Credit card scandal continues

THE former chief of the International Monetary Fund (IMF) and the former chairman of Caja Madrid have until this Wednesday to between them deposit €19 million with the High Court or face having their assets seized.

Rodrigo Rato – former IMF chief and former Bankia chairman – and Miguel Blesa formerly of Caja Madrid, have been ordered to pay the amount following a credit card scandal that has rocked Spain. Rato must pay €3 million and Blesa €16 million on Wednesday, to cover possible civil penalties.

According to allegations being investigated by the High Court, lavish spending on credit cards handed out to Bankia and Caja Madrid senior employees reached a total of €15.5 million between 2003 and 2012. It’s alleged that the cards were misused and personal expenses were put on the cards including clothing, restaurant bills, recreational travel expenses and personal withdrawals.

A total of 86 board members and executives of the two banks received credit cards that were not reported to tax authorities nor were included in official company accounts, according to reports.  

Both Rato and Blesa deny any wrongdoing, claiming that they thought the credit cards were part of their salaries, said a source present at this week’s closed High Court hearings.

The credit card scandal has caused uproar in Spain where high unemployment still reigns. The country suffered a crippling recession following a European bailout to the tune of €40 billion. Caja Madrid merged with Bankia in 2010 but in 2012 Bankia’s exposure to the country’s burst property bubble unleashed a financial crisis.