Former Bank Chief Receives Get-Out-Of-Jail-Free Card

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Just over two weeks ago, Miguel Blesa, the former president of Spanish savings bank Caja Madrid, was sentenced to jail for his alleged role in irregularities in the bank’s purchase of City National Bank of Florida.

It felt like a historic moment. Finally, after five long years of false hopes and dashed dreams, a TBTF bank chief had been sent down for his role in the lead-up to the financial crisis. With the pounding of his gavel, it seemed that Judge Elpidio José Silva had sent Spain spinning into some weird parallel dimension, a quixotean universe where the richest, most powerful and most corrupt individuals could no longer operate above and beyond the law.

It seemed too good to be true, and in the end it was. This week, reality returned with a jolt when Madrid’s High Court, under concerted pressure from both Blesa’s defense team and the public prosecutors, decided to overturn Judge Silva’s ruling. Two days later, Blesa walked out of El Soto prison a free man, to be reunited with his family and the millions of euros he amassed while laying the foundations for the biggest bankruptcy in Spanish history.

But it won’t be just Blesa celebrating the Madrid High Court’s ruling. Banking and corporate executives up and down the land will be breathing a sigh of relief, comforted by the knowledge that, whatever charges they may face in the future, Spain’s government and its highly politicised public prosecutor’s office have got their back.

Back to Business

The message to Spain’s banking and corporate elite could not be clearer: you are free to continue cutting legal corners, “misappropriating” funds, bribing politicians, evading taxes and laundering money. In a startling admission, Juan Rosell, the president of the Spanish Confederation of Employers’ Organizations (CEOE) — an institution that prides itself on being the “voice” of Spanish business — said that if Blesa had been punished for his model of management, “in the end all of us could go to prison.”

Which, ironically, is precisely what happened to Rosell’s predecessor at the helm of the CEOE, Gerardo Díaz Ferrán, one of just a handful of Spain’s business elite to have felt the sharp end of the law in this post-crisis era. Díaz Ferrán is now serving a prison sentence after being found guilty of concealment of property from the authorities, tax evasion and money laundering while CEO of now-bankrupt Spanish travel agency Grupo Marsans. He is also accused of receiving a very dubious loan package worth some 26 million euros from Blesa during his stewardship of Caja Madrid.

Blesa, meanwhile, denies all charges against him, and is now calling for an “impartial judge” to preside over his trial.

And so the witch hunt against Judge Silva begins — a witch hunt that bears a striking resemblance to the recent smear campaign orchestrated by powerful right-wing groups against Spain’s most renowned legal figure, Baltasar Garzon.

Prosecuting Judges, Pardoning Bankers

Garzon first came to international attention, in 1998, for issuing a warrant for the arrest of former Chilean President, General Augusto Pinochet. Twelve years later, however, he was disqualified from the Spanish bench after daring to launch an investigation into the torture, disappearances and summary executions perpetrated from 1932-1952 under General Francisco Franco’s dictatorship – a definite no-no in a country that has, to all intents and purposes, undergone a collective lobotomy of all the human rights abuses that occurred during the Franco years.

Garzon was specifically accused by the government and many of his judicial colleagues of overreaching his authority by ignoring Spain’s 1977 Amnesty Law, which provided all former members of Franco’s government and police state with blanket protection from prosecution for crimes they had committed.

As Alejandro M. Garro and Cesar Chelala wrote in the Japan Times, the case launched against Garzon set a worrying precedent:

“Whatever personal opinion one may hold on Garzon as an individual and beyond his controversial civil war investigation, the decision to go after this judge for opening an investigation of Franco’s worst human rights abuses seriously undermines judicial independence and Spain’s credibility in fighting against impunity. More importantly, it ignores that, under international law, Spain’s sovereign decision to forgive and forget its past cannot be adopted at the expense of the victims’ right to justice, truth and adequate reparations for serious and systematic human rights abuses.”

Since Garzon’s dismissal, the Spanish government has directly intervened in two other high-profile cases: first, to drop all charges against the King’s daughter La Infanta Cristina for her role in the Noos Scandal; and now, to overturn Silva’s decision  to refuse Blesa bail.

In this sorry excuse of a democracy, independent-minded judges are hounded and prosecuted for daring to protect the public from big-time perpetrators of white-collar crime, while senior bankers, corporate executives, kings, princes and politicians are insulated from the consequences of their criminal activities.

Living in Griftopia

In his book Griftopia: Bubble Machines, Vampire Squids and the Long Con That is Breaking America, Matt Taibbi wrote that there are two Americas, one for the Grifter Class and one for everybody else:

“In everybody-else land, the world of small businesses and wage-earning employees, the government is something to be avoided, an overwhelming, all-powerful entity whose attentions usually presage some kind of financial setback, if not complete ruin. In the grifter world, however, government is a slavish lap dog that the financial companies… use as a tool for making money.”

Unfortunately, the “grifter world” of which Taibbi speaks is not a phenomenon constrained to U.S. shores. It has spread to virtually every village, town and city of the Western world, and its dogma — the corporatocracy’s ruthless pursuit of wealth and power at any moral, social, environmental or financial cost — is now the dominant paradigm of the world in which we live.

In a flagrant breach of their duties to their citizenry, governments around the world have pawned themselves to the highest bidders, and are now little more than fawning agents of a dominant class of super criminals. It is hardly any surprise, therefore, that not a single member of that class — the senior banker caste — has faced the music for their role in arguably the biggest financial heist of modern history. 

