Three members of the new board at State-owned Caixa Geral de Depósitos are prepared to quit if they have to submit their tax returns and asset statements to the Constitutional Court.
The Social Democrats and Left Bloc have presented a joint proposal to Parliament to lower these directors’ ‘millionaire salaries’ and force managers to submit their tax returns, as is expected of those in this category of public position.
The new leader of the board, multi-millionaire António Domingues, says he has checked out his legal position and does not have to be treated like a public employee despite Caixa Geral being owned by the State.
Members of the new board say they have no intention of voluntarily surrendering their income statements despite increasing pressure from MPs and the media. The deadline for income submissions was this Monday and now it is up to the Constitutional court to decide who is right and who is wrong.
It is deeply disturbing that these three directors are unwilling to act in an open and transparent manner, charged as they are with restoring order and discipline to a bank that for years was run by a series of directors whose aim was self-enrichment rather than focusing on shareholder profits to ease the burden of the Portuguese taxpayer.
The prime minister has stayed clear of this mess, stating only that it is a legal matter for the Court to decide.
Domingues already has negotiated hugely enhanced salaried for himself and his fellow directors, endorsed by the Finance Minister, but the unwillingness to follow long-agreed rules for income disclosure for those in senior State-funded positions should set alarm bells ringing.
As for his work, one of the immediate problems that Domingues needs to address is the La Seda case which is set to cost the bank upwards of €900 million in a failed Spanish investment promoted by José Sócreates.
Ten years ago, Caixa Geral de Depósitos got involved in the investment and financing of La Seda, a Spanish company that was already in difficulties.
La Seda received €123 million in investment from Caixa Geral plus a loan of €75 million. Artland, a supplier to La Seda, received investment of €225 million and has loans outstanding of €520 million and Selenis, a Portuguese shareholder in La Seda, which still owes €165 million. All companies collapsed and the loans will not be recovered.
The investment was a political decision made by the then Prime Minister José Sócrates and his Economy Minister, Manuel Pinho, (pictured below) who argued that Portuguese companies should have an ‘Iberian profile.’ This political meddling in the bank's lending policy cost Caixa nearly €1 billion which has been accounted for in previous years' accounts.
In addition to La Seda, which will be investigated in the wide-ranging review of Caixa Geral’s more suspicious investments, loans made to Banco Comercial Português shareholders in 2007 of over €1 billion also needs further investigation.
The bank clearly has been out of the control of its directors and public scrutiny for decades with politicians able to channel loans into politically motivated 'investments' with disatrous results.
Former Prime Minister José Sócrates and Economy Minister, Manuel Pinho
