A Spanish court has jailed five former executives who got millions in severance pay from a struggling bank that later had to be nationalised, a first in a country still reeling from banking bailouts.
“These are people who managed a savings bank that had to be rescued by the state,” Spain’s top-level National Court said in a ruling seen by AFP on Tuesday, adding it had taken the decision to avoid allowing former bankers to enjoying “impunity”.
The ruling could act as a precedent for the other, more high-profile trial of former economy minister and ex-IMF chief Rodrigo Rato over alleged embezzlement when he was president of Bankia, another bank that was rescued during the financial crisis.
In 2010, as the crisis raged in Spain, the five then managers and executives at Novacaixagalicia (NCG) left their posts, but not before obtaining compensation of nearly €19 million ($20.3 million) although they knew the bank was in dire straits.
The following year, NCG was nationalised to avoid bankruptcy as were other banks – and cash-strapped Spain eventually asked the European Union for a 41.3-billion-euro bailout of the banking sector in 2012.
NCG received a total of €9 billion in aid, and in 2013, Spain sold it to Venezuelan bank Banesco for €1 billion.
The five men, currently aged 59 to 85, had already been found guilty of embezzlement in 2015 and were then given a two-year jail sentence, which their defence asked to be suspended.
In Spain, it is usual for first offences for non-violent crimes carrying a sentence of two years or less to be suspended.
But the National Court said that in this case, “the gravity of the offence given its macroeconomic impact means it is necessary that the five go to prison, in the interest of avoiding impunity.”
They added that the former executives had not paid a fine owed, and ruled against suspending the sentence.