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CGD at Risk of Losing €24.5 Million After Agreement with Luís Filipe Vieira

1 June 2018

The agreement dates back to 2012 when CGD received 50% of Luís Filipe Vieira’s stake in Fundo Imobiliário Real Estate in payment of a debt. At the time, the participation was valued at €24.5 million. Now the Fund is insolvent, potentially leading to a loss for CGD.

Luís Filipe Vieira, the president of Benfica, made a deal with the Caixa Geral de Depósitos (CGD) in 2012 that could lead to a potential loss of 24.5 million euros for the state-owned bank in 2018. Correio da Manhã (CM) reported on the deal Friday. The loss is due to the Closed Real Estate Investment Fund’s declaration of insolvency, submitted by Banco Bic, BPN’s buyer, this week to the Lisbon Commercial Court. CGD owns 50% of the fund after having taken Vieira’s shares in lieu of payment for a debt.

In 2012, Luís Filipe Vieira had debts totalling €31 million to Caixa. To pay off that debt, he offered to transfer ownership of his shares of the Closed Real Estate Investment Fund, whose principal asset is the Loures Business Park, to the state-owned bank. At the time, the bank had valued Vieira’s stake in the fund at 24.5 million euros, and the proposal was accepted. The executive continued to owe 6.5 million euros to CGD.

Banco Bic bought the other 50% of the fund from BPN in 2011. BPN acquired 50% of the Real Estate Fund in return for a 20-million-euro loan it granted to Luís Filipe Vieira for a capital increase for the fund in 2003.

The fund has lost money every year since CGD’s acquisition. From 2012 to 2017, the accumulated loss reached 49 million euros, mainly due to the devaluation of land and debts to third parties, which exceed 15.7 million of euros.

EuroBic cited these difficulties in its petition for bankruptcy, along with the non-realization of an injection of capital that had been expected in 2016. Neither CGD nor Parups, a state-owned institution that public entity that had the participation of the BPN group in the fund, were also notified of the impending declaration of insolvency.

The Fund is currently 100% owned by the Portuguese state. CGD owns 50% of the fund’s units, and Parups owns the remainder. Parups is a state-owned vehicle that receives a part of BPN’s toxic assets.

The Loures Business & Logistics Park is the fund’s principal asset. Francisco Nogueira Leite, of Parvalorem, which is in turn held by Parups, told CM that the business centre “suffered a significant loss of worth and profitability due to the main tenant’s insolvency. The proceedings have yet to be finalised, which scares off potential buyers.”

Caixa Geral de Depósitos did not respond when contacted by CM.

“I owed nothing then to CGD, and I owe nothing now.”

Luís Filipe Vieira reacted late on Friday in a statement, saying he had paid “everything he had agreed to with [CGD].” “I owed nothing then to CGD, and I owe nothing now.”

“If the Fund mentioned above went bankrupt, it should be the sole and exclusive onus of whoever took over the management,” the president of Benfica wrote. “Any suggestion that any debt was forgiven, or that the agreement caused the €24.5-million loss, is totally false,” Mr Vieira emphatically argued.

Original Story: Público

Photo: Ricardo Campos

Translation: Richard Turner