As the Attorney General’s office announces it has launched ‘various inquiries’ into the banking crisis within Grupo Espírito Santo (GES), news comes that as many as 50 shareholders in Portugal Telecom are suing over the communications giant’s €900 million “investment” in bankrupt GES subsidiary Rioforte.
Talking to Lusa news agency, Octávio Viana – president of investors association AMEC spearheading the protest – alleged “serious violations in management duty” on the part of PT’s executive commission.
“It is unthinkable that a careful, diligent management with technical knowledge could apply 40% of its company’s liquidity in 2013 and almost 50% of its share capital in a single entity,” he said, alleging that PT should have foreseen “the probability” of Rioforte failing to meet its repayment deadline – which it spectacularly failed to meet last week.
Viana also claims PT’s executive commission was remiss in its inability to predict the impact of Rioforte’s financial implosion.
Thus investors are forging ahead with two lawsuits.
The first is to be lodged at Lisbon’s commercial court (Tribunal do Comércio) and will contest damages caused (exact figure €897 million), while the second is a civil action aimed at challenging the “civil responsibility” of the PT management team that signed the deal.
Viana further revealed that a US investment fund has been damaged in the debacle, and that Portuguese investors may end up suing through the US courts “as Portuguese justice is slow and inefficient”.
He told Lusa that investors involved in the lawsuits range from those who held shares worth €500 to €1000, all the way to companies that have dropped as much as €400,000 with the fall of PT stock.
Two of the investors involved are said to be Chinese, he added.
Meantime, Vítor Bento, the new executive president of BES who took over disgraced former boss Ricardo Salgado, has declared his priority is to “recover the confidence of the markets” and put an end to all the negative speculation.
As Expresso newspaper reports, “the Bank of Portugal has already gone public various times to guarantee BES’ financial solidity, and Prime Minister Passos Coelho has already calmed the bank’s depositers”.
Winding up his interview with Lusa, Octávio Viana said investors’ lawsuits had stopped short of criminal action “for the time being” as they did not have enough information “for this kind of action”.
In other words, all eyes are on the Attorney General’s office, which announced last Friday, July18, that it was looking into the “penal relevance” of this latest banking crisis.
