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State Loses Another €70 Million With BPN
2 October 2017
Federal prosecutors dropped a lawsuit concerning the purchase of land owned by Herdade de Rio Frio
The state will lose another 70 million euros with the nationalisation of BPN. The figure was tallied after a criminal case related to the 2004 purchase of 1440 hectares of land in Herdade de Rio Frio, was dropped. The deal by the businessmen Emídio Catum and Fernando Fantasia was financed by the former BPN, which was unable to recuperate the loans. However, the Central Department of Investigation and Criminal Action closed Parvalorem’s complaint, considering that the bank had not been deceived in the operation. Parvalorem is a company created by the Portuguese state to manage the banks’ so-called “toxic waste.”
According to Parvalorem’s complaint, the loss amounted to 68.5 million euros in 2013. In April 2004, Domurbanis, a Catum and Fantasia company, submitted a request for financing for the acquisition of 1,442 hectares of Herdade de Rio Frio, in Palmela, to BPN. The proposal sought funding of €35 million. The proposal was accepted, considering an assessment by the bank, then headed by José Oliveira e Costa, put the value of the land at 85 million euros. The amount of financing was recorded in the property deed, which was signed in July 2004: 51 million euros.
The problem began when Domurbanis sold the land to BPN Imofundos, the bank’s real estate investment fund, for 53 million euros in July 2004, and the public deed stated that the deal was made “free of any liens and charges, precisely the mortgages registered in favour of BPN, whose cancellations are assured, according to the cancellation statement issued by the bank. ”
For Parvalorem, “with the non-regularization of the loans granted by BPN to Domurbanis, the money was used for the benefit” of the partners of the company in several operations. In the end, “BPN was left with Domurbanis’ debt, without any assets that could be used as guarantees.” A second company, Pluripar, linked to the same businessmen, had the capital to acquire other lands in Herdade de Rio Frio.
Federal Prosecutors, however, rejected allegations of embezzlement, as the entire sequence of transactions occurred within BPN’s structure, so therefore the bank was aware of all of it. “The non-payment/liquidation/amortisation of the loans granted by BPN to Domurbanis was requested and consented by the bank itself,” Maria Cachim wrote, considering that there had not been any “astutely created success” by the company “hoping for a cancellation of the mortgages.” Incidentally, Emídio Catum and Fernando Fantasia became partners of José Oliveira Costa in other businesses.
Emídio Catum’s total debt to Parvalorem stands at 350 million euros, according to the company’s claim in bankruptcy proceedings. According to the Correio da Manhã, several creditors, among them Novo Banco, BCP and Caixa Geral de Depósitos, lodged claims for a total debt of 697 million euros. However, Emídio Catum has only one apartment in his name and 10,000 euros in the bank, which left the bankruptcy court to exonerate the remaining liabilities since the debtor has no means to pay.
Arlindo de Carvalho in similar situation
Arlindo de Carvalho, a former health minister, currently being tried for defrauding BPN in a deal very like that of Catum and Fantasia, did not have as much luck. According to the indictment, Arlindo de Carvalho committed qualified fraud in cooperation with defendants Oliveira Costa, former president of the Banco Português de Negócios (BPN), Francisco Sanches, former executive of BPN, and José Neto, the minister’s partner in the real estate firm Amplimóveis.
In his defence, Arlindo de Carvalho claimed that he was invited to take part in the deal by the bank and that he even tried to increase the value of the real estate in question, seeking to make more money for them. He also affirmed that BPN’s management had knowledge of the deal because it authorized his financing. The trial is currently nearing an end.
Original Story: Sábado.pt – Carlos Rodrigues Limao
Translation: Richard Turner