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BusinessRato, on the bench: portrait of a “powerful” man who made fraud...

Rato, on the bench: portrait of a “powerful” man who made fraud and money laundering a “modus operandi”

After more than six hours of detailed presentation – spaced over three sessions – the anti-corruption prosecutor Elena Lorente stacked the papers she had on the table, took her glasses case and encouraged the court in charge of judging the alleged illicit origin of the fortune. of Rodrigo Rato not to look for complex mechanisms in his verdict. She did so by invoking one of the emails that José Manuel Fernández Norniella, Rato’s ‘squire’, sent to the former banker and in which he alluded to the philosophical tool of Ockham’s razor, which says that the simplest explanation is probably the most real. . “This could be a beginning for what you have to do from now on,” the prosecutor concluded.

It was the culmination of the accusatory report by Lorente, the prosecutor in charge of promoting the case against the former managing director of the International Monetary Fund (IMF) and vice president of the Government with José María Aznar (PP). An exhibition focused on refuting the theses of Rato’s defense, which he accused of having used “trompe l’oeil, traps and concealments” in favor of his defense. The following days, the former banker’s lawyer, María Massó, counterattacked, saying that the case was a “house of cards” that would collapse with just a few “breaths” and went back to the Roman Empire with a quote from Quintilian. “A quote that said that it is easier to cause wounds than to heal them and that we must be modest in our judgments so as not to fall into the common mistake of condemning what we do not understand,” she stated.

The court of the Provincial Court of Madrid will now be in charge of determining who is right. In her long presentation, the prosecutor worked to create a detailed portrait of the man whom some sectors pointed out for years as the architect of the Spanish economic miracle. In contrast to that figure, the prosecutor defined Rato as a “man accustomed to commanding,” with “extraordinary power,” but who made laundering and hiding funds a “modus operandi” and who now appears before Justice as a “fiscal stateless person” to avoid the high sentence to which he is exposed.

The Prosecutor’s Office is demanding more than sixty years in prison for him for allegedly defrauding more than 8.5 million euros and for the alleged bribes he collected when he was president of Bankia. He attributes 11 tax crimes and crimes of money laundering and corruption between individuals. The criminal activity that has led him to the bench for the third time would have begun in 1999, when he was minister and vice president, and would have continued to develop when he was president of the IMF, Caja Madrid and Bankia. Rato was already convicted for the Caja Madrid black card scandal and was acquitted of the Bankia IPO fiasco.

“Tax stateless”

In these three sessions, the representative of the Anti-Corruption Prosecutor’s Office tried to support the evidence gathered against Rato in more than seven years of a complex investigation, in which more than 70,000 documents were accumulated. The bulk of the investigation refers to the alleged tax fraud that he would have carried out in a two-way manner. On the one hand, hiding “asset pockets abroad” that were “unknown to the Spanish Treasury.” And, on the other hand, billing through “instrumental companies” for services that he provided personally, such as his hiring as an advisory director at Telefónica or the holding of conferences after his return to Spain after having directed the IMF, for which he was chiefly responsible among June 2004 and November 2007. In this way, the accusation says, he prevented taxation from “skyrocketing.”

One of the key elements at this point is to determine where Rato had his tax residence when he was managing director of the IMF. The Prosecutor’s Office attributes tax crimes to him in the years 2005, 2006 and 2007, which he declared in Spain but omitting part of his assets, and in which he would have defrauded almost 2.5 million euros. In his intervention, the prosecutor stated that although he resided in Washington, his tax domicile was in Spain. “It is being pretended that he was a stateless tax person,” she even said.

In response, the former banker’s lawyer said that this was one of the “whistles” that could overturn the “house of cards” built against Rato. According to Massó, he could not be a resident in Spain “in accordance with Spanish regulations”, which means that in those years there was no fraud. “If that is so, there would be no fee defrauded until July 2010, and therefore there is no fee to launder or connection,” she added. And she added that, consequently, the “monstrous accusation” against his client would decline.

The ““refined bleaching techniques”

However, the Prosecutor’s Office insists that all the amounts hidden from the Treasury were the subject of “up to eight refined laundering techniques” through “opaque accounts” and no less opaque financial “trusts.” All, according to the representative of the Public Ministry, with the objective of “breaking the trail of the origin of the money.” Among these tools is the so-called “Lombard credit,” which “consists of obtaining a loan with the sole guarantee of financial assets,” Lorente explained.

Other means of laundering would have been the supposed start-up of a hotel in Berlin or the “million-dollar capital increases” of some of its companies. “It was an activity carried out for years that denotes a whitewashing action in an unquestionable way, practically like a modus operandi,” the prosecutor said bluntly.

The third leg of the case is the alleged irregularities of Rato’s time at Bankia, whose presidency he became in 2010 in the midst of a power struggle between Mariano Rajoy and Esperanza Aguirre, who preferred Ignacio González for that position. Rato held that position until May 2012. The Prosecutor’s Office maintains that knowing that advertising expenses due to the expansion of the brand and its IPO were going to be high, Rato tried to “take personal financial advantage.”

To do this, Lorente explained, he surrounded himself with his most loyal collaborators, who formed what the prosecutor defined as a true “pressure group” in the entity. According to calculations by the Public Ministry, the former politician and former banker pocketed 835,025 euros in commissions for mediating so that the Publicis and Zenith agencies obtained advertising contracts from Bankia in 2011 and 2012 valued at around 50 million euros. The former minister’s lawyer defended that there was “no irregularity” in that process.

The Prosecutor’s Office also highlights the “particularly relevant” collaboration that his former brother-in-law Santiago Alarcó and tax advisor Domingo Plazas would have had in Rato’s fraudulent operations. The first is accused of allegedly managing his accounts abroad and managing the corporate structures that “served” his interests. Plazas that, for his part, managed the Kradonara company, considered the main piece of the former minister’s businesses; and organized the “repatriation” of part of the amounts. It is the same company that, according to the accusation, he used to collect money from bribes for Bankia advertising.

This investigation began after it became known that Rato took advantage of the tax amnesty approved by the Government of Mariano Rajoy in 2012. Before the court, Rato acknowledged that he had “made a mistake” in taking advantage of that measure, since he mistakenly thought that it was “ the easiest way” to surface the funds he had in three companies abroad. In her report, the prosecutor insisted that “far from having regularized [fondos] neither administratively nor, even less so, criminally” did he use that measure “as a vehicle for laundering or cleaning up the illicit defrauded fees that he had been carrying for years.” His defense, however, insisted that, in this way, he had “erased the crime.” The last word will be the judges who during the last four months have heard the accusations, the accused and the dozens of witnesses who have appeared before the court.

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