Former Paschi Bankers Face Trial Over Hidden Nomura FileElisa Martinuzzi, Sonia Sirletti and Sergio Di Pasquale
Three former executives of Banca Monte dei Paschi di Siena SpA face an expedited trial for allegedly obstructing regulators in the first indictments related to the managers’ use of derivatives to mask losses.
A judge approved the request by Siena prosecutors to try Giuseppe Mussari, Gianluca Baldassarri and Antonio Vigni on charges that they helped hide a document, and scheduled a trial for Sept. 26 in an accelerated procedure, according to three people with direct knowledge of the case. They asked not to be identified because the decision hasn’t been made public.
The expedited trial will demonstrate that Mussari is innocent, his lawyer Tullio Padovani said by phone today. Lawyers for Vigni and Baldassarri didn’t answer calls to their mobile phones. Italian prosecutors use the immediate-trial procedure, shortening the investigative phase, when they believe sufficient evidence exists to go to trial.
The three managers colluded to hide a document that showed how the world’s oldest bank entered into a derivative deal with Nomura Holdings Inc. in 2009 to conceal losses, prosecutors have said in previous court filings. As part of the transaction arranged by Nomura and dubbed Alexandria, Monte Paschi bought Italian government bonds with a loan from the Tokyo-based bank, swapping the fixed-rate interest payments on the bonds with a floating rate and guaranteeing the credit risk on the bonds.
The so-called mandate agreement for Nomura to arrange the financing, dated July 31, 2009, was found on Oct. 10 last year, court filings show.
Bloomberg News on Jan. 17 first reported the lender’s use of derivatives to conceal losses, which had never been fully disclosed to shareholders, in a similar transaction with Deutsche Bank AG. As both transactions backfired, Monte Paschi was forced to post more margin.
The Bank of Italy spotted accounting irregularities that allowed Monte Paschi to mask losses in 2010 and sought daily liquidity reports from the lender as margin calls drained funds on the Deutsche Bank deal. The central bank, based in Rome, in April fined former managers for lack of risk controls.
Prosecutors in Siena also are investigating whether former Monte Paschi managers committed false accounting, market manipulation, criminal association and money laundering.
Italian news agency Ansa earlier reported that Siena magistrate Ugo Bellini approved the prosecutors’ request and set the trial date for the three men.
Monte Paschi filed a suit against former General Manager Vigni and ex-Chairman Mussari in Florence on March 1, alleging they used the swaps to hide losses. The bank is seeking 1.2 billion euros ($1.6 billion) in damages from Deutsche Bank and Nomura, claiming the two colluded with the former managers to devise the derivatives. Both banks have denied any wrongdoing.