Caixa Geral Depósitos (CGD) is assessing lawsuits against former bank managers who took part in the decision to finance the 194 million euro Vale do Lobo and subsequent entry of the bank into the luxury venture management company. In the sight of the attorneys hired are all former managers of Caixa's management led by Santos Ferreira, even though they are not responsible for the responsibilities directly associated with granting that credit. But they eventually approved the credit proposal with no evidence of debate or confrontation of positions, a source close to the case told the Jornal Económico.
At issue are losses of EUR 228 million in financing for the tourist resort, where Caixa also held a 25% stake in Wolfpart. These credit decisions led CPI to Caixa to conclude that they constituted “extremely unbalanced risk sharing” (see text opposite), in a document that concluded that most of the losses originated in the years of the administration led by Santos Ferreira ( 2005-2008).
Faced with assessing lawsuits against former managers, an official source says CGD “does not want to comment further” after the bank's president has confirmed that he has mandated several law firms to analyze civil liability for ruinous claims.
Vale do Lobo is one of CGD's ruinous finances, which is being investigated by the courts, and was also noted in the EY audit as presenting “high risks”, whose decision criteria are now being viewed by magnifying glass by Caixa's lawyers. in the assessment of civil liability actions which could give rise to claims for damages of hundreds of millions of euros to cover damages resulting from the negligent breach of professional duties in management acts.
Former managers risk actions
The legal analysis targets all former Santos Ferreira administration managers, including the CEO: Maldonado Gonelha, Armando Vara, Francisco Bandeira, Norberto Rosa, Celeste Cardona, Vitor Fernandes, Rodolfo Lavrador and Carlos Costa, current Governor of Banco de Portugal , who in an interview with SIC in February assured that he was not in the final decision on the Vale do Lobo credit and that he did not participate in any of the 25 major ruinous operations of the public bank.
Vice President Maldonado Gonelha, the administrators Armando Vara and Francisco Bandeira had, according to CPI's work, direct intervention in the most problematic credits. The remaining directors had a regular seat on the Extended Credit Board and also approved credits by consensus and in line with the proposals of the directors of the areas.
The CPI report, which is debated in plenary (the last of the legislature) on Friday, will be sent to the Attorney General's Office (PGR) to assess whether there are matters of criminal relevance. It will now be up to the Public Prosecutor to find out whether, in the context of granting ruinous claims, which resulted in the loss of hundreds of millions of euros to CGD, crimes were committed and who was responsible.
Three companies evaluate shares
As the JE reported on 9 February this year, CGD has hired Vieira de Almeida (VdA), one of the largest law firms in Portugal, to assess lawsuits against former public bank managers who may be liable for the ruinous claims of the bank. between 2000 and 2015, which, according to EY's audit of Caixa's management, resulted in losses of 1,647 million euros in 186 credit operations. This was followed by two more: Linklaters and Serra Lopes, Cortes Martins, who also advised the bank in parallel due to incompatibilities of the office led by João Vieira de Almeida regarding some of the matters under analysis.
The legal assessment of the three law firms relates to the period in which the auditor EY detected credits granted with unfavorable risk analysis, without any advice to justify the decision or without due guarantees. In addition to inefficiencies in risk management, EY's audit also found bad credit granting.
Caixa's lawyers now want to establish legal liability for actions for damages that may be brought to court in the coming months. The hiring of law firms arose after, in October 2018, the Government of António Costa requested the bank's management to “take all steps to ascertain any responsibilities that may arise from the information contained in the report” of EY that was delivered to Caixa in July 2018. In a request addressed to Paulo Macedo, the Ministry of Finance also referred to the need “to take appropriate measures to defend CGD's equity situation”.
According to the same source, following the hiring of VdA by Caixa, declarative actions of condemnation (where compensation is required, presupposing a violation of a right), which may include former CGD directors (executives and non-executives) ), as well as former directors with responsibilities on the credit board.
Final report after summer
The lawyers' final report on the liability of Caixa's former managers regarding the ruinous credit to Vale do Lobo is due to be delivered to CGD management only after the summer. This forensic assessment comes at a time when a court inquiry into the harmful management of Caixa is ongoing and has no defendants yet, but according to the PGR, "due diligence is under way."
Until then, the legal analysis of CGD's lawyers thus focuses on fulfilling the due diligence duties of Caixa's former managers who must be taken care of in their professional practice, whose decisions must be careful and careful. And if it is found to be in breach, Caixa may be brought to court with joint liability lawsuits, lawsuits where for ex-managers to be convicted “it is not necessary that the liability be willful, it will be sufficient to prove that there was negligence”. The same source recalls that the law provides only for specific situations for managers who did not participate or voted overdue in decisions approved by management that were detrimental to the entities.
Article published in the July 1998 issue of the Jornal Económico