The former Chief Executive of Spanish Bank Caja Madrid, Miguel Blesa, has become the first Spanish banker to be jailed for his part in the country’s financial crisis. Caja Madrid is now a part of the country’s BANKIA SA (OTCMKTS:BNKXF). Blesa is accused of saddling the bank with major losses after a takeover of a bank in Miami, Florida.
Bankia was taken over by Spain’s government last year after a series of losses were revealed, some of which were due to the fiasco at Caja Madrid. The seizure of BANKIA SA (OTCMKTS:BNKXF) led to the collapse of Spain’s ability to raise debt, and an EU bailout.
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Miguel Blesa Spent Thursday Night In Jail
According to a New York Times piece on the case, Mr. Blesa spent Thursday night in jail. The judge in the case decided that the banker should spend the night in jail and have his passport removed because the accused post a flight risk. The judge, according to the NYT piece, did not elaborate on his reasons for denying Mr. Blesa travel rights. His bail was set at €2.5 million, an amount based on the severance payment he received when he left Caja Madrid in 2010.
The former chief executive has denied any wrong doing and has not yet been formerly charged with a crime by the Spanish courts. Manos Limpias, translated to English as Clean Hands, a group that has pursued several Spanish corruption cases accuses the banker of buying the Florida bank for an inflated price in 20o8. Overall, the banks spent $1.127 billion to purchase the U.S. bank.
The group says that when Mr. Blesa orchestrated the purchase of City National Bank, a financial institution based in Florida, due diligence was not properly carried out, and documents may have been falsified. During Spain’s financial boom in the middle of the first decade of the new millennium, many of the country’s smaller banks, like Caja Madrid, sought to expand internationally, emulating the international success of larger financial institutions.
According to the NYT, Mr. Blesa is one of around 100 bankers in the Mediterranean country currently accused of various financial crimes in the lead up to, and during, the financial crisis. Mr. Blesa himself faces more than accusations based on the City National acquisitions, he is also accused of losing more than €25 million on a bad loan to a Caj Madrid board member.