Left Bloc politician João Semedo said on Wednesday that Prime Minister Pedro Passos Coelho immediately must set up an inquiry into the leak of information leading up to the BES collapse and subsequent 'solution,' so that there is a "complete understanding" as to how hedge funds made millions and well placed companies could bail out before the individual investor had been alerted.
"We do not understand why the Government says nothing, does nothing, clarifies nothing. We consider it an urgent matter that the Prime Minister sets up an inquiry run by a judge appointed by the Supreme Judicial Council with a report to be submitted to the Council of Ministers, so there is a complete clarification," said a hopeful Semedo at a press conference at party headquarters.
Stressing that the leaks can not go unpunished, João Semedo defended also the need for transparency, clear information and an explanation as to what went on so we all can see which regulatory institutions are at fault.
Semedo named two people who must have got the nod, Luis Marques Mendes and José Luís Arnaut. The first, a journalist at SIC who announced the Bank of Portugal plan to try to save BES, 24 hours in advance of it happening.
The second was José Luís Arnaut of Lehman Brothers who managed to shift 4 million BES shares marginally before the company went down the tubes.
According to Semedo, information clearly was leaked to several people. "Everyone knows which companies were able to withdraw money in time."
Semedo refers to Goldman Sachs, "The leaks can not go unpunished," said Semedo as the government stays silent, save for the dull mantra to be heard from the Ministry of Finance that "taxpayers' money is not at risk" which fails now to convince even the most ardent party supporter.
Finance Minister, Maria Luís Alburque, is noticeable by her lack of engagement with the BES collapse and subsequent collateral damage. The taxpayer now is exposed to over €10 billion due to the BES bailout, which she denies is the case.
It is the case. In addition to the loan to Novo Banco from the Resolution Fund, and emergency credit to BES from the Bank of Portugal, the State also spent €3.5 billion on buying BES paper, yet Albuquerque denies that the State, ergo the taxpayer, is exposed at all.
Within six months, the reincarnated BES - Novo Banco - will have to pay back three bond issues totalling €3,5 billion which are backed by a guarantee from the Portuguese Republic.
During 2011 and 2012, when international markets were closed to the Portuguese financial sector, BES and other Portuguese banks held public debt issues taking full advantage of a state backed warranty. The BES issues amounted to €4.25 billion according to data from the General State Accounts which the Finance Minister will be familiar with.
Currently due to be repaid are the three bonds with a value of €3.5 billion which now appear under the list of credits that were transferred to Novo Banco. The repayment dates are in December this year and January and February 2015.
If Novo Banco is unable to repay these credits, the Portuguese State will assume this debt, i.e. the taxpayer pays.
Secondly the government agreed to lend the Resolution Fund €3.9 billion so the fund could inject capital into Novo Banco. The money from a future sale of Novo Banco then will be paid back to the Resolution Fund and the state will get taxpayers' cash back.
The big 'but' is if the money raised by selling Novo Banco is less than €3.9 billion, the Bank of Portugal and the Government will have to get the money back from those Portuguese financial institutions that are still in business, using their annual contributions to the now empty Resolution Fund which last year was a paltry €200 million, even after a special levy on the banking sector.
Lastly, the emegency loan to BES from the Bank of Portugal, another €3.5 billion, will not be repaid if Novo Banco sinks majestically below the financial waves. This loan of course is backed by João the Taxpayer whose total exposure to this mess now exceeds €10 billion, and counting...
Passos Coelho and Maria Luís Albuquerque repeatedly have stated that the state is not taking any risks with the BES solution devised by the Bank of Portugal; as can been read above, the taxpayer is underwriting the lot as it is unlikely a sale of BES, one option for Vitor Bento, will get anywhere near €10 billion even now it has been washed clean of all its bad debts.
