The four ruinous management acts in BES – Business Journal – Portugal

The BES granted credit to non-financial entities of GES when he was forbidden to do so. Also made financing transactions. And spent the comfort letters to Venezuela. All evidence that can configure ruinous management, according to the forensic audit of BoP BES.

“practical potential malicious acts of ruinous management.” There are four examples of such acts in the management led by Ricardo Salgado, according to the executive summary of the five parts of the special audit – WB1 (the official name of the forensic audit carried out by Deloitte, at the request of the Bank of Portugal, the Banco Espírito Santo), that the Business had access.

The known comfort letters passed by BES to Venezuela, which guaranteed the payment of debt societies of the Holy Spirit Group if it does not saldassem those instruments, is one of those acts. Not only. There was funding the financial sector entities in the Espírito Santo Group that did not belong to BES, as Esfil and the Panama bank, and here too there is a risk of these ruinous management decisions.

When it was banned, the BES also funded non-financial sector entities in the GES, as the BEST – another potential practice of this kind, according to Deloitte. Finally, there were loans granted to these entities, but about which there is no information. Without details, the audit also anticipates the wrongful act

Letters to Venezuela

There were letters issued by BES to two Venezuelan customers related to debt securities of the Holy Spirit International in guaranteeing the repayment of this debt in case of default: are dated June 9, intended for the Development Bank Economico y Social Venezuela and Fondo Nacional Desarrollo Fonden, amounting to 365 million (EUR 328 million). Were signed by Ricardo Salgado and José Manuel Holy Spirit.

“We have not received information about the existence of any guarantees received by BES to cover the potential increase in exposure to non-financial branch of GES as a result of these letters,” comments on Deolitte. That is, although “ensure the necessary liquidity to allow the scheduled repayment”, BES has received any guarantee to cover that commitment.

Funding GES authorities after June 4

From June 4, 2014, BES was forbidden to grant new financing, directly or indirectly, the non-financial sector entities in the GES.

There was at least the BEST commercial paper subscribed by the bank after this date. Not only. Thus, according to Deloitte, the default may have happened and set up a practice of intentional acts of ruinous management.

Credit for entities not the financial GES undocumented

There was credit extended by the bank led by Ricardo Salgado GES non-financial sector entities before June 4, 2014 on which Deloitte has not received documents.

“It was not provided documentation to support the approval and contractual formalization of a set of seven loans granted to non-financial sector entities in the GES,” admits the audit. Thus, he says, there are potential disobedience to a determination of the Bank of Portugal by both ESFG as BES. But also admits malicious acts of ruinous management practiced in these loans.

Funding the financial sector entities GES not BES

There were companies in the Espírito Santo Group that were not part of the BES:. Esfil and to the Holy Spirit Bank Panama are some examples

According to the conclusions of the forensic audit, “the Group granted new financing and / or made renovations financing provided to GES of financial institutions that were not part of the Group, through money market operations or through bank overdrafts “. Another risk of being concerned an intentional act of ruinous management.