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Ex-IMF head Rato in Spain fraud hearing

by 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.

A Spanish judge questioned former IMF chief Rodrigo Rato 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 rage at the nationalisation of the bank in which many say they lost savings.

He was questioned by a judge at Spain's National Court in a case against him and 32 other officials from the bailed-out bank.

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

A source present at the hearing told reporters afterwards: "He was calm, but not as calm as he had been in Congress" during an appearance in parliament in July when he defended himself.

The source said Rato reiterated his claims that Spanish authorities held responsibility for events at Bankia including the timing of its ill-fated stock listing.

Bankia 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 said that when he took over at the bank he found "a very complex economic situation and a very big challenge: modernising the savings banks," the source said.

Rato arrived at court in the mid-afternoon and left several hours later without commenting, his car sweeping past a large crowd that bellowed and insulted him from behind a line of police.

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."

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 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 become a target of popular anger, seen as a symbol 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 later turned away from politics and secured the top job in the Caja Madrid bank before presiding over a series of mergers and the Bankia listing.

"The whole process was controlled by the regulator," he told parliament in July. "The process was transparent and rigorous."