Sigrún Davíðsdóttir's Icelog

Icelog has earlier drawn attention to Bankia, the Spanish bank at the heart of the banking crisis in Spain, as an example of the interplay of the financial crisis and corruption. Interestingly, the Spain’s National Court has now opened a criminal investigation against former chairman of Bankia Rodrigo Rato, together with 32 top managers at Bankia. Most of them quit following Bankia’s recent nationalisation. None of them is currently working at Bankia.

The investigation centers on Bankia’s chairman Rodrigo Rato and the bank’s IPO last year. More than 300,000 investors, mostly small investors who also were Bankia clients, allowed the bank to raise €3.1bn. The Bankia managers are suspected of having lured investors with false information of the state of Bankia – the bank was apparently far from being an attractive investment object.

There are already other similar investigations ongoing regarding Bankia. Most likely, these investigations will be bundled into one. There is also an ongoing investigation into the merger of seven cajas in 2010, given the name of Bankia.

Bankia is now part of a financial system that needs a €100bn bailout. With Bankia’s management and whole existence being closely connected to Spain’s ruling Popular Party, the Bankia investigations test the soundness and effectiveness of the Spanish legal system and its ability to deal with financial crimes and political corruption.

Barclays was recently fined $450m both in the UK and the US for fixing interest rates – and is apparently also under a criminal investigation for interest rate-fixing. Other banks are expected to be named for similar illegalities in the coming weeks and months. It is about time that politicians and others in authority open their eyes to the corrupt side of the financial crisis.

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