The Bank of Portugal is terrified at the prospect of Caixa Geral de Depósitos having to reveal to a committee of inquiry how much was lent to whom, stating today that this will bring "serious threats."
The committee of inquiry needs to have the details of these big loans to asses which ones were fraudulent, which ones involved kick-backs and why certain loans were given at all. This is the whole point of the committee’s existence.
With State-owned Caixa Geral being lined up for a massive recapitalisation (aka bail-out) the parliamentary committee of inquiry and the public want to know what went wrong the last time and whom to hold to account for a series of clearly misguided, or deliberately cushy, loans made to director's mates, those who later paid an under-the-counter lick-back to Caixa directors or to government friendly businesses that otherwise would not have qualified.
But the government want the recapitalisation to go ahead without the hideous truth being found out, or if found out, certainly kept from the public.
The collusion by the Bank of Portugal is another indication that its governor, Carlos Costa, (pictured) has something to hide as the right to ‘banking secrecy’ went out the window with Caixa Geral’s insolvency and desperate appeal for public money.
Costa fears “pernicious effects” on the financial system if Caixa Geral de Depósitos legally is required to hand over the list of big loans and says there will be “serious threats to the bond of trust that is absolutely indispensable to banking activity and its supervision."
"The information in question is likely to have detrimental impacts on the stability of the national financial system - a public interest that the Banco de Portugal has the task of pursuing," says the bank regulator in its argument to request the judgement by the Court of Appeal be overturned for Costa’s convenience.
Costa throws the kitchen sink at this one, so concerned that the Bank of Portugal yet again will be seen to have failed in its regulatory and supervisory roles.
"It is enough to think about matters such as access to credit, competition issues, commercial secrecy, and even the intimacy of the private lives of citizens and companies", claimed the Bank of Portugalin a feeble attempt to prevent the public, and the all-important committee of inquiry, knowing the truth
The January 18th judgment from the Court of Appeal may, in the view of the Bank of Portugal, "influence future decisions and legitimise the disclosure of information that would disrupt the stability of the financial system itself.”
As for the current directors of Caixa Geral, they state that the bank fears that disclosure will incur "incalculable losses."
These are attempts at a cover up of the truth at Caixa Geral that for years was run for the convenience of its directors with little or no supervision.
