Financial Crisis: The Oligarch, The Scandal And The Bank Bailout

Portugal’s top banker goes down in flames but, asks TOM GILL, will the fire spread to the rest of Europe?

Ricardo Espírito Santo Silva Salgado is known in Portugal as “Dono disto tudo,” or “Owner of everything.”

The oligarch’s family has been calling the shots in Portugal for over a century. 

It’s the largest shareholder of the country’s biggest stock market-listed bank and controls a string of other financial companies, agricultural, energy, healthcare and property companies in Portugal and across the globe. 

But now it looks like the final chapters in the long history of the most renowned members of the country’s elite are about to be written. And perhaps with it a new chapter in Portugal’s and Europe’s financial and economic crisis.

Last month Ricardo Salgado, now aged 70, was arrested. He was detained – later released on bail for €3m – in connection with a long-running investigation into money laundering and tax evasion. 

Salgado’s arrest didn’t come out of nowhere. The Espírito Santo family has been under intense scrutiny since earlier this year when an audit ordered by the central bank discovered accounting irregularities at the Luxembourg-registered holding company ESI. 

With ESI and its 100 per cent-owned Rioforte now preparing for bankruptcy, the country’s President Anibal Cavaco Silva has admitted that the failure could be systemic. “We cannot ignore that there will be some impact on the real economy,” he said, providing a rather darker forecast than most of the experts quoted in the press with soothing words such as “contained” and “priced-in.” 

Predictably the central bank has come to the rescue, ejecting Mr Salgado and barring the family from further involvement in the management of Banco Espírito Santo, and injecting €4.9bn of public money to shore up the bank group. This is a huge sum in a country that has been through unprecedented austerity as part of a three-year EU and IMF bailout.

The repercussions of the crisis go much further than the Espírito Santo clan – different branches of which apparently descended into infighting as members used their influence to take out loans, even after regulators in Portugal and Luxembourg started their investigations. 

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