Ricardo Salgado first was forced out of one of the top jobs in Portuguese banking as chief executive of Banco Espirito Santo amid family disquiet over his behaviour and the direction of his moral compass.
That was in June; now Salgado has suffered the embarrassment of being arrested as part of the long-running Monte Branco money laundering and tax evasion investigation - he was whisked away from his Cascais home in a police car at 08.30 this morning.
The government prosecutor said that Salgado was arrested at his home near Lisbon and whisked off to a ‘meeting without coffee’ with the formidable Carlos Alexandre. Salgado managed to scramble two lawyers to join him, a wise move in his situation.
Several business premises housing Espirito Santo companies were searched by police on Wednesday and Salgado’s arrest only hours later suggests that sufficient additional evidence may have been uncovered to warrant arresting the man whose business and government connections are legendary.
The BES structure is a complicated one, its design best being understood by the family that until recently controlled it. Ricardo Salgado is the grandson of the founder of the bank and should he be convicted of any of the crimes of which he will be charged, his family disgrace will be complete as he approaches his 71st year.
Curently, Espirito Santo International owns 100% of Rioforte which in turns owns around 50% of Espirito Santo Financial Group, which owns 20% of high street bank BES.
The Monte Branco investigation has been going on for a while and Salgado said at the beginning of the year that he was not considered a suspect. He also claimed he always paid his taxes which would be unique in his elevated position. Indeed, Salgado’s web of offshore companies and frequent mention of his name in several fraud cases makes this a claim that is unlikely to be true.
Salgado has yet to explain the €12 million in transfers made to his offshore company Savoices by the builder José Guilherme, or indeed his involvement in the sale of EDP Renewables and the privatization of REN.
EDP privatisation where despite advising the government on the sale, Salgado purchased shares and the pre-offer price, selling them days later a at tidy personal profit.
Salgado’s pattern of behaviour was highlighted by a top BES Group accountant who came clean over irregularities in some BES company accounts dating back several years including over-valuation of assets and dodgy Angolan indemnities. Then there was the widely publicised default on Rioforte's bond repayment to Portugal Telecom and the filing for creditor protection in a Luxembourg court for Espirito Santo International and Rioforte.
These events have seen Salgado’s reputation follow the share price down the tubes as far as the sewer.
Luxembourg protection is no guarantee of a soft time as the country’s authorities already have started an investigation into three Espirito Santo family holding companies.
At last the head of Portugal’s market regulator has admitted that after a six year investigation into the Espirito Santo Group he had evidence of ‘possible illegal activity,’ most likely insider trading, and has forwarded his case file to the state prosecutors.
New BES boss Vitor Bento has sent a message of good cheer to anyone who knows him saying he is working hard to regain the confidence of markets, against a background of concern from the usually quiet Portuguese president Cavaco Silva.
The Prime Minister and Finance Minister have united to offer the government’s view on this unfolding scandal; it is nothing to do with them, it is the shareholders who will take the hit and don’t even think about a bailout.
If the Espirito Santo Group goes under and the BES high street bank is affected, the company’s most visible asset, the ministers may regret their rather high-handed approach and care to recall the last bailout of a Portuguese bank which cost the taxpayer €3 billion.
