Court of Appeal confirms Montepio sentence

The Lisbon Court of Appeal (TRL) upheld the ruling of the Competition Court that partially upheld the appeals of Montepio and former directors, ordering them to pay fines exceeding €2 million.

In Thursday’s ruling, to which Lusa had access today, the panel of the Intellectual Property, Competition, Regulation and Supervision (PICRS) section of the TRL considered “totally unfounded” the appeals filed by Caixa Económica Montepio Geral (CEMG), by its former chairman António Tomás Correia and by former directors Almeida Serra, Eduardo Farinha, Álvaro Dâmaso and Barros Luís.

The panel, with the president of the PICRS, Eurico Reis, casting a dissenting vote, considered that the sentence handed down on April 9 by Judge Mariana Machado of the Competition, Regulation and Supervision Court (TCRS), in Santarém, which reduced the fines to which the appellants had been sentenced by the Bank of Portugal (BoP), was not worthy of censure.

In the sentence now confirmed by the TRL, CEMG saw the fine of €2.9 million applied by the BoP reduced to €1 million, Tomás Correia from €1.4 million to €375,000, Almeida Serra from €550,000 to €275,000, Álvaro Dâmaso from €140,000 to €135,000, Eduardo Farinha from €300,000 to €290,000, and Barros Luís kept the fine of €75,000, all suspended at half the amount for 15 months.

The sentence resulted from joining two administrative offence proceedings, one for violations of the rules and failure to comply with internal control, namely regarding the granting of credit, and the other on irregularities in the mechanisms to prevent money laundering.

In the sentence of April 9, now confirmed by the TRL, the TCRS considered proven that the internal service orders of CEMG were reducing the rules of control of credit granting, containing several exceptions that allowed to dispense with the analysis of the credit risk of the operation (in housing loans and large companies), violating the warnings of the BoP and with a negative impact on the bank.

It also considered that rules on conflict of interest were violated when loans were approved for companies with CEMG capital by directors who were managers of both.

It also pointed to the lack of provisions for credit risk to mitigate the deterioration of the loan portfolio and the fact that the three largest subscriptions in the public offering authorised by the BoP were funded by the subsidiary Finibanco Angola, counting as an increase in equity, which went against the supervisor’s guidelines.

The TCRS also considered it proven that there were several credit operations to subsidiaries Finimóveis and Lusitânia that exceeded 10% of equity.

Within the scope of the joined case, the sentence confirms that the system for the prevention of terrorism financing and money laundering was deficient, having been subsequently corrected.

In this case, Almeida Serra suffered a warning, and Tomás Correia was acquitted because there were doubts about his participation.

The TCRS ordered the suspension of the fines in half of their value, given the advanced age of several of the former directors and the fact that they no longer held any position in the bank, as well as the fact that they had not appropriated assets or carried out acts to conceal the facts, having, at the insistence of the BoP, corrected the majority of the situations.

In the appeal to the TRL, dated the end of April, the appellants invoked, in particular, what they classified as “contradictory res judicata” since there was an appeal by the Public Prosecutor’s Office (MP) to the order of initial receipt of the records, of 07 June 2019, which was the subject of a judgment of the Court of Appeal on September 11 2019, two days after the decision that determined the return of the case to the BoP for violation of the right of defence in the administrative phase.