Former IMF Chief on Trial for P-Card Misuse

October 12, 2016

Bankia, a troubled Spanish bank, is facing further challenges as 65 bankers are now on trial in Madrid for allegedly committing purchase card (P-Card) fraud—to the tune of approximately 12 million Euros. Prosecutors say that the money was spent on luxury items unrelated to their work duties including high-end clothing, hotels, travel and entertainment.

Considered to be Spain’s largest-ever banking scandal, the fraud was first came to light in 2013 when a journalist read a hacked email that mentioned “black credit cards”.

Black credit cards are exclusive credit cards generally reserved for use by company executives and wealthy individuals. They have very high credit limits and provide cardholders with access to rewards and luxuries such as VIP access, upgraded flights and hotels, etc.

Included amongst the defendants is former International Monetary Fund (IMF) chief Rodrigo Rato, who has claimed he believed the expenses were legal and part of his salary. Prosecutors, however, say that Rato oversaw a “corrupt system” that allowed him and other executives to misuse their P-Cards for personal purchases, which were not declared to tax authorities.

The alleged fraud first began at the Caja Madrid bank and was carried over to Bankia by Rato in 2011 when the bank was created out of a merger between Caja Madrid and six other savings banks.

Given the massive amount of money involved in the case, it’s no surprise that the case is making headlines. The public, though, is taking an even greater interest because it was only in 2012 that Bankia was bailed out first by the Spanish government and then by the EU, leading to 200,000 small investors with preferential shares in the bank experiencing significant losses. This massive public bailout also contributed, in part, to Spain’s banking crisis during this time.

Angering the public further, the luxury purchases were made between 2003 and 2012, a time during which Spain faced financial crisis.

The financial crisis saw Spain experience years of recession, drastically high unemployment rates, mass layoffs and extreme financial hardship for millions of citizens.

At the ongoing trial, Rato has vehemently denied any wrongdoing; given his role as an overseer of the bank’s financial system and the P-Card misuse, authorities are hoping to see Rato behind bars for four and a half years. They are also seeking to make him pay a fine of 108,000 Euros and 2.6 million Euros in damages.

Cases like this serve as a reminder of the importance of implementing a comprehensive continuous monitoring platform, such as Alessa, to automatically detect instances of P-Card misuse.

About Anu Sood 

Anu Sood (LinkedIn | Twitter) is the Director Marketing at CaseWare RCM and is responsible for the company’s global marketing strategy. She has over 20 years of experience in product development, product management, product marketing, corporate communications, demand generation, content marketing and strategic marketing in high-tech industries.

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