The audit of the management acts of BES / Novo Banco between 2000 and 2018 reached Parliament today, sent by the Government, in a document with close to 400 pages and classified as “confidential”. The chairman of the Budget and Finance Commission (COF), Filipe Neto Brandão, now wants to know what Members may or may not disclose in the final report that he concluded with net losses of 4.042 million euros in 283 transactions.
The Socialist deputy has already sent Deloitte's documentation to Parliament's legal services to define information that is considered confidential under banking secrecy and also asked the Government to identify confidential data. Objective: elements protected by the confidentiality of the version that will be made public.
“I signed an order to send Deloitte's documentation to the legal services that support COF to analyze what is likely to be considered confidential under bank secrecy, so you can disqualify everything else,” he said to Jornal Económico Filipe Neto Brandão, adding that the objective is to make the audit of Parliament's website public, in the short term, after removing the parts that may be considered confidential.
For this purpose, he explains, the Government was also asked, through the Secretary of State for Parliamentary Affairs, Duarte Cordeiro, to proceed with the identification of confidential matters, commenting on those that it considers sensitive parts or covered by confidentiality. The COF president expects to complete this process “soon”, believing that the public version of the audit will be available before the scheduled hearing with Novo Banco's executive president, António Ramalho, for September 15.
It should be recalled that it was the Executive, through the Ministry of Finance, who delivered the documentation related to the audit of the management acts of the last 1 years of BES / Novo Banco in the early hours of Tuesday, September 18, classified as “confidential”.
The finance minister, João Leão, safeguarded in the letter accompanying the report in electronic form that the disclosure of information covered by banking secrecy is prevented. At issue are data under confidentiality as individual values and the names of those who have incurred debts with the entities that were subject to analysis in the special audit of Deloitte.
“It is underlined that the report of the special audit contains information subject to bank secrecy which, being not available for the purposes of transmission to the Assembly of the Republic and the Government under the terms of Law No. 15/2019 of February 12, binds the recipients of the same the duty to reserve under the terms of articles 78 and following of the general regime of credit institutions and financial companies [RGICSF] ”, reads the letter of the Minister of Finance, dated August 31, addressed to the President of the Assembly of the Republic accompanying the audit report sent in electronic form, to which the JE had access.
João Leão thus signals that the deputies of the Assembly of the Republic, according to the RGICSF, cannot reveal or use information about facts or elements concerning the life of the institution or its relations with its clients.
The COF president informed the JE that the document was already sent this Tuesday morning to the deputies of this committee who can have full access through a software specific. According to Filipe Neto Brandão, all COF deputies can access the report through accreditation.
Losses exceed four billion euros
Deloitte's audit assesses 18-year management acts, first by BES and since 2014 by Novo Banco, including a part where its management was private and will also be sent by the Government to the Attorney General's Office. According to data released this morning by the Ministry of Finance, the operations analyzed in this period generated net losses of more than four billion euros at Novo Banco and “describes a set of serious shortcomings and deficiencies” at BES, until 2014, in the granting of credit and investment in financial and real estate assets.
The report, resulting from Deloitte's audit, analyzed management acts performed between 1 January 2000 and 31 December 2018, having been analyzed 283 operations that resulted in losses of 4.042 million euros to Novo Banco between 4 August 2014 (one day after BES resolution) and December 31, 2018.
The total sample of Deloitte's audit of Novo Banco comprises 283 assets, including credits, real estate, securities and transactions with subsidiaries that have generated losses covered by the Contingent Capital Mechanism (CCA). The sample will have covered 100 debtors and others that the Resolution Fund has decided to add to Deloitte's scrutiny.
Three blocks of Novo Banco management acts practiced in that period were analyzed. 201 credit operations were audited that generated losses of 2.320 million euros, 26 operations with subsidiaries and associates, which caused losses of 488 million euros and 56 operations with other assets, which generated losses in the amount of 1.234 million euros.
It is an “extensive” report that “describes a set of serious internal control weaknesses and deficiencies in Banco Espírito Santo's activity period until 2014 in the process of granting and monitoring credit, as well as in relation to investment in other financial assets and real estate ”, stress Finance.
Majority of losses stem from assets inherited from BES
As the JE reported in the last edition, the audit concludes that the problems detected for the most part are due to the pre-resolution management period of BES, until August 3, 2014, when the bank was led by Ricardo Salgado, accused of 65 crimes, including criminal association, active corruption in the private sector, qualified fraud, money laundering and tax fraud, in the BES / GES process. The frauds committed by the ex-banker alone will have cost BES 2,5 billion euros, according to the MP's accusation. The auditors thus signal that a large part of the losses was due to credits and properties inherited from BES.
According to the note sent by the Ministry of Finance, the audit report “shows that the losses incurred by Novo Banco resulted mainly from exposures to assets that originated during Banco Espírito Santo's activity and were transferred to Novo Banco within the scope of resolution ”, as well as the existence of a set of“ serious weaknesses and deficiencies in internal control in the period of activity until 2014 of Banco Espírito Santo ”.
Novo Banco has already highlighted, in a statement, this conclusion evidenced by Finance, stressing that the report also confirms “the progress made by Novo Banco” in the areas of internal control. The entity led by António Ramalho ensures that the bank is “totally committed to continuing the path that will allow it to fully comply with the indications referred to in the audit report”.
In the audit, various types of operations were analyzed and scrutinized, such as credits, investment or divestment decisions in Portugal or abroad, as well as decisions to acquire and dispose of assets, namely real estate, during various management mandates. The longest refers to Ricardo Salgado, who led the bank for 22 years, until 2014, also covering the following executive presidencies such as that of Vítor Bento, Eduardo Stock da Cunha and António Ramalho, current executive president of Novo Banco.
