Rato allowed 65 other top executives to misuse bank Caja Madrid and Bankia's funds during his tenure as the bank head
Former International Monetary Fund (IMF) chief Rodrigo Rato will face trial on Monday over 'overseeing a corrupt system that allowed 65 former executives and board members at Spanish banks Caja Madrid and Bankia to misuse funds during Rato's tenure as their bank head', AFP reported today.
Prosecutors want Rato to get a prison sentence of four-and-a-half years and a 2.6-million-euro fine for allegedly spending 12 million Euros between 2003 and 2012, leading to Spain's near financial collapse.
Rato took over as the head of Caja Madrid in 2010 where he indulged in the corrupt practices. He reportedly continued with 'similar practices' later in Bankia, the group born in 2011 following the merger of Caja Madrid with six other savings banks.
The Bankia scandal
Rato's short tenure as a banker in Spain between 2010 and 2012 saw the unfolding of the Bankia scandal, AFP observes.
Thousands of small-scale investors, after being goaded into converting their savings to shares when Bankia was born, lost huge sums of money.
The losses escalated to an extent that the country plunged into a financial crisis. It had to ask the European Union for a bailout for the banking sector. Out of the 41 billion euros, Bankia has paid 1.2 billion euros.
As the head of Caja Madrid Rato is accused of spending 436,000 euros between 2003 and 2010, including more than 100,000 euros in restaurant bills.
Rato, however, has denied any wrongdoing saying that the expenses were for “discretionary spending as a part of the pay deal for executives."
(WION with inputs from AFP)