The judge of the National Court José Luis Calama has completed the investigation of the Banco Popular case and proposes to try the former president of the entity Ángel Ron, twelve other directors and the consulting firm PriceWaterhouseCoopers (PwC) for crimes of defrauding investors and accounting falsehood in the capital increase in 2016 to which investors were “deceived”, since the financial statements of that year and 2015 “did not reflect the true image of the balance sheet or the assets”.
In the order to move to an abbreviated procedure, the magistrate agrees to the provisional dismissal for former president Emilio Saracho as he had not had any intervention in the violations of the accounting regulations, but, on the contrary, says the judge, he took measures to check and Evaluate the bank's balance sheet.
Furthermore, he points out that it has not been possible to verify that he was responsible for the “serious leaks” to the press that accelerated the flight of deposits suffered by Banco Popular.
The 178-page resolution considers it proven that on May 25, 2016, the Board of Directors of Banco Popular, chaired by Ángel Ron, decided to carry out and execute the capital increase agreed upon at the General Shareholders' Meeting on April 11. . Prior to that meeting, a call for the Board's Audit Committee took place that same day, whose second item on the agenda was “the approval of a favorable report for the capital increase.”
The resolution indicates that the Audit Commission issued a report favorable to the expansion, without having any detailed written study that could be the subject of debate. PwC's external auditors were present at that meeting, and they did not warn the members of said commission of any problem in BP's accounts (annual-2015- and quarterly-2016-) in view of the capital increase.
Regarding the capital increase brochure, the order explains, “consciously altered financial information is offered (which hid enormous provision deficits from investors) taken from the annual accounts for 2015 (audited by PwC) and the financial statements. as of 03/31/2016 (with limited report from said auditor).”
If the provisions not reflected in the balance sheets of Banco Popular - as of 12/31/2015 and 03/31/2016 - had been reflected in them, the instructor adds, “the accounting result of the profit and loss account would have shown at least 2,500 million losses. , instead of the profits declared” by the entity, apart from substantially altering numerous ratios of the accounts, which are used by investors for their financial analysis.
The magistrate emphasizes that PwC did not record any qualifications in its audit report on the 2015 annual accounts, nor in the interim financial statements as of March 31, 2016.
Regarding the marketing of the capital increase, the magistrate reports that veiled instructions were given to the commercial network, by order of the CEO Francisco Gómez, in order to finance the purchase of shares for many clients, despite the fact that it was expressly prohibited. in the Risk Policies Manual of Banco Popular. The amount financed, he adds, was not subtracted from the regulatory capital that affected the bank, which is why a distorted figure was offered to the market.
The order also refers to the Thesan structure, consisting of the creation of companies in Luxembourg with the sole purpose of channeling BP credits to these companies with the aim of subsequently transferring those loans to certain Popular borrowers, in order to avoid that they were classified as doubtful credits and, therefore, avoid the provision of hundreds of millions of provisions.
The hidden provision deficit in BP's 2015 annual accounts remained during the 2016 interim financial statements and was only partially corrected, it says, in the 2016 annual accounts.
The judge explains that the crime of swindling investors could have been committed through the capital increase that Banco Popular marketed in 2016. He points out that he has no doubt that the investors who came to subscribe to said increase were deceived, every time. that BP's consolidated annual accounts for 2015 and the financial statements for the first quarter of 2016 did not reflect a true image of the balance sheet or equity of said Entity. These accounts, according to the magistrate, hid a significant deficit in provisions.
Calama describes the bank's operation, which consisted of refinancing a relevant part of large borrowers in a situation of non-payment of installments, granting them terms that avoided their formal default or using instrumental corporate structures based in Luxembourg in order to maintain viable loans that in reality were doubtful
The magistrate indicates that if the doubtful credits had been correctly classified, Popular would have exceeded 2,500 million in accounting losses, a figure that is accredited "only taking into account the deficits detected in the two OSI inspections and computing the Thesan deficit."
According to the judge, the conscious collaboration of the external auditor (PWC) contributed to this situation since he did not record any reservations in his audit report of the annual accounts of Banco Popular for the year 2015 or in the limited report regarding the financial reports of the first quarter of 2016.
The head of the Court of Instruction Four also attributes to those investigated a crime of accounting falsehood perpetrated successively in the annual accounts of 2015, in the interim financial statements of 2016 and in the annual accounts of this last year.
Calama explains that the actions of the supervisors (CNMV/BdE/BCE) have been left outside the walls of the investigation, since from the beginning of the criminal investigation this was established since it is not up to the judicial body to determine whether the supervision system worked correctly or not. and adds that other areas will have to consider whether or not they lived up to their important institutional mission.
Regarding the possible civil liability of Banco Santander, the judge explains that the operative part of the order does not mention this possibility and that, as suggested by the Criminal Chamber, it will be at the time of issuing the order to open the trial. orally when addressing this issue.
