A Spanish court Friday ordered former IMF head Rodrigo Rato and other bankers to pay an 800-million-euro ($911 million) court bond as it investigates the Bankia group's ill-fated stock listing. It was the latest step in a long investigation into alleged fraud in the 2011 stock market listing of the bailed-out group and its ex-chairman Rato, also a former Spanish economy minister.
From 2004 to 2007 Rato was managing director of the International Monetary Fund, which later played a leading role in tackling the eurozone debt crisis. The National Court ordered the Bankia group, along with Rato and three other former executives, to jointly pay the bond to cover their possible liability in the case. They are suspected of misrepresenting Bankia's accounts ahead of its doomed stock listing. Rato is accused of fraud, embezzlement and forgery among other charges. Bankia nearly collapsed in 2012 and had to be bailed out by the Spanish government for 24 billion euros.
Spain later received 41 billion euros from international creditors to protect its whole banking sector from collapse, though it avoided having to get a full sovereign bailout like Greece's. Thousands of customers have brought separate lawsuits against the group, saying they lost their money after being misled into converting their savings into Bankia shares. Friday's ruling said the defendants could appeal against the bond but otherwise would have to pay it within a month or have their assets impounded.
Fraud probes before elections A report submitted to the court last month by experts at Spain's central bank said there were signs of suspect buying and selling of Bankia shares around the time of the listing. The financial evaluation of Bankia included in the brochure for the stock listing "did not present a faithful picture of the company", the Bank of Spain experts wrote.
They said they had discovered "inexplicable purchases" of Bankia shares and "sales immediately after the stock listing that cast doubt on the real interest of certain investors". Citing that report in Friday's ruling, Judge Fernando Andreu said there were "solid and well-founded indications calling into question the truthfulness" of the information given to investors. He said the suspects could face jail sentences of up to four years if found guilty of publishing false accounts before the listing to attract investors.