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Spanish ex-IMF chief Rodrigo Rato gets jail sentence for embezzlement

Former IMF chief Rodrigo Rato was handed a jail sentence of four years and six months Thursday for misusing funds when he was the boss of two Spanish banks.

Spanish ex-IMF chief Rodrigo Rato gets jail sentence for embezzlement
Rodrigo Rato arrives at the High Court in San Fernando de Henares, near Madrid on September 26, 2016. Photo: AFP

Spain's National Court, which deals with corruption and financial crime cases, said he had been found guilty of embezzlement when he headed up Caja Madrid and Bankia, at a time when both groups were having difficulties.

The case caused an outrage in Spain, where it was uncovered at the height of a severe economic crisis that left many people struggling financially – made all the worse because Bankia later had to be nationalised and injected with more than 22 billion euros in public funds.

Rato, who is also a former Spanish economy minister, remains at liberty pending a possible appeal.

He was on trial with 64 other former executives and board members at both banks accused of misusing 12 million euros between 2003 and 2012 – sometimes splashing out at the height of Spain's economic crisis.

They were accused of having paid for personal expenses with credit cards put at their disposal by both Caja Madrid and Bankia, without ever justifying them or declaring them to tax authorities.

These expenses included petrol for their cars, supermarket shopping, pricey holidays, luxury bags or parties in nightclubs.

'Corrupt system'

According to the indictment, Rato maintained the “corrupt system” established by his predecessor Miguel Blesa when he took the reins of Caja Madrid in 2010.

He then replicated the system when he took charge of Bankia, a group born in 2011 out of the merger of Caja Madrid with six other savings banks, prosecutors said.

Blesa was sentenced to six years in jail.

Rato, 67, had always denied any wrongdoing and said the credit cards were for discretionary spending as part of executives' pay deal.

He told court last October that everything “was completely legal”.

Rato will not necessarily go directly to jail if he appeals the ruling, just like the Spanish king's brother-in-law Inaki Urdangarin who has been left free without posting bail following his sentence of six years and three months for syphoning off millions of euros.

Urdangarin's temporary reprieve, also announced on Thursday, made waves in Spain where people have long criticised what is perceived as the impunity of the elite.

IMF chiefs in the dock

Rato was economy minister and deputy prime minister in the conservative government of Jose Maria Aznar from 1996 to 2004, before going on to head up the International Monetary Fund until 2007.

His subsequent career as a banker in Spain was short-lived – from 2010 to 2012 – but apart from the case of the undeclared credit cards, it also led to another banking scandal considered the country's biggest ever.

Thousands of small-scale investors lost their money after they were persuaded to convert their savings to shares ahead of the flotation of Bankia in 2011, with Rato at the reins.

Less than a year later, he resigned as it became known that Bankia was in dire straits.

The state injected billions of euros but faced with the scale of Bankia's losses and trouble in other banks, it asked the European Union for a bailout for the entire banking sector and eventually received 41 billion euros.

Rato and others were put under investigation, accused of misleading small investors in the listing of Bankia, which has since paid out 1.2 billion euros in compensation.

He is the third former IMF chief to get into trouble with the law.

His successor Dominique Strauss-Kahn was tried in 2015 on pimping charges in a lurid sex scandal, and was acquitted.

And Christine Lagarde, who took over from Strauss-Kahn and is the current IMF chief, was found guilty of negligence over a massive state payout to a tycoon when she was French finance minister.

By Marianne Barriaux

BUSINESS

France’s EDF hails €10billion profit, despite huge UK nuclear charge

French energy giant EDF has unveiled net profit of €10billion and cut its massive debt by increasing nuclear production after problems forced some plants offline.

France's EDF hails €10billion profit, despite huge UK nuclear charge

EDF hailed an “exceptional” year after its loss of €17.9billion in 2022.

Sales slipped 2.6 percent to €139.7billion , but the group managed to slice debt by €10billion euros to €54.4billion.

EDF said however that it had booked a €12.9 billion depreciation linked to difficulties at its Hinkley Point nuclear plant in Britain.

The charge includes €11.2 billion for Hinkley Point assets and €1.7billion at its British subsidiary, EDF Energy, the group explained.

EDF announced last month a fresh delay and additional costs for the giant project hit by repeated cost overruns.

“The year was marked by many events, in particular by the recovery of production and the company’s mobilisation around production recovery,” CEO Luc Remont told reporters.

EDF put its strong showing down to a strong operational performance, notably a significant increase in nuclear generation in France at a time of historically high prices.

That followed a drop in nuclear output in France in 2022. The group had to deal with stress corrosion problems at some reactors while also facing government orders to limit price rises.

The French reactors last year produced around 320.4 TWh, in the upper range of expectations.

Nuclear production had slid back in 2022 to 279 TWh, its lowest level in three decades, because of the corrosion problems and maintenance changes after
the Covid-19 pandemic.

Hinkley Point C is one of a small number of European Pressurised Reactors (EPRs) worldwide, an EDF-led design that has been plagued by cost overruns
running into billions of euros and years of construction delays.

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