The former International Monetary Fund chief Rodrigo Rato has been sentenced to four-and-a-half years in prison for misusing corporate credit cards while in charge of two leading Spanish banks at the height of the country's financial crisis.
Mr Rato, also a former a Spanish economy minister and deputy prime minister, was found guilty on Thursday of embezzlement at the end of a five-month trial at Spain’s national court.
He had been on trial with 64 other former executives and board members at Caja Madrid and Bankia banks, whose near collapse sparked an EU bailout of Spain's financial sector.
The defendants had been accused of spending a total of of €12 million between 2003 and 2012, using “black credit cards” to pay for hotels, parties and luxury goods. Prosecutors had claimed the executives used the cards issued to them by Caja Madrid and Bankia without justifying them or declaring them to tax authorities.
Mr Rato (67) had denied any wrongdoing, insisting the credit cards were for discretionary spending as part of the pay deal for executives.
According to the indictment, Rato maintained the corrupt system established by his predecessor Miguel Blesa when he took the reins at Caja Madrid in 2010. Mr Blesa was given a six-year prison sentence on Thursday.
It had been alleged that Mr Rato replicated the system when he took charge of Bankia, a group that arose out of the merger of Caja Madrid with six other savings banks.
The case, with its details of lavish corporate spending as Spain endured its devastating economic crisis, has prompted huge anger. Thousands of small-scale investors lost their money after they were persuaded to convert their savings to shares before the flotation of Bankia in 2011 with Mr Rato at the helm. Less than a year later he resigned as it became known Bankia was in dire straits.
The state injected billions of euro, but faced with the scale of Bankia’s losses and trouble at other banks, it asked the EU for a bailout for the entire banking sector and eventually received €41 billion.
Mr Rato, who led the IMF from 2004-07, and was a key figure in the conservative People's Party (Partido Popular or PP), was greeted with cries of "thief", "fraud" and "thug" when the trial began in September. –(Guardian service)