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Fraud case opened over Bankia

Fraud case opened over Bankia
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Responding to a lawsuit brought by one of Spain’s smaller political parties, a Spanish court has opened a fraud case looking at the actions of former bosses of state-rescued lender Bankia.

Executives – including ex-chairman Rodrigo Rato – are accused of of fraud, price-fixing and falsifying accounts. Rato is also the former head of the International Monetary Fund.

As public anger grows against bailouts for the bank, the High Court summoned 33 officials to give evidence.

There is particular fury among Spaniards over Bankia as hundreds of thousands of small savers were persuaded to buy shares in the lender when it was floated on the stock market in 2011, only to see their investments virtually wiped out in less than a year.

The government took over Bankia in May. It was drowning in bad debt with losses stemming from indiscriminate lending during Spain’s property boom that crashed four years ago. Bankia’s new management has requested a 19 billion euro bailout.

Under Spanish law, the crimes carry jail sentences ranging from six months to six years but commentators said that while corporate corruption cases grab the headlines in Spain, they rarely resulted in convictions. “It will be a long-running, complicated case,” said Pedro Schwartz, economics professor at San Pablo University in Madrid.