//
you're reading...
Politics, Portugal

New bank, old fraud

Plans have been announced to ‘rescue’ Banco Espirito Santo  by splitting it into a “good” and “bad” bank and loaning it €4.9bn from the European bailout fund in an operation that will leave the liabilities with the Portuguese people. Rui Tavares of the Left Bloc argues it doesn’t have to be this way

Portugal has witnessed a rare event. This weekend, the Bank of Portugal tried to convince the country – and the financial world – of the effectivness of a program to resolve the problems of Banco Espirito Santo (BES). I use “try to convince” without any ulterior motive: trust being the key element in the relationship between the clients and the banking system, the job of a central banker is always one of persuasion.

As such, only time will tell if the effort of persuasion today worked or not. If in the coming days the depositors of the former Banco Espírito Santo, now christened Novo Banco (New Bank), are not alarmed by new skeletons in the closet, it may be that the central bank will have overcome the first test in this high risk exercise. The rest is much more complicated and it is a task for the government; can it fullfil its promise that the BES will not contaminate public debt and not harm Portuguese taxpayers? The division between the BES into a “bad bank” and “good bank”, with all the complexities and uncertainties that it conceals, makes this all very doubtful.

The governor of the Bank of Portugal, Carlos Costa, was forced to admit that the management of Banco Espírito Santo was not very Catholic: in recent times, and probably well before that, the bank’s
management, and the family group he formed part of, carried out a series of frauds and concealments. It is clear from what Carlos Costa said that criminal actions must be investigated.

Despite the name “good bank”, Novo Banco, is a naive propaganda attempt to make people believe that we are entering a period in which the slate will be wiped clean. But the fraud of Banco Espírito Santo is nothing new.

And that’s where there was something even more extraordinary in that extraordinary moment. Carlos Costa confessed failings by the regulatory authorities with respect to financial capitalism as it operates today.

The Banco Espírito Santo fraud is not anything new: basically it depends on the use of hidden jurisdictions, holding companies in tax havens, and a carousel of transactions between all of them. The system remains as opaque as ever. Nothing has changed. And the central bank governor confirmed that things only erupt when the bank is forced to lift a corner of the veil. The rot in the BES empire is still to be discovered.

Put that way, Carlos Costa has said no more than all the great critics of contemporary capitalism. It’s just that he said it less clearly. The old vices continue intact under the “new banks”.

There are ways to finally end with this. Separate investment banks from traditional banks. Compel the European banks to reveal everything they do in their subsidiaries. Regulate, at European level,
as the US has done with its Foreign Account Tax Compliance Act (FATCA) law, which requires all taxpayers, companies or individuals, to declare the assets they hold outside their home jurisdiction. And finally, create a special investigation unit for financial and economic crime, based within the European Central Bank or Europol.

All this can be achieved, but not by the governments we have today.

O Publico

Translation by Revolting Europe

 

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Twitter Updates

Enter your email address to follow this blog and receive notifications of new posts by email.

DATA

Anti-social Europe in numbers

WAGES SLIDE

Key facts and figures on wages across the EU

Wealth Inequality in Europe

Get the key facts and figures

RADICAL VOICES

A different take on European issues

Italy’s Healthcare Crisis

Health services are ‘close to collapse’ in Rome, Turin and Naples after years of cuts and privatisation.

550 days, 29 Workers, Zero Job Losses

How a few determined Italian women stopped their factory closing and protected their livelihoods

Filthy Rich

France's Bernard Arnault of the Louis Vuitton Moet Hennessy (LVMH) empire is worth $41 billion. Check out Europe's rich list

SANTA DRAGHI’S COMING

Private banks receive half-trillion-euro gift from ECB

POPULAR FIGHTBACK

Workers and citizens stand up for themselves

FLORENCE’S BUS LUMACA

Workers are on a go-slow over privatisation

Popular resistance delivers results

Lessons from the victory against Madrid privatisation plan

FRENCH FACTORY OCCUPATION

Hundreds of workers occupied the factory of ArcelorMittal in Florange in the north of France

RSS Fight discrimination in Europe – Amnesty Int’l

  • An error has occurred; the feed is probably down. Try again later.

DOMESTIC VIOLENCE

in Italy the home is a very dangerous place to be

LABOUR RIGHTS

Follow Revolting Europe on WordPress.com

Subjects

EUROPE NEEDS A CITIZENS’ REVOLUTION

Read the statement by Lafontaine and Melenchon

The Troika in Portugal – Three Years On

A success story?

THE EURO

The Dossier

FRANCE

GERMANY

GREECE

ITALY

PORTUGAL

SPAIN