Secret report on BES case should be disclosed? "Can avoid mistakes of the past", says João Costa Pinto – O Jornal Económico

Secret report on BES case should be disclosed? "Can avoid mistakes of the past", says João Costa Pinto - O Jornal Económico


The disclosure of "what is contained in the report" about the Bank of Portugal's (BdP) performance in the BES case "can be very useful" and "avoid repeating past mistakes," João Costa Pinto assured the deputies of the II (CPI) to the recapitalization of CGD and to the management of the bank they are listening to on Wednesday, April 10, the former chairman of the audit board of the Bank of Portugal (BdP).

The defense in the disclosure of this report by the former chairman of the BoA audit board came in response to BE deputy Mariana Mortágua, who questioned Joao Costa Pinto about whether he "thinks that content [do relatório secreto, cujas conclusões terão sido muito críticas à atuação do supervisor] should be publicized. "

Mr Costa Pinto has not yet remembered, "and it is not for lack of it", that questions concerning credit misconduct at CGD were taken to a meeting of the board of directors of the Bank of Portugal, where he served as chairman of the board supervisor from October 2014 to May 2018.

João Costa Pinto's response was given to the Socialist deputy, João Paulo Correia, who questioned the former chairman of the BOD's audit board on whether the topic Caixa Geral de Depósitos was ever taken to the boards of BOP, where Costa Pinto participated , in particular the alerts of the quarterly reports of the audit committee of the public bank that were sent to the regulator, reporting on "non-compliance with the credit monitoring policy" in CGD.

João Costa Pinto, who was responsible for the "secret" report on the performance of Carlos Costa and the supervisor in the case of BES, which is requested by the PS and Bloque de Esquerda, also stressed at the hearing: "as far as I am aware of the nature of the problems for credits [na CGD], it is mainly by the press. "

It is recalled that blocs and socialists intend to analyze faults of the supervisor in the BES case that could be extended to CGD, requiring the PS the secret report to evaluate CGD's exposure to BES.

On this presentation, MP of the PS, João Paulo Correia, questioned the former chairman of the Board of Auditors of the Bop as to whether that secret report has any chapter of what was the GES / BES exposure to other banks, namely CGD, or through actions , bonds and loans granted, upon the resolution of BES.

"It was not the subject of the independent commission (which evaluated the BOP's action in the BES case). Neither was this subject of concern, so it is not reflected in the report, "said João Costa Pinto.

The conclusions of the document, about 600 pages, point to criticisms of the performance of the current governor of the Bank of Portugal, Carlos Costa, but also of the former, Vítor Constâncio, in relation to the Espírito Santo family bank that came to be the target of a resolution in August 2014.

This is one of the documents that both the Socialists and the blockers asked to have access under the new CPI to CGD, created after the disclosure of the audit report of EY to the management of the Caixa between 2000 and 2015, which concluded for losses of 1,647 million 18 credit operations that turned out to be ruinous. This report has also been requested in court by former bank leader Ricardo Salgado.

In early March, the JE reported that the PS joined BE in the request of the internal report that evaluated the performance of the Bank of Portugal in the BES case. While blockers want to analyze supervisor failures that could be extended to CGD, the Socialists require a secret audit to assess CGD's exposure to BES.

The parties, like the CDS, want access to the internal report that evaluated the supervisor's action in the BES case to confront the BOP governor in the new CPI to the management of the Caixa who intends to go further than the previous one in the facts which caused losses of millions of euros in the public bank.

For BE deputy Mariana Mortágua, this report is fundamental for the Parliamentary Commission of Inquiry to carry out an integrated evaluation of the performance of the Bank of Portugal in the financial system. "In addition to the retrospective analysis, it is important to assess whether there has in fact been a change in practices on the part of the regulator, as a result of the experience gained in past cases", justifies Mrs Bloquista in her request for a secret report.

The Socialists also included this secret report in the list of documents requested by the party, handed over to Parliament under the new CPI to the Caixa. According to the deputy of the PS, João Paulo Correia, justified to the JE, the objective is to "gauge CGD's exposure to BES".

Even before the resolution of BES, on August 3, 2014, it was reported that CGD's exposure to companies owned by the Espírito Santo Group was around 300 million euros, but all credits had real guarantees such as shares or real estate. Among the companies that were financed with CGD was Espírito Santo International, which controlled the Espírito Santo Financial Group (ESFG), then BES's largest shareholder, and in the meantime, both companies had been declared insolvent.

The secret report was requested by the BES parliamentary inquiry committee that the supervisor did not want to hand over in 2015. It was again requested the following year by leftist deputies in the Banif case inquiry commission, but the document that was prepared by the Bank of Portugal's evaluation and decision-making committee for the supervision of BES, with the technical support of consulting firm Boston Consulting Group (BCG). Now, in the new committee of inquiry to CGD, Parliament again requested the report from the BOP and obtained a new refusal to hand over the document that risks never seeing the light of day.

The BOP argued in 2016 that it does not have to make available "information or documents whose content has no connection with the resolution measure" and therefore considered them subject to "professional secrecy". An argument that will now be more difficult to use in the face of the new banking transparency law, which will oblige banks to send information under bank and professional secrecy to the commissions of inquiry and should be useful to the new CGD management inquiry.

The BES's self-assessment in the BES case leaves criticisms of the supervisor's actions and points out failures in the follow-up done to the bank, he told Jornal Econômico source close to the process, confirming the doubts left by the internal evaluation committee, reported by Jornal de Negócios March 23, 2016, when he reported that the report known as Costa Pinto, inheriting the name of the chairman of the audit board of the governor that led it, goes until the beginning of the last decade.

The commission's mission

The report on the performance of the regulator in the BES case results from the creation of an evaluation committee determined by the governor of the BOP following the process that led to the application of the resolution measure to BES on August 3, 2014 and the injection of 4, 9 billion euros bank that resulted from the collapse of the institution that was led by Ricardo Salgado. This commission was charged with evaluating the BOP's performance in the three years preceding the application of the resolution measure to BES to "identify possible deficiencies and opportunities for improvement in the organization and in the supervisory processes".

Without ever releasing the report, the BOP has only assumed, after its conclusion, that it should in future have a special concern to take "supervision decisions in a more timely and determined manner, even if this entails a greater risk of litigation." A lesson taken by the supervisor as part of his role in the BES case, which is among the 19 recommendations resulting from the internal audit carried out after the bank's fall.

This evaluation committee was chaired by the chairman of the BoP audit board, João Costa Pinto, and integrated the consultants of supervisor Maximiano Pinheiro and Norberto Rosa. It is recalled that this former former BOP consultant was also a director of CGD (between 2005 and 2010) and was the most recent case of a former Caixa manager who needed the ECB's endorsement to perform banking functions. This former Caixa manager recently spent six months waiting for the ECB's green light to join the BCP team, in which he was appointed to the position of chairman of the BCP Audit Committee, and eventually quit.



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