Spain’s National Court plans to investigate Banco Santander SA (SAN) Chairman Emilio Botin and 11 other members of his family for suspected tax-related crimes involving funds in Switzerland.
The case, which involves five of his children as well as his brother, Jaime Botin, and five of his children, is related to bank accounts at HSBC Private Bank Suisse, the court said in an e-mailed statement in Madrid today. The probe includes Ana Patricia Botin, Botin’s eldest daughter and chief executive officer of the bank’s U.K. unit.
Spanish tax officials received information on clients at HSBC Holdings Plc (HSBA)’s Swiss private bank from French authorities, prompting Spain’s tax agency to ask for accounts from the family members going back to 2005. The family presented “huge amounts of documentation,” that tax officials haven’t been able to examine, prompting the authorities to ask the court to start an investigation before a June 30 deadline that would render the matter too old to pursue.
The move by magistrate Fernando Andreu to investigate accusations by the anti-corruption prosecutor comes a day before Santander, Spain’s largest bank, holds its annual shareholders’ meeting. Santander fell as much as 1.6 percent in Madrid trading, and was down 8 cents, or 1.1 percent, to 7.54 euros by 4:06 p.m.
Met Tax Obligations
If the documentation presented by the family members is “complete and true,” then the suspects would be “absolutely exonerated,” the court said in the statement.
The Botin family, in a statement distributed by Santander today, said it has put its tax affairs in order “voluntarily,” has met all its tax obligations, and hopes the case will be cleared up in court soon. The family has helped run the 153- year-old bank for 116 years.
Spokesmen at Santander and the bank’s U.K. unit declined to comment, as did a spokesman for HSBC in London.
Emilio Botin’s father took money to Switzerland when he was forced to leave Spain in 1936 after the outbreak of the country’s civil war, Efe newswire reported, citing unidentified people close to the family. Family members have paid a combined 200 million euros ($283 million) to put their tax affairs in order, Efe said.
“There is suddenly uncertainty surrounding the management of a bank that is very closely associated with a single family and that is clearly a concern,” Mauro Guillen, a professor at the Wharton School of the University of Pennsylvania in Philadelphia and co-author of a history of the bank, said in a phone interview.
The bank the Botins helped build was founded in 1857 as a lender to service trade from Santander, a port on Spain’s northern coast, as the region embarked on an industrial boom driven by its mining industry. Rafael Botin Aguirre, brother of Emilio’s great-grandfather, became the first family member with a management role at the bank when he was named a managing director in 1895, according to a history the bank published to mark its 150th anniversary in 2007.
Botin, 76, the third in his family to hold the Santander chairmanship, joined the bank in 1958 at age 24 and took over in the top post in 1986 when his father stepped down after 36 years. Ana Patricia Botin, 50, joined the board in 1989 and was named head of the U.K. unit last November.
“However remote it might be, there is the potential to disrupt a management that has investor confidence,” said Peter Hahn, a former Citigroup Inc. banker who lectures on finance at London’s Cass Business School “You have an institution that has for so long been closely associated with a single family; a fact that many investors undoubtedly find to be of comfort and adding stability.”
The other individuals named in the court documents are: Paloma Botin, Emilio Botin, Carmen Botin, Francisco Botin, Jaime Botin, Marcelino Botin, Alfonso Botin, Gonzalo Botin, Marta Botin and Lucrecia Botin.
London-based HSBC’s Swiss private bank said in March of last year that Hervé Falciani, a former software technician in Geneva, stole details on at least 24,000 accounts. The French government has used the data to search for tax dodgers and previously shared the information with Italy’s prosecutors.
HSBC said it became aware of the theft in the middle of 2008 and Falciani was arrested in Switzerland in December of that year. He later left the country for France, where, under police protection, he cooperated with investigators.
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