however.

2. Espírito Santo’s “Universe”

• July 2015
• Criminal charges filed: None
• Final court decision: None

Criminal activities and irregularities have been identified in the management of the Bank. It is one of the biggest investigations the Public Prosecution Service has undergone. There were six other defendants, besides Salgado: José Castella (financial administrator), Pedro Luís Costa (administrator of Espírito Santo Financial Assets), Cláudia Boal de Faria (chief of the Savings Department), Isabel Almeida (financial markets director) and António Soares (administrator for BES Life Insurance Solutions).

3. Operação Marquês

• January 2017
• Criminal charges filed: Yes
• Final court decision: None

One of the most well-known cases in the history of the Portuguese justice. Salgado is one of the three defendants who have been charged with the most crimes, accounting in this case with 21 criminal charges.

One of them accounts for a crime of active pursuit of corruption targetting a holder of a public office position, two for corruption, nine crimes of money laundering, three breaches of trust, three falsifications of documents and three aggravated tax evasion crimes.

Between 2001 and 2015 Ricardo Salgado manipulated the management of PT, making it follow his interests, and, according to the Public Prosecution Service, BES welcomed a gain of €8,4bn in dividends and payments.

4. CMEC, the alleged manipulation of EDP’s management costs

• April 2018
• Criminal charges filed: None
• Final court decision: None

Manuel Pinho (former Economy minister, under Sócrates’ government) has allegedly helped to concede €1,2bn in benefits to EDP — a Portuguese electricity provider company — between 2006 and 2012.

CMEC’s are the Contract Management Balance Costs, which surge as a compensation to the CAE (EU legislation that changed Energy Acquisition Contracts in 2004).

It falls upon the public interest, as there has been a favouring of the electricity company, as the contracts were re-drafted in such a way that made EDP’s profits spike.

Ricardo Salgado was indicted because CMEC’s became a major profit and source of revenue for EDP in Portugal. CMEC represents a compensation for the anticipated contract losses due to the application of CAE.

According to the Public Prosecution Service, GES/BES group was entirely interested in these profits as they held 2% of EDP’s shares at the time. During Manuel Pinho’s office duty –between March 2005 and July 2009 — the company ES Enterprises, which had offshore accounts in the British Virgin Islands, transferred each month the sum of €14.963,94, accounting for a total of around €508 thousand.

Administrative Offences

Bank of Portugal

5. Banco Espírito Santo Angola

• October 2015
• Criminal charges filed: Yes
• Final court decision: None

In October 2015, the Bank of Portugal charged Salgado for having committed an administrative offence, in the context of BESA’s management. Infringements in the internal audit compliance were also mentioned.

Besides Salgado, Amílcar Morais Pires, Rui Silveira, Joaquim Goes, José Maria Ricciardi, as well as 11 other former managers of GES (Espírito Santo Group) were also formally accused of committing administrative offences.

There are very serious infringements in the process, and Ricardo Salgado, Amílcar Morais Pires and Rui Silveira have been accused of willful misconduct, which means the prosecution believes all three defendants had committed these crimes intentionally.

6. Espírito Santo Internacional (ESI)

• August 2016
• Criminal charges filed: Yes
• Final court decision: Yes

Tribunal de Supervisão, Santarém: the regional supervision court of Santarém released the final decision: Salgado won’t be allowed to have any similar office position for eight years, as well as he will have to pay three million euros to make up for the law infringements he committed while illegally selling ESI’s debt issues to its clients.

7. Money Laundering

• July 2016
• Criminal charges filed: Yes
• Final court decision: the process was cancelled

The second to last infringement was cancelled due to Santarém regional supervision court’s final ruling. This indictment concerned the lack of preemptive corruption measures in the bank, especially regarding terrorism financing, and money laundering.

8. Eurofin

• July 2018
• Criminal charges filed: Yes
• Final court decision: None yet

The Bank of Portugal has recently discovered that, between 2009 and 2014, a scheme between BES and a Swiss finance entity called Eurofin, allegedly eased the embezzlement of three billion euros from the Portuguese banking institution, causing a deficit in the bank’s accounts of around €1,249 bn. The prosecution points out the people benefiting more with this scheme were Ongoing’s Nuno Vasconcelos and Rafael Mora.

CMVM

9. CMVM accuses Ricardo Salgado, José Maria Ricciardi and José Manuel Espírito Santo

• June 2017
• Criminal charges filed: Yes
• Final court decision: None yet

CMVM accuses Ricardo Salgado, José Maria Ricciardi and José Manuel Espírito Santo, with claims that these were trying to sell commercial paper from Espírito Santo International and Rio Forte to the bank’s clients.

The regulator concluded, in the accusation, that the former holdings’ clients were misled and misguided towards buying commercial paper from GES, having been provided with “false, illicit, incomplete and outdated information”.

Salgado can be punished with fines of 25 thousand to five million euros for each of the eight infringements he was accused of perpetrating. Besides him, Ricciardi, José Manuel Espírito Santo, Ricardo Abecassis, Pedro Mosqueira do Amaral, Manuel Fernando Espírito Santo and Rui Silveira have all been accused of eight crimes, likewise punishable with the same above-mentioned penalty.

From the 9 opened cases against Ricardo Salgado regarding the alleged crimes he has committed, only one has had a final court settlement (6. Espírito Santo International), while all other processes are divided: three of them haven’t been filed to court (1,2 and 4),  four of them have been indicted but haven’t been trialed yet (9,8,5,3), and one of them was cancelled (7).