Lagarde May Be Called as Witness in Bankia Fraud Investigation
Private prosecutors driving an investigation into allegations of fraud at Bankia SA (BKIA) requested that International Monetary Fund Managing Director Christine Lagarde be called as a witness, court papers show.
Lawyers for Union, Progress & Democracy, the Spanish political party whose complaint triggered the probe, asked Judge Fernando Andreu to call Lagarde and another IMF official to answer questions about what they told Spanish authorities in the months before the ouster of Rodrigo Rato, a former IMF chief himself, as Bankia chairman in May 2012, according to court filings dated today.
The filings show Lagarde is only being called as a witness and the UPD lawyers make no suggestion that she or other officials working for the IMF did anything wrong. A spokeswoman for the IMF, who asked not to be named, declined to comment.
Prosecutors are trying to discredit Rato’s argument that Bankia was a victim of the rapid deterioration of the Spanish economy as the European debt crisis intensified after the lender’s July 2011 initial public offering. The former deputy prime minister is battling a potential jail term over the collapse of Bankia which forced Spain to seek a 41 billion-euro rescue package from the European Union.
UPD representatives Andres Herzog and Maria Jose Bueno Ramirez said in the petition that they want to question Lagarde about three meetings she had with Spanish Economy Minister Luis de Guindos in the first months of 2012 when Valencia, Spain-based Bankia’s problems were discussed. They also seek to study an IMF report from April 25, 2012, highlighting one large Spanish bank that required swift action to bolster its balance sheet, the filing shows.
The questions for Lagarde will focus on four areas: when Bankia became a serious problem in the fund’s view; Bankia’s capital needs; the difference between the IMF’s assessment and that of the Bank of Spain; and the fund’s intentions in publishing the April 25 report.
Rato, named as an official suspect last year over allegations including false accounting and embezzlement, has played down expressions of concern from the IMF before Bankia’s 22 billion euro ($28 billion) bailout, the filing shows. The lender’s former chairman said in court testimony cited in today’s filing that he interpreted the April 25 report as an endorsement of his plans to clean up the lender.
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