Ricardo Salgado, who was recently forced to quit as head of stricken Portuguese bank Banco Espirito Santo (BES), was arrested on Thursday in connection with money-laundering.
Prosecutors said 70-year-old Mr Salgado was arrested early in the day at his home near Lisbon and brought before a judge. The arrest, which relates to a long-running investigation into money-laundering and tax evasion, came a day after several premises in the Espirito Santo group were searched on Wednesday.
Mr Salgado had been a voluntary witness in the probe and said in January 2013 that he had always paid his taxes and was not a suspect. At the time, the prosecutor’s office confirmed he was not suspected of any crimes
Mr Salgado had run BES for 23 years until he was forced out of office on June 20 as pressure rose amid allegations of accounting irregularities in some of its holding companies.
The bank itself is the biggest private bank in Portugal, where it has interests in many sectors of the economy.
BES shares have plunged as the crisis surrounding it gathered pace in recent weeks, raising concerns about possible repercussions on the Portuguese banking system and economy, but the central bank has said that it is confident that shareholders in the overall group would come forward if necessary.
Separately on Thursday, Carlos Tavares, head of Portugal’s CMVM securities markets watchdog, said that in the past six years his regulator had scrutinised the family’s Espirito Santo Group on various occasions and found signs of possible illegal activity of which it had alerted prosecutors.
Speaking to a parliamentary committee, Mr Tavares cited what he described as “signs of abuse of insider information and possible crime of confidence abuse”.
The prosecutor’s office said last week it had several investigations under way into the situation around the Espirito Santo empire.
On Monday the president of Portugal warned that the financial crisis gripping BES could affect the country’s economy. President Anibal Cavaco Silva voiced his concerns over the family business which owns a stake in Portugal’s second-largest bank, after the company filed for creditor protection, saying it can’t meet its obligations.
“If some citizens, some investors suffer significant losses (from the Espirito Santo group) they may delay investment decisions, or some of them may find themselves in very big difficulties,” Mr Cavaco Silva said.
“We cannot ignore that there will be some impact on the real economy.”
Portugal, which in May emerged from an EU/IMF bailout it had to take during the eurozone debt crisis, is expecting its economy to grow by 1pc this year, the first year of growth since 2011.
However, Espirito Santo International, which partially owns Banco Espirito Santo (BES), said in a statement last week that “due to a significant part of its debt maturing” it has applied to be placed under “controlled management” under Luxembourg law, where it is based.
“The controlled management regime will allow the company to defend the interests of its creditors in a transparent and orderly way under the control of the courts and nominated officials, particularly allowing a process of managing the value of the assets for creditors that is more adequate than a rapid and massive liquidation,” the company said in a statement.
Vitor Bento, the new chief executive of BES after Ricardo Espirito Santo Salgado, the family patriarch, resigned from the position, told clients in a message on Monday that he was “working hard to regain the confidence of markets, to generate sustainable benefits and to open a new chapter for the bank”.
In a complex arrangement, Espirito Santo International owns 100pc of RioForte, another holding company, which in turns owns just under 50pc of Espirito Santo Financial Group, which owns 20pc of BES.
Espirito Santo International’s move on Friday night, after markets had closed, came just hours after Portuguese prosecutors said they were investigating the family’s web of businesses.
“There are inquiries under way related to this matter that even pre-date the reports of the past few weeks,” the prosecutors said.
Luxembourg’s justice authorities have already started an investigation into three of the family’s holding companies.
In May, Espirito Santo Financial Group claimed it had found “serious irregularities” in the accounts of Espirito Santo International, including “overvaluations of assets”.
Last month BES rattled European stock and bond markets as the spectre of the eurozone debt crisis was raised again. Fears over BES were triggered by the accounts claims and the fact that Espirito Santo Financial Group missed a payment on short-term debt. Alarm was compounded by the group’s structure, which has been controlled by the Espirito Santo family for nearly 100 years.
Portugal’s central bank governor said on Friday that BES should be able to tap private investors if it needs to boost its defences against losses. Earlier this week the lender appointed three new executives to replace Espirito Santo family members in a bid to distance itself from the financially troubled empire.
Source: The Telegraph