And it’s a trend that seems set to stay, if not grow. For as long as the world’s biggest banks continue to pay — or, better put, own — the piper (that is, national and regional governments, regulators and central banking institutions), they will continue to operate beyond all bounds of legal or moral authority.

16 thoughts on “Former Bank Chief Receives Get-Out-Of-Jail-Free Card

  1. So how come Ferrán was convicted? Does he lack institutional backing or is he the proverbial fall guy? Or was there another honest judge presiding ..
    Let’s just hope that Silva is less of a sitting duck than Garzon was.


    1. I think the most important issue is that Ferran was not a banker. If you leave thousands of your customers high n dry while sending ur money to tax havens, you can expect to pay some kind of price — unless, of course, u r a banker!


      1. If what you are saying is true and TPTB in Spain go after even the big crooks except the banksters, then there is still hope. The banksters are digging their own grave at the moment and there is no way they’re going to be bailed out once again. There simply is no ammunition left for that


      2. You may be right, Mh505. However, the new model for saving the banks is not to bail them out, but to bail them in (that is, use depositor and shareholder funds to keep them going, or at least pay off their most important creditors).

        I think in the coming months and years we will see the controlled collapse of more and more of the strategically less important banking entitities.
        The beneficiaries will be the much larger entities, which will feed on the juicy carcasses of their former competitors, as happened in the U.S. in 2008-09.

        As such, genuinely too big to fail institutions, such as JPM C, Deutsche Bank, Santander, HSBC, will probably continue to grow. Unless, of course, the powers-that-be finally lose control of events.


  2. DQ –
    Not sure you are aware of this but your system does not allow replies after the third one (in this case yours of 23/06/2013 at 12:35 pm).

    You are right of course – bailins are the new bailouts. To no avail, however. As discussed on a different occasion, the capitalization of the major EU banks hovers around 2-3%; but certainly below 5%. That includes all the deposits, credit balances of their customers et al. In other words, a bailin will never get them more than the mentioned 2-5% of their liabilities; which will certainly not be enough when the next crash comes so we are back to bailouts


    1. Thanks, mh505, for bringing my attention to that problem. Will have to speak to one of my techie friends and see if they can sort it out.

      As for the bail-in question, you’re absolutely right: There’s no way that the world’s insolvent banks have enough assets to cover their liabilities, especially if you factor in their derivatives exposure.

      What this means for the sector and, more importantly, for its “customers”, is anyone’s guess. Personally, I believe that when the fateful day arrives, central banks and governments will do all they can to keep the most strategically vital entities (i.e. the primary dealers and a few other bloated institutions) whole.

      This they will probably do by sacrificing many of the smaller banks (and of course, their assets) — kind of like the MF Global hesit but on a far larger canvas.


      1. Just discovered your corner of the blogosphere and I do appreciate you adding more fuel to the fire of awakening. Raging bullshit, indeed…

        I have always considered myself a realist, neither optimistic nor pessimistic by nature. In that regard, despite the huge advantage the plutocracy currently enjoys in the power structures around the world, what I see when I view images of Egypt, Spain, Turkey, Greece is just the beginning of a world-wide, decentralized hive mind coming into painful self-awareness of just how corrupt our “democratic institutions” have become.

        Objectively speaking, there is no way I can imagine a movement of the magnitude we’re seeing spontaneously form against the myriad outrages that have been perpetrated against We the People–no matter where we may reside–by anything other than the systematic and ongoing abuses of power, privilege and authority. In a way, it is a blessing since this is bringing to a head world-wide what may have been allowed to quietly corrode our societies if done with less breakneck abandon.

        What I have done here in Amerika has been to close out my money center bank account, abandon the credit cards of the same institutions, totally defunded my brokerage accounts retirement plans, constantly barrage my congressional representatives with my opinions, spent large sums of money supporting the Electronic Frontier Foundation, ACLU etc., completely converted to VPN and Tor-based communications and moved my liquid assets to Singapore…it’s a beginning, eh?

        Everything done still 100% within the law while doing my own very humble part in smashing the sons of bitches who are destroying 2500 years of human progress in self-government.

        Before it’s all over, I fully expect to see civil disobedience in Amerika surpass the worst of what we saw in the Viet Nam protest movements. These monsters are not going to go back into the closet quietly, on their own, out of a sense of moral rectitude. They will need to be crushed, like they are crushing us in country after country.

        I can tell you that, here in the South of Amerika, the disgust bordering on hatred for what is being done in our name is almost palpable among growing numbers of people. When it hits 10% committed to only the level I’ve taken, the game will be afoot.

        Do you know the Hopi prophecy that the time will come when our leaders will have failed us so badly they will be hunted like animals in the street? Wise people, those Hopi…


      2. Thanks Ernest for your very frank comments. Am in a bit of a rush right now — La Doña wants to go out for a Sunday stroll — so will try and write a longer reply tomorrow. In the meantime, have a lovely Sunday.


      3. Thanks for commenting Ernest. Sounds like you’ve taken some serious actions to get yourself off the grid, and I commend you for it.

        As for the Hopi prophecy, I have to admit that I was complete unaware of such a phenomenon. Who’s to say how this slowly gathering collective madness is going to pan out. People are rightly angry, but the more their anger grows the more their demands, need and wishes are ignored by their leaders or supposed representatives.

        Rising public rage may be kept in check for a long time but, as history has shown time and again, the levies almost always eventually break.


  3. […] On both occasions Blesa was promptly sprung from jail. In the first instance it was the country’s public prosecution (turned defense) service that provided the V.I.P. (Very Important Prisoner) with the metaphoric file and rope needed for escape; in the second it was Spain’s National High Court. [For more background on the case, click here, here and here]. […]


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