By Jesús Aguado
MADRID (Reuters) – A former head of the International Monetary Fund and three other former executive board members of Bankia <BKIA.MC> went on trial in Spain’s High Court on Monday accused of fraud over the lender’s ill-fated public listing in 2011.
The trial, expected to last several months, is set to be a politically and socially-charged affair as more than 300,000 retail shareholders lost their life savings investing in a bank that within a year had to be bailed out by the government.
If found guilty, Rodrigo Rato, a former economy minister who led the IMF from 2004 to 2007 and was Bankia’s chairman at the time of the listing, could face up to five years in jail.
Rato, who resigned from Bankia in 2012, is already serving a 4-1/2 year prison term for embezzlement.
He has always denied any wrongdoing.
Bankia declined to comment.
Less than a year after Bankia raised 3.1 billion euros ($3.5 billion) in the July 2011 share offering, the bank restated its 309 million euro profit for 2011 to a 3 billion euro loss.
The Spanish government had to quickly nationalise the lender via a 22.5 billion euro bailout. With the banking system at the time reeling under pressure from the European debt crisis, the move ultimately forced Spain to resort to a 41 billion euro European financial aid package in 2012.
On Monday, lawyers for Rato and the three other former executive board members sought permission to include more documents as part of their defence. They also asked judge Angela Maria Murillo for additional information on documents that were part of the investigation.
More than 30 executives of the now state-owned lender, its parent company Banco Financiero de Ahorros (BFA) and consultants Deloitte are expected to testify as early as next week or in early January, a source familiar with the legal process said.
Deloitte declined to comment.
A small Spanish political party, UPyD, forced Spain’s High Court more than six years ago to open a criminal investigation into whether Rato and other Bankia bosses were guilty of fraud, price-fixing or falsifying accounts.
In January 2016, the Supreme Court confirmed the financial accounts used in Bankia’s initial public offering did not accurately reflect the bank’s situation.
On Monday, prosecutor Carmen Launa did not rule out pressing fraud charges against other former Bankia executives and non-executive board members.
Carlos Aguilar, a lawyer for Angel Acebes, a former non-executive board member and former Spanish interior minister, said prosecutors should not pursue his client, adding not even Spain’s state bailout fund had pressed charges against him.
Lawyers for other former Bankia bosses made similar pleas.
Bankia was formed in 2010 from the merger of seven unlisted savings banks.
The 2011 accounts were reformulated by Bankia’s current management team, headed by chairman Jose Ignacio Goirigolzarri. Bankia has paid out almost 1.9 billion euros in compensation to shareholders.
(Reporting by Jesús Aguado; Editing by Andrei Khalip, Paul Day and Mark Potter)