Spanish court wants ex-boss of Popular, PwC, to stand trial over alleged fraud
By Jesús Aguado
MADRID (Reuters) -A Spanish High Court judge proposed on Monday that former Banco Popular chairman Angel Ron and 12 former executives stand trial on charges of investor fraud related to a 2016 capital increase, a court document showed.
Judge Jose Luis Calama proposed trying Ron, the executives and consultancy firm PwC for allegedly defrauding investors and committing false accounting on a 2.5 billion euro ($2.71 billion) capital increase in 2016 in which investors were "deceived", the 178-page document seen by Reuters said.
The judge said that Popular's board and audit committee approved the capital increase without a thorough debate.
Ron and the executives have denied any wrongdoing. Ron said he would appeal the court decision as it did not match the findings of a more than six-year investigation into the matter. He said the judge's decision "contradicts the accounting rules and its conclusions are not supported by facts."
PwC said in a statement it would appeal the court's decision and cooperate with judicial authorities. A court source said it could take several months for a trial to commence.
Banco Popular, saddled with big debts, became the first bank to be wound down using new European rules aimed at avoiding taxpayer funded bailouts in June 2017.
The lender was then sold for a nominal 1 euro to larger rival Banco Santander with shareholders and some bondholders taking losses.
In separate civil proceedings, a European court has already ruled Popular's shareholders and creditors were not entitled to compensation.
PwC FAILED TO ISSUE WARNING, SARACHO CLEARED
PwC auditors did not warn of any problems in the bank's 2015 accounts and 2016 quarterly results, the judge said on Monday.
The bank's 2016 and 2015 results "did not reflect a true and fair view of the balance sheet or equity", the court document showed.
In 2015, Popular reported a profit in its income statement of around 105 million and in the first quarter of 2016 around 93 million euros, according to the document.
"If bad loans and foreclosed assets had been correctly classified and provisioned, Popular would have exceeded 2.5 billion euros in accounting losses," the judge said.
Calama did not press charges against former Popular chairman Emilio Saracho as he had "no involvement in the breaches of accounting regulations."
On the contrary, the judge said he took measures to check and evaluate the bank's balance sheet.
During Ron's time as chairman from 2004 to 2017, shares in Popular lost around 95 percent of their value as the bank struggled to rid its books of toxic real estate assets.
Under the leadership of Saracho, who took over as chairman in February 2017, the lender struck a more cautious tone and said that an internal audit found it would have to revise down its 2016 results, when it booked losses of 3.5 billion euros.
The judge said it was not up to the court to determine whether the Bank of Spain and or the stock market supervisor had functioned correctly.
The judge said it would address the possible civil liability of Santander once the court formally ordered the trial to open.
($1 = 0.9221 euros)
(Reporting by Jesús Aguado, editing by Andrei Khalip and David Latona; Editing by Sharon Singleton and Ros Russell)
