CRIES of “thief” and “fraud” rang out as former Spanish economy minister and International Monetary Fund chief Rodrigo Rato arrived at the Madrid court where he will stand trial for misusing corporate credit cards during his tenure in charge of two of Spain’s largest banks.
Prosecutors accuse Rato and 64 other former high ranking executives at Caja Madrid and Bankia of using so-called “black credit cards” to pay for private hotel suites, parties and luxury items, spending roughly €12 million in the process.
A one-time rising star in the Partido Popular (PP), Rato’s trial is a serious headache for acting prime minister Mariano Rajoy’s party, which is trying to iron out a path to governance in spite of a series of corruption scandals damaging its public credibility.
Now 67, Rato has denied any criminality and claims the credit cards were entirely above board as a discretionary entitlement for senior executives.
The prosecutors’ hand is strengthened, however, by public outcry over the affair after it was revealed that Rato and his compadres had spent millions on luxuries like purses and alcohol at the height of Spain’s economic crisis.
They have requested that Rato, who was the head of the IMF from 2004-2007, receive a four-and-a-half year prison sentence and be fined €2.6 million for his role in the affair, described as overseeing and maintaining a “corrupt system”.
The funds were spent between 2003 and 2012 when Rato resigned as Bankia chief with the outfit in such a deep financial hole that the Spanish government was forced to take a €41 billion EU bailout simply to keep the sector afloat.
It later transpired that Bankia executives, including Rato, had misled small-scale investors when they encouraged them to back the bank by converting their savings to shares before its flotation in 2011.
Thousands lost their savings in what was one of the biggest financial scandals in Spanish history, with Bankia since paying out more than €1.2 billion in compensation.