Former IMF Chief Just Got His Get-Out-of-Jail-Free Card

As they say north of the Pyrenees, the more things change, the more they stay the same

How quickly a headline can change. Three days ago I wrote an article titled “Former IMF Chief (Rodrigo Rato) and Dozens of Former Bank Execs Just Got Sentenced to Jail,” which was published on Wolf Street. The reasons I chose the word “sentenced”, rather than “sent”, are fourfold:

  1. The Spanish judicial system has a rather curious way of functioning: not only is it deeply politicised, lacking the basic balance of powers of which Montesquieu wrote centuries ago, but it also tends to make up the rules as it goes along.
  2. Spain’s court court had made no moves to actually enforce the sentence that it had served on the more than 50 former Caja Madrid/Bankia executives.
  3. A week prior to the Rato ruling Iñaki Urdangarín, the husband of the King’s sister, Infanta Cristina, was sentenced to six years in prison for fraudulently obtaining (and spending) millions of euros in public funds in the Nóos case. Only days later he was told that he can go back to his luxury home in Switzerland where he can stay until all possible appeals are exhausted, which, this being Spain, could take years. He did not even have to post bail.
  4. Many of the accused in the Bankia trial– in particular Rodrigo Rato, former Economy Minister of Spain, close confidante of former Spanish PM José María Aznar, and ex-chief of the fund of all funds, the IMF — are so intimately connected to the political and business establishment that it’s almost impossible to imagine them warming a bench in a jail cell for one day.

Lo and behold, the headlines all changed today. Just as with Urdangarín, Rato will not be forced to warm a bench in a public prison. He’ll be able to wait out his appeal from the comfort of his own sofa, as the judges of Spain’s perfectly independent and impartial Supreme Court take all the time in the world to consider his case.

This is what equality before the law means in 21st century Spain, which has gently morphed from a country in which corrupt white-collar criminals are never brought to trial, to one in which many are sentenced to jail, but none are actually sent there. As they say north of the Pyrenees, the more things change, the more they stay the same.

Like Father, Like Son

The ultimate irony is that if he were ever sent to prison, which is clearly not going to happen, Rato would be following in the footsteps of both his father and uncle, who spent three years in prison in the late sixties for illegally channeling client funds through their family bank, Banco de Siera, to a private bank in Switzerland. In a police operation that would be wholly unimaginable today, the two brothers were arrested during the no-expenses-spared wedding of Rodrigo Rato’s sister, María de los Ángeles Rato Figaredo, with Emilio García Botín, the nephew of Spain’s recently deceased banking godfather Emilio Botín, of the Banco Santander empire.

It is indeed a sign of our times that in Spain’s post-Franco democracy the senior figures of the financial establishment enjoy even greater immunity from the law than they did during Franco’s brutal dictatorship. At least during the dictatorship, wayward bankers occasionally saw the inside of a prison cell.

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