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The audit of the management acts of BES / Novo Banco between 2000 and 2018 reached Parliament today, sent by the Government, in a document with close to 400 pages and classified as “confidential”. The chairman of the Budget and Finance Commission (COF), Filipe Neto Brandão, now wants to know what Members may or may not disclose in the final report that he concluded with net losses of 4.042 million euros in 283 transactions.
The Socialist deputy has already sent Deloitte's documentation to Parliament's legal services to define information that is considered confidential under banking secrecy and also asked the Government to identify confidential data. Objective: elements protected by the confidentiality of the version that will be made public.
“I signed an order to send Deloitte's documentation to the legal services that support COF to analyze what is likely to be considered confidential under bank secrecy, so you can disqualify everything else,” he said to Jornal Económico Filipe Neto Brandão, adding that the objective is to make the audit of Parliament's website public, in the short term, after removing the parts that may be considered confidential.
For this purpose, he explains, the Government was also asked, through the Secretary of State for Parliamentary Affairs, Duarte Cordeiro, to proceed with the identification of confidential matters, commenting on those that it considers sensitive parts or covered by confidentiality. The COF president expects to complete this process “soon”, believing that the public version of the audit will be available before the scheduled hearing with Novo Banco's executive president, António Ramalho, for September 15.
It should be recalled that it was the Executive, through the Ministry of Finance, who delivered the documentation related to the audit of the management acts of the last 1 years of BES / Novo Banco in the early hours of Tuesday, September 18, classified as “confidential”.
The finance minister, João Leão, safeguarded in the letter accompanying the report in electronic form that the disclosure of information covered by banking secrecy is prevented. At issue are data under confidentiality as individual values and the names of those who have incurred debts with the entities that were subject to analysis in the special audit of Deloitte.
“It is underlined that the report of the special audit contains information subject to bank secrecy which, being not available for the purposes of transmission to the Assembly of the Republic and the Government under the terms of Law No. 15/2019 of February 12, binds the recipients of the same the duty to reserve under the terms of articles 78 and following of the general regime of credit institutions and financial companies [RGICSF] ”, reads the letter of the Minister of Finance, dated August 31, addressed to the President of the Assembly of the Republic accompanying the audit report sent in electronic form, to which the JE had access.
João Leão thus signals that the deputies of the Assembly of the Republic, according to the RGICSF, cannot reveal or use information about facts or elements concerning the life of the institution or its relations with its clients.
The COF president informed the JE that the document was already sent this Tuesday morning to the deputies of this committee who can have full access through a software specific. According to Filipe Neto Brandão, all COF deputies can access the report through accreditation.
Losses exceed four billion euros
Deloitte's audit assesses 18-year management acts, first by BES and since 2014 by Novo Banco, including a part where its management was private and will also be sent by the Government to the Attorney General's Office. According to data released this morning by the Ministry of Finance, the operations analyzed in this period generated net losses of more than four billion euros at Novo Banco and “describes a set of serious shortcomings and deficiencies” at BES, until 2014, in the granting of credit and investment in financial and real estate assets.
The report, resulting from Deloitte's audit, analyzed management acts performed between 1 January 2000 and 31 December 2018, having been analyzed 283 operations that resulted in losses of 4.042 million euros to Novo Banco between 4 August 2014 (one day after BES resolution) and December 31, 2018.
The total sample of Deloitte's audit of Novo Banco comprises 283 assets, including credits, real estate, securities and transactions with subsidiaries that have generated losses covered by the Contingent Capital Mechanism (CCA). The sample will have covered 100 debtors and others that the Resolution Fund has decided to add to Deloitte's scrutiny.
Three blocks of Novo Banco management acts practiced in that period were analyzed. 201 credit operations were audited that generated losses of 2.320 million euros, 26 operations with subsidiaries and associates, which caused losses of 488 million euros and 56 operations with other assets, which generated losses in the amount of 1.234 million euros.
It is an “extensive” report that “describes a set of serious internal control weaknesses and deficiencies in Banco Espírito Santo's activity period until 2014 in the process of granting and monitoring credit, as well as in relation to investment in other financial assets and real estate ”, stress Finance.
Majority of losses stem from assets inherited from BES
As the JE reported in the last edition, the audit concludes that the problems detected for the most part are due to the pre-resolution management period of BES, until August 3, 2014, when the bank was led by Ricardo Salgado, accused of 65 crimes, including criminal association, active corruption in the private sector, qualified fraud, money laundering and tax fraud, in the BES / GES process. The frauds committed by the ex-banker alone will have cost BES 2,5 billion euros, according to the MP's accusation. The auditors thus signal that a large part of the losses was due to credits and properties inherited from BES.
According to the note sent by the Ministry of Finance, the audit report “shows that the losses incurred by Novo Banco resulted mainly from exposures to assets that originated during Banco Espírito Santo's activity and were transferred to Novo Banco within the scope of resolution ”, as well as the existence of a set of“ serious weaknesses and deficiencies in internal control in the period of activity until 2014 of Banco Espírito Santo ”.
Novo Banco has already highlighted, in a statement, this conclusion evidenced by Finance, stressing that the report also confirms “the progress made by Novo Banco” in the areas of internal control. The entity led by António Ramalho ensures that the bank is “totally committed to continuing the path that will allow it to fully comply with the indications referred to in the audit report”.
In the audit, various types of operations were analyzed and scrutinized, such as credits, investment or divestment decisions in Portugal or abroad, as well as decisions to acquire and dispose of assets, namely real estate, during various management mandates. The longest refers to Ricardo Salgado, who led the bank for 22 years, until 2014, also covering the following executive presidencies such as that of Vítor Bento, Eduardo Stock da Cunha and António Ramalho, current executive president of Novo Banco.