The Court of Auditors has criticised the Ministry of Finance for "a lack of control" over Caixa Geral de Depósitos between 2013 and 2015.
The audit report conducted by the Ministry of Finance for the period between 2013 and 2015, refers to a "lack of state control" of the State-owned bank in that period after the 2012 recapitalisation when taxpayers were obliged to throw €1.65 billion at the troubled lender.
The Court of Auditors lists situations in which it considers that the Ministry of Finance, which for the greater part of that period was under the management of Maria Luís Albuquerque, (pictured), should have exercised greater control.
"Caixa Geral’s control lacked transparency, particularly evidenced by the non-referral to the shareholder (the State) of the documents required by the legal system of the Public Business Sector," says the Court, concluding that "the approval of Caixa Geral’s accounts was made with gaps in the information."
This is due to the "lack of knowledge" of Caixa Geral’s management tools, not only by the Technical Unit for Monitoring Public Sector Business, but also by the Directorate General of Treasury and Finance – in other words, the Minister did not know how Caixa Geral operated yet was happy for it to carry on despite the dire financial state it was in.
Thus, according to the Court of Auditors, this information was not incorporated in the process of assessing the financial statements, "which the shareholder approved without full information."
In the report on the fourth quarter of 2015, the Court of Auditors points to the situation at Novo Banco, where "the audit committee warned of the need for information to be made available in order to caution and evaluate the possible impacts on Caixa Geral." This did not happen.
Despite the existence of impairments of €1.5 billion and Caixa Geral’s exposure of €4.5 billion, there was no evidence at all that Caixa Geral had been subject to even the most cursory inspection by the General Inspectorate of Finance as requested by the State.
Overall, Maria Luís Albuquerque allowed Caixa Geral to carry on despite the bank having severe internal weaknesses leading to it being run in a risky manner.
In a case of 'horse' and 'stable door', The Ministry of Finance, now being run by Mario Centeno, responded to the Court of Auditors, saying it now is "firmly committed" to increasing control over the State Business Sector, which includes Caixa Geral that now is in such a deplorable state that it needs around €4 billion in extra money from the taxpayer to be restructured.
In turn, Caixa Geral refuted the criticism of "insufficient control" by the State, saying it had been adequately supervised.
In fact the directors had been allowed to get away with running the State-owned bank very much as they liked without much involvement at all from the Finance Ministry.
This lack of supervision should be no surprise to readers. The reckless lending policies at Caixa Geral that favoured a group of elite businessmen has led the bank to the brink of collapse with the taxpayer again picking up the tab.
