Former IMF Chief Gets Jail Time for Embezzling Funds During Height of Financial Crisis, 64 Execs on Trial
Former International Monetary Fund (IMF) Chief Rodrigo Rato could spend four years and six months in jail after courts found him guilty of embezzling funds when he was working at two different Spanish banks.
Caja Madrid and Bankia, were both having financial difficulties, it turns out, when Rato was leaking funds into his own personal accounts. Spainards are outraged as the criminal acts of Rato were timed at the height of a severe economic crisis in the country, leaving many people struggling financially.
Rato also caused thousands of small-scale investors to lose their money after they were persuaded to convert their savings to shares ahead of the flotation of Bankia in 2011, with Rato at the reins. Less than a year later, he resigned as it became known that Bankia was in dire straits.
Just as in the U.S. banking bailouts which used at least $700 billion in tax payer treasury funds to keep big banks afloat, Bankia of Spain was injected with more than €22bn in public (tax payer provided) funds.
Rato, who is also a former Spanish economy minister, has yet to be jailed, despite the sentence, as his case is pending a possible appeal.
Rato was on trial with 64 additional former executive and board members at both Caja Madrid and Bankia that were accused of misusing €12m between 2003 and 2012, including using credit cards paid by both banks for their personal expenses, including supermarket trips, holidays, luxury hand bags, parties, and nightclubbing.
Local papers have not yet revealed what sentences, if any, were given to the 64 additional banking executives for having a financial free-for-all while so many people in their country were suffering.
At least Spain’s government is attempting to do some massive house-cleaning when it comes to corruption in the financial sector.
Hopefully, the former IMF chief won’t be able wiggle out of his jail sentence in a court of appeals. As we have seen all too often banks get away with financial murder, rarely paying for their misdeeds. Goldman Sachs for example, only admitted it defrauded millions during the 2007 mortgage banking crisis, this past year, and hasn’t paid a dime back to the tax payers and investors who were affected by their criminal acts.
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