In 2006, Prime Minister, José Sócrates, learned of an investment project through Hélder Bataglia, for the purchase of the luxury Vale do Lobo development in the Algarve.
The project relied on bank financing because potential investors wanted to use as little equity as possible and the price was high - around €230 million. Also, the value of the project could change if pending alterations were made to land zoning to limit the possibility of building in areas where building already had started.
At that time, Armando Vara was a director of Caixa Geral de Depósitos (CGD), appointed by his friend, José Sócrates.
Vara spoke to Sócrates about the possibility of CGD financing, taking into account the high loan amount needed and the need for the bank to take a share in the company as private investors were willing only to stump up €5 million to €6 million. In addition to the initial loan, further financing would be necessary for the development of the project.
Vara therefore conveyed to José Sócrates that if CGD did the financing, investors Diogo Ferreira and Rui Horta e Costa (pictured below) were willing to pay them an under-the-table fee, quite illegally, which would be shared between Vara and Sócrates.
The Portuguese State is CGD's sole shareholder, represented by the then Prime Minster, José Sócrates, who informed Vara that he would back the investment politically as he could say the deal was to ‘support Portuguese investors.’ In exchange, he would receive a quiet bung into an offshore account.
Armando Vara led the process of granting the CGD financing for Vale de Lobo, even though this was a highly risky venture. It would also be up to Vara to make the contacts with the investors, to define the amount payable to himself and Sócrates and arrange the date of payment.
The initial financing for the purchase of Vale do Lobo was formalised in December 2006. CGD lent €196 million and bought into the company with €28 million of CGD cash.
2007 and 2008
During the following year, always with the intervention of Armando Vara, CGD approved new financing for Vale do Lobo Group companies to the tune of €60 million.
In August 2007, the Sócrates government approved amendment to the Regional Plan for Territorial Planning for the Algarve (PROTAL), where its construction plots were safeguarded, thus protecting the investors.
At the end of the year, Vara told Sócrates that it was time to share the bung of €2 million and it was necessary to work out how the money would reach them. They agreed to ask Carlos Santos Silva for help in using his Swiss bank accounts and to find a third person who could serve as a smokescreen when the money was transferred.
They decided to use the Lena Group, through accounts held by Joaquim Barroca in the name of offshore companies Giffard and Belino. Santos Silva convinced Barroca to receive a transfer and to pass the money to the Santos Silva account.
Joaquim Barroca accepted, so Carlos Santos Silva gave Armando Vara the account number to which the transfer was to be made and Vara gave this information to Diogo Gaspar Ferreira.
The businessman already had a plan to get the money to Switzerland: he used a Dutchman named Jeroen Van Dooren, who bought a plot of land in Vale do Lobo and had agreed to pay part in cash without declaring it in the escritura. This followed a request by Diogo Gaspar Ferreira and Rui Horta e Costa, administrators of Vale do Lobo.
On January 16 and April 4, 2008, Van Dooren transfers a total of €2 million to Joaquim Barroca's account in Switzerland. One million went to the account of Giffard on February 19th. The other million was transferred to Vara's offshore account that he held with his daughter, Barbara Vara.
That, is the case for the prosecution.
José Sócrates denies all the charges laid against him in Operation Marquês, with his lawyer, João Araújo, saying he would fight the charges contained in the indictment issued on October 11th after a four year investigation.
Diogo Gaspar Ferreira. VdL CEO
