Consumer champion DECO is taking the Bank of Portugal and the stock market regulator CMVM to court on behalf of over 2,000 small shareholders in Banco Espírito Santo.
DECO is to claim compensation for the financial damage caused to Banco Espírito Santo customers who were not warned of the true state of affairs at BES and associated group companies.
Ana Cristina Tapadinha from DECO said that the case was delivered to the administrative court in Lisbon on Monday and that BES and CMVM "acted negligently in the conduct of their businesses and concealed the liability that the bank had."
DECO, which so far has received 2,753 complaints from small shareholders, already has been to the Lisbon civil court in early February to lodge a case against BES, its auditor KPMG, its disgraced former chief executive Ricardo Salgado, and other members of the Espírito Santo family, plus 27 former directors and members of BES audit committee.
DECO claims that, regarding the Bank of Portugal it is taking action because there was a violation of political and legislative functions and therefore small investors in Banco Espírito Santo should be compensated.
According to the DECO, the Bank of Portugal and the Finance Minister Maria Luís Albuquerque knew full well the dire problems that BES was having before it successfully raised more capital on the open market their blessing, and well before it was split up into good and bad bank.
Despite this knowledge, the Bank of Portugal and the Finance Minister did nothing except issue statements of confidence in BES to encourage small shareholders to invest in ultimately worthless BES shares.
DECO claims that had investors known what the Bank of Portugal, the Finance Minister and the market regulator knew, investors would not have taken up more shares in the company and would have had time to decide whether to hold or sell their existing shareholdings.
With regard to the Bank of Portugal, DECO claims that the bank’s management knew since at least September 2013 of the problems in the non-financial part of Grupo Espírito Santo, the affect this could have on the banking part and still did nothing.
With regard to action against the stock market regulator, DECO’s Ana Cristina Tapadinha pointed out that this has to do with the "failure of communication between regulators" which could have limited the damage.
"CMVM had the power, knowing in advance what was going on in the non-financial part of Grupo Espírito Santo, to adopt other measures and did not, nor did it inform investors," claims DECO which added that there was a "total and absolute failure of oversight and supervision by the public entities that are meant to provide information, so the information was distorted which led consumers to hold onto the shares they had, or to subscribe to the capital increase."
The DECO information comes on a day when another Novo Banco branch has been stormed by 50 angry BES shareholders and investors all of whom have lost money.
Last week Oporto, this week Coimbra where the police were called to deal with a loud crowd of protestors who were demanding the return of the money.
Today’s protest started with 100 disgruntled pensioners at the Bank of Portugal branch in Coimbra who then walked to a Novo Banco branch, chanting, "we want our money," interspersed with singing the obligatory ‘Grândola Vila Morena’ before going back to chanting "thieves", "do not give up" and "the bank is ours."
True to form, the Bank of Portugal today blamed the stock market regulator for the mess as Bank of Portugal governor Carlos Costa continues to develop intriguing ways to save his own skin.
Costa wrote today to Carlos Tavares, the president of CMVM, indicating that the complaints the Bank of Portugal has been receiving from investors in Espírito Santo Group companies must be answered by Carlos Tavares.
Meanwhile the parliamentary committee of inquiry continues to investigate ‘the practices of the previous BES management, the role of the external auditors and the relationship between BES and Espírito Santo Group companies, in particular the methods used by BES to finance these entities."
