BES shareholders sue Governor of the Bank of Portugal for “injurious negligence”

As key players appear before the government inquiry into the collapse of BES, 485 shareholders have banded together to sue the Governor of the Bank of Portugal over damages they claim to have suffered in the bank’s catastrophic collapse in August last year.

The so-called small shareholders are reported to be claiming from Carlos Costa (pictured) himself as well as from the state.

Their civil action already presented to Lisbon’s administrative court centres on what they call “grave failings in supervision” that led to the “progressive financial degradation and lack of liquidity of BES”.

They also cite the misleading statements coming from Carlos Costa in the weeks and days leading up to the bank’s collapse.

These multiplying statements, “explanations, notes and declarations to the press” guaranteed that the situation of BES was “perfectly solvable”.

Costa talked about a “safety cushion that would accommodate even the worst case scenarios”, reads the civil action.

“These facts led many shareholders and the public in general to buy stocks.”

They also led shareholders “not to get rid of them, trusting in the communiqués and declarations of Carlos Costa”.

The action, elaborated by legal firm Pereira de Almeida e Associados, maintains that Costa “could not have been unaware of the situation of BES” and “knew perfectly” that he was preparing the (bailout) resolution that he announced on August 3, 2014.

Far from being a resolution for the 485 who held 22,789,387 shares, it turned into a “straight confiscation” which devastated the value of stocks and left endless numbers of investors in states of financial ruin.

Costa’s “guarantees to the market and public constituted injurious negligence” and even blame (‘dolo’), claim petitioners, stressing that it is also highly likely that “some institutional investors” received privileged information, enabling them to sell off their stocks in time “while others bought them, confident in the communications and declarations of Carlos Costa”.

As Portugal’s media reports regularly on the revelations coming from the ongoing parliamentary inquiry, the 485 shareholders add that it is now clear that auditors KPMG warned the Bank of Portugal that Espírito Santo International (the GES holding company that owned Rioforte) “had more than a billion euros worth of debt” in January last year – eight full months before the whole hideous financial debacle came tumbling down.

Newspapers report that Costa, the state and the Bank of Portugal have all been contacted this week to place their arguments against the civil claim.

By NATASHA DONN [email protected]