New Zealand retirement fund sues Bank of Portugal over its “unlawful” handling of BES debacle

A New Zealand Superannuation Fund, backed by the NZ government, is the latest “heavyweight” to announce it is suing the Bank of Portugal over its handling of the BES banking scandal.

The announcement comes as investment bank Goldman Sachs has announced that it will take “all immediate legal remedies without delay” to claw back €721 million “lost” in the controversial BES ‘good-bank/bad bank’ carve-up, while consumers association DECO has lodged a civil action in a bid to recover at least a €1 million lost by small shareholders.

Elsewhere, a group of 500 former banking customers have banded together with another civil action (see: https://www.portugalresident.com/bes-shareholders-sue-governor-of-the-bank-of-portugal-for-%E2%80%9Cinjurious-negligence%E2%80%9D).

Thus the pressure on the Bank of Portugal, most particularly its governor Carlos Costa, is now phenomenal.

Reporting today on the outrage still boiling over the bank’s refusal to make ‘good bank’ Novo Banco responsible for millions by way of loans, bonds and other investments, Portuguese media says the bank is “locked in a blame game” with the country’s regulator CMVM.

CMVM however is adamant. The fault lies with the Bank of Portugal.

Explaining its stance, CMVM told Expresso on Thursday that “information was publicised on a number of occasions that created (and maintained) legitimate expectations that subscribers to these products would get their money back, even if only partially…”

As New Zealand’s sovereign wealth fund for state pensions throws its hat into the ring, the fund’s chief executive Adrian Orr affirms: “We have been treated unequally and unlawfully.”

Novo Banco “continues to have the benefit” of money that NZ Superannuation lent, through Oak Finance Luxembourg (a vehicle set up by Goldman Sachs), Orr told Wall Street Journal yesterday.

The total of New Zealand Superannuation’s losses come to 150 million dollars (€131.7 million) – and according to WSJ: “The fund is one of at least eight Oak Finance noteholders seeking to recoup their money through legal action in the Portuguese and English courts.”

Thus the furrowed-brow of Carlos Costa is unlikely to look any less creased as he closes-up Portugal’s central bank for the weekend.

What these stories do for the bank’s prospects of selling Novo Banco to the highest bidder is anyone’s guess – but fears that the sale will not recoup the €3.9 billion ploughed into it by a consortium of the nation’s banks are now running higher than ever.

The much-lauded rescue that was meant to have “zero impact on taxpayers” looks now like the disaster critics always maintained it would be.

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