Three London Court of Appeal judges unanimously have ruled that the legal dispute between Novo Banco and the US bank Goldman Sachs will have to be resolved in Portugal and not in the British courts.
This decision overturned a lower court decision in August that stated that the loan set arranged by Goldman Sachs in favour of the former Banco Espírito Santo (BES) just two months before it collapsed, could be heard in London.
Novo Banco, now run by António Ramalho, had argued that the case should be heard in Portugal with Goldman Sachs wanting the case to be judged in London in what it sees as a more competent and skilled framework when dealing with complex financial matters.
Novo Banco today said that the London court agreed with the decision of the Bank of Portugal that the case came under Portuguese law and that the proper place for the action to take place is in Portugal where the Administrative Court of Lisbon now will handle the battle over the €765 million 'disappearing loan.'
The money was credited to BES in June 2014 by Oak Finance, an investment vehicle set up by Goldman Sachs which was made up of several powerful funds.
BES then went bust in August 2014 and after its mutation into Novo Banco, the debt was taken on by Novo Banco as a liability.
In December 2014, the Bank of Portugal, led by Carlos Costa, shifted this liability from the recently refinanced ‘good bank’ Novo Banco to ‘bad bank’, the old BES which had no way of repaying such an amount.
The legal action to recover the debt that Carols Costa had wiped out with his magic wand was filed in the summer of 2015 by the group of international investors in Oak Finance which included a New Zealand state pension fund.
That case was opened after Novo Banco failed to pay the first installment of the loan in question, with the bank chaired by Eduardo Stock da Cunha considering itself free of this responsibility, but due only to some nifty and unethical financial footwork.
Much as the world dislikes Goldmnan Sachs, it has a good case against Novo Banco which, in collusion with the Bank of Portugal, stripped out a loan that was repayable when part of Novo Banco, and in effect was written off when is passed back to the BES ‘bad bank’ which was, and remains, deeply insolvent with billions in liabilities and scant few remaining assets.
Goldman Sachs will not be best pleased that the hearing now will be in Portugal where it rightly assumes that political interference is more likely than in London.
