CAM trial gets technical
Experts disagree if holes in accounts were errors or fraud
By Alex Watkins THE TRIAL against the ex-directors of the CAM savings bank restarted at the High Court in Madrid on Monday.
They are accused of fraud and false accounting in 2010 and 2011 when the bank claimed to be in good financial health but was actually about to go out of business.
A series of eight expert witnesses for the prosecution and the defence offered differing opinions as to whether the hidden losses and inflated profits should be considered errors or fraud.
For example, ex-Bank of Spain inspector Rubén Manso referred to the alleged irregularities when Bankia was floated on the stock market and then also required a state bailout; in that case the public prosecutor ruled out false accounting as there was not enough evidence the rules had been broken and the bank had assets to cover its losses.
He claimed the CAM had enough to cover its deficit at the end of 2010 as required by the Bank of Spain, and that the in- formation he had been given did not indicate the accounts shown to investors had been falsified.
However Javier López Andreo of consultants PwC argued: “There is a vast difference between an accounting error and fraud.
“€1,037 million is a significant enough amount to show that the CAM acted intentionally,” he said in reference to the amount of incorrectly managed credit that had been detected by the regulator in December 2010, six months before the government intervened.
He blamed the policies of the ex-director generals Roberto López Abad and María Dolores Amorós, who along with six other ex-directors face up to seven years in prison.
Experts flagged ‘inappropriately reclassified’ loans that were unlikely to be repaid and described some operations as ‘very strange’ which had been removed from the balance sheets or ‘calculated wrongly’, enabling the CAM to publish allegedly fictitious profits of €65 million.
Sr Manso’s argument that everything complied with the regulations and the decline did not set in until 2011 was supported by the expert brought in by ex-director general Juan Carlos Torres.
Germán López referred to the policy of securitisation (selling bundles of debts to investors) to increase liquidity, which ended up taking place through private funds between Ireland and the UK.
He admitted this put the transactions beyond the control of the Spanish market regulator (CNMV) and they were referred to as ‘lacking sense’ by the Bank of Spain in 2012.
Another ex-Bank of Spain inspector, Ángel Regúlez, pointed out that Sr López Abad took early retirement before the €5.249 million government bailout and subsequent sell-off to Banco Sabadell.
He said the top directors enjoyed special conditions even though they should have received packages under the same redundancy package as the rest of the workforce.
Sr López Abad received a €5,561,000 golden handshake, noted the expert.
The trial is due to finish on July 21.
Roberto López Abad (left) received a €5,561,000 golden handshake