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Former IMF chief faces fraud charges

February 1, 2016

Former IMF chief Rodrigo Rato is facing fraud charges over allegations he used a corporate credit card for extravagent personal expenses while head of a Spanish bank. Rato has had his passport seized.

Spanien, Rodrigo Rato festgenommen
Rato being arrested last yearImage: REUTERS/S. Perez

The former head of the International Monetary Fund (IMF) is to stand trial, along with dozens more, on corruption charges stemming from his tenure atop a Spanish bank.

Spain's National Court announced Monday that it will try Rodrigo Rato, along with 65 co-defendants over allegations that the group misused a bank's corporate credits cards, to the tune of 15.5 million euros ($16.9 million), for personal consumption, such as purchases of jewelry and safari trips.

The 66-year-old Rato and his co-defendants are accused of fraudulent administration and misappropriation of funds between 1999 and 2012. Rato himself is accused of using the corporate account for personal purchases totaling more than 44,000 euros ($50,000).

The investigating magistrate found there was "sufficient merit" in pursuing a case against the group, though no date has been set for the trial.

The alleged fraud reportedly began in 1999 at Caja Madrid and continued once the bank merged with half-a-dozen smaller financial institutions in December 2010, becoming Bankia. Caja Madrid became the dominant shareholder of the new conglomerate, maintaining a 52-percent stake.

Rato lead the IMF from June 2004 to October 2007. After leaving the IMF he became chairman of Caja Banka and subsequently the Bankia conglomerate, upon its creation in 2010, until its collapse in 2012.

The 'worst CEO'

Bloomberg Business News dubbed Rato one of the five worst CEOs of 2012. They noted that the bank had reported a profit of 309 million euros for 2011, but after Rato's departure it was restated as a 3 billion euro ($3.3 billion) loss. The bank ultimately declared bankruptcy, and required a 20 billion euro ($22 billion) state bailout.

Prior to his stint at the IMF, Rato was Spain's finance minister from 1996 until 2004.

He was also a prominent figure in Spain's ruling Popular Party, and a close associate of Prime Minister Mariano Rajoy. But he was forced to quit the party in January 2015 when the growing political pressure became too much.

After being implicated in scandal, he was arrested last April for alleged fraud, embezzlement and money laundering. Rato could face as much as 10 years in prison if found guilty.

Investigating judge Fernando Andreu said that the credit card abuse would not have been possible without Rato and his predecessor Miguel Blesa.

The prosecution wants a four-and-a-half-year prison sentence for Rato, as well as a 2.7 million euro ($2.9 million) fine. Blesa is facing six years in prison and a 9.3 million euro ($10.3 million) fine.

Rato denies the allegations, and says the credit card use was part of the employee's salary.

He is also the subject of several other investigations and has had his passport confiscated.

bik/ng (AP, AFP, dpa)