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Bankia scandal touches raw nerve

Friday, October 17, 2014 - 02:18

Spain's High Court orders former senior executives at bailed-out lender Bankia to hand over several million euros as it investigates the alleged misuse of company credit cards. As David Pollard reports, the high-profile corruption scandal is touching a nerve amongst Spaniards emerging from the country's downturn.

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Rodrigo Rato - a one-time IMF chief - emerged from the court to shouts of 'thief' over allegations he misused company credit cards when chairman of Bankia. The court ordered him to pay three million euros to avoid having his assets blocked. His predecessor, Miguel Blesa, was told to pay 16 million euros. The high-profile corruption scandal has dominated Spain's headlines in recent weeks - the scandal touching a nerve as Spain emerges from its downturn - after a slew of corruption cases involving politicians and the King's sister. (SOUNDBITE) (Spanish) MADRID RESIDENT TERESA CABRERO, SAYING: "It is shameful, especially with the situation we are in in Spain. This is a person who had a very big political responsibility and I think it's all wrong." (SOUNDBITE) (Spanish) MADRID RESIDENT FRANCISCO RODRIGUEZ, SAYING: ''I think it affects how we run a democracy. We have a weak democracy, and with these cases you can imagine how we feel." Bankia swallowed up nearly half of a 41 billion euro rescue from Europe in 2012. And thousands of Spaniards who bought shares when it listed on the stock market lost money. Investigators are looking at whether Rato, Blesa and up to 84 other executives inappropriately spent over 15 million euros on undeclared credit cards between 2003 and 2012. It's alleged the cards were used for personal expenses such as clothing, food and trips. For investors, it's another banking scandal they don't need, says Mike Ingram, market analyst at BGC. The sector still has much to do to restore its image. (SOUNDBITE) (English) MIKE INGRAM, MARKET ANALYST AT BGC PARTNERS, SAYING: ''There is of course an argument that many of the people who were perhaps responsible for some of these lapses and this cultural malaise are still there. It's certainly something that Mark Carney was keen to opine over the last week or so. So I think we're dealing with something which may be a generational issue. Yes bankers may be able to restore their reputation, but we could be talking about many, many years in the future.'' Rato is reported to have told the court he didn't know there was anything wrong in using the cards. Blesa is said to have explained that the credit card system had been in place since 1988 - and was seen as a way of compensating board members for some of the costs they incurred.

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Bankia scandal touches raw nerve

Friday, October 17, 2014 - 02:18