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Ex-IMF chief Rato in Spain court in fraud case

Elodie Cuzin
Former chairman of Bankia Rodrigo Rato speaks during an audience at the lower house of parliament in Madrid on July 26, 2012.Former IMF chief Rodrigo Rato went before a judge Thursday over fraud charges linked to the collapse of Spanish lender Bankia, a symbol of Spain's financial calamity.

Former IMF chief Rodrigo Rato went before a judge Thursday over fraud charges linked to ruined Spanish lender Bankia, a symbol of Spain's financial calamity.

Furious yells of "Thief! Rato, go to jail!" met the high-flying financier outside court as demonstrators vented their rage at the nationalisation of the bank in which many say they lost savings.

He was being questioned by a judge at Spain's National Court, in a case against him and 32 other officials from the bailed-out bank, one of four lawsuits brought by various groups.

Court papers listed criminal charges including fraud, embezzlement, falsifying accounts and price manipulation.

The 63-year-old resigned from Bankia in May just before the lender was nationalised and bailed out for 23.5 billion euros ($29.5 billion), marking a new phase in Spain's banking crisis.

The bailout drove Spain to seek up to 100 billion euros in eurozone rescue funds for its banking sector.

Protestors say Bankia sold them risky preference shares that lost their value after its collapse.

"They swindled me," said one demonstrator outside court, 40-year-old Clemence Cohen.

"They offered me shares and they knew what a hole there was" in the bank's balance sheet, she added. "It's right that justice should do its work."

Anti-corruption judges had already opened a separate preliminary investigation into alleged fraud relating to Bankia's founding in 2010 and stock listing the following year.

It was created by merging seven regional savings banks, part of a financial sector shake-up brought on by the collapse of a construction boom that has dragged Spain into recession.

Rato is one of the most prominent financial figures in Spain and a hero of the Spanish right. He served as economy minister between 1996 and 2004 and then as managing director of the International Monetary Fund until 2007.

On July 20, 2011, the day Bankia shares began trading on the Madrid stock exchange, Rato seemed to be riding high as he gave the thumbs up, smiling broadly.

"It was certainly a very emotional day for him because he comes from a family of bankers," said Carmen Gurruchaga, journalist and author of a book of interviews with Rato.

But his moment of triumph was brief.

A descendant of northern Spanish industrialists, born into a wealthy family, Rato has now become a target of popular anger, a symbol of the problems of a financial system too closely linked to politics.

Often described as brilliant and as a fine orator, but also sometimes as pretentious and even rude, his career had seemed faultless until he entered the world of Spanish banking.

A law graduate with an MBA from Berkley, he was praised as an excellent economy minister, a post he held under conservative Popular Party prime minister Jose Maria Aznar, who ruled from 1996-2004.

Aznar said recently he had viewed Rato as his "natural successor" to lead the party and, perhaps, the country.

But Rato's political status changed after he opposed the US-led Iraq war, which Aznar supported.

Rato later insisted he had no further political ambitions and instead secured the top job in the Caja Madrid bank before presiding over a series of mergers and the Bankia listing.

In July, Rato defended himself before parliament.

"The whole process was controlled by the regulator," he told a parliamentary hearing, adding it had also been overseen by "prestigious experts" from accounting firms Deloitte and PricewaterhouseCoopers.

"The process was transparent and rigorous," he added.

Rato made no comment on arriving at court and the hearing was closed to the public and the media, but the din of angry protests roared on outside.

"Shame!" yelled the crowd. "Where is our money?"