JE personalities: Ricardo Salgado - Rise and fall of “DDT”

The BBC razed Ricardo Salgado, making him the worst executive of 2014. Pedro Queiroz Pereira did everything he could to unmask Salgado and the Portuguese-Angolan Hélder Bataglia revealed the unknown connections. This is the rise and fall of the banker who for the longest time led a private bank in Portugal.

Manuel de Almeida / Lusa

Jornal Económico chose 30 personalities from the last 25 years that have marked, in a positive and negative way, the current Portuguese society: politicians, businessmen, managers, economists and civil society personalities. The methodology used to compile the JE Personalities is explained at the end of the text.

It was no accident that Ricardo Espírito Santo Silva Salgado (Cascais, 1944) was known by the acronym “DDT” - an acronym for Dono Disto Tudo. Economist, the former president of Banco Espírito Santo (BES) became the longest serving banker in Portugal. Long before BES's collapse, especially since 2008, there was no year in which, among the top managers of the financial sector, rumors did not run about the inevitability of Ricardo Salgado's succession process, anticipating names that emerged as his own. most likely successors.

Each time a new shortlist of Ricardo Salgado's successors, immediately afterwards, almost immediately, information emerged that opposed the solidity of BES's management ratios and the excellence of international contacts maintained by the Espírito Santo Group, always positioned among the “fine-flower” of the bank with scrolls aristocratic and the high society of industrial families. However, rumors about the breakdown of the GES structure and the growing unease between branches of this family never disappeared.

When the problems increased and Ricardo Salgado began to feel the loss of effectiveness in his direct contacts to the top of politics in Portugal and Angola - which coincided with the generalization of rumors about the imbalance in the accounts of the Espírito Santo universe, at a time when these rumors were already reaching the majority of the ministerial offices - the inevitable tragic way in which Ricardo Salgado was going to dive directly from the top of the top was almost anticipated until he was confronted with the relentless loss of his autonomy.

This happened almost overnight, but for many managers, politicians, family and friends, this tragedy came as no surprise. Interestingly, it was only then that many pointed out Ricardo Salgado's calamitous management. This would not have been the case with Pedro Queiroz Pereira, who, for different reasons, had distanced himself from Ricardo Salgado, following different directions. Nor was the case of the Portuguese-Angolan Hélder Bataglia, who, for very different reasons, allowed the activities of companies in the Espírito Santo universe to be known, which helped to understand the financial collapse of this family group.

Hélder Bataglia's information

Starting from the end, it is important to remember that, recently, the Lisbon Court of Appeal considered null the order of the investigating judge of “Operation Marquês”, Ivo Rosa, who decided not to include or validate in this process the statements of the businessman Hélder Bataglia, former responsible for the company ESCOM - Espírito Santo Comercial, made in the context of another process - statements on financial transfers that indicate possible links between José Sócrates and Ricardo Salgado. Thus, the Lisbon Court of Appeal accepted these statements by Hélder Bataglia as evidence, rendering void the order issued by Ivo Rosa on June 21, 2019 that had determined the impossibility of using as statements, in the investigation phase, statements provided defendant Hélder Bataglia in the context of another case.

Contrary to Ivo Rosa's decision, Judges Ricardo Cardoso and Artur Vargues understood that Hélder Bataglia's statements had been made legally and that for this reason they are “legally admissible as a means of proof and can be valued in the context of an evidentiary assessment in instruction phase ”.

What did Hélder Bataglia say, then? Their statements report facts about the company ESCOM - formed in 1993, where Hélder Bataglia held 33% of the capital, managed by Luís Horta e Costa and Ferreira Neto, who operated in Angola, especially in the area of ​​mining resources and which was eventually subdivided ESCOM BV and Legagy, where they went to “problematic” assets. Hélder Bataglia explained how the relations between ESCOM and other offshore companies mentioned in the “Operation Marquês” case file, such as Overview Investments and Green Emerald Investment Ltd, as well as the scheme for transferring and placing funds abroad, which used the company Montenegro, Chaves & Cia Lda, owned by Francisco Canas.

However, Ivo Rosa completed the investigation phase of the “Operation Marquis” case, where the main defendant is José Sócrates, this being a case where suspicion of corruption, money laundering and other economic and financial crimes will be tried.

But - note - Hélder Bataglia gave testimonies about Ricado Salgado in the “Monte Branco” case, which were also considered decisive to constitute Ricardo Salgado accused in the “Operation Marquês” case, on credits granted by BESA - BES Angola without the necessary guarantees, which contributed to an imbalance of accounts in the order of four billion euros, which unbalanced BES's situation and accelerated the financial collapse of its universe.

In other words, Hélder Bataglia's testimony would have been very relevant for researchers from the DCIAP - Central Department of Investigation and Penal Action, to advance in the screening of offshores and the financial circuits used to move money in the financial universe under analysis. It is recalled that the “Monte Branco” process began to be investigated in 2011, arising from information obtained during the “Operation Hurricane” survey, in 2005, which investigated signs of tax fraud and money laundering.

At the same time, some of Ricardo Salgado's immediate family members issued public alerts about the lack of control that the group's distressing situation had reached. However, few assumed the problem with the frontality of the entrepreneur Pedro de Mendonça Queiroz Pereira - who belonged to the nucleus of close friends of the Espírito Santo family and who knew the universes of GES and BES very well.

Queiroz Pereira wanted “everything combed”

Pedro Queiroz Pereira wanted to make sure that the level of the tragedy in which the Espírito Santo Group (GES) had been submerged was rigorous. To this end, in 2013, it hired a legal team to “comb it out” the alleged irregularities that were worrying people who knew the reality of GES better.

After gathering complex factual elements, he compiled them in a file to be analyzed by the supervision of Banco de Portugal, letting Ricardo Salgado know about his intention.

At the origin of the investigations requested by Queiroz Pereira was his strong suspicion that Ricardo Salgado had already advanced to a secret agreement with his sister Maude Queiroz Pereira and with his cousins ​​Carrelhas, designed to allow Salgado to control Semapa in order to feed GES with the money raised to the Queiroz Pereira family group.

For this reason, he wanted to quickly undo Semapa's connections to GES and vice versa, in order to free himself from the shareholdings with which Ricardo Salgado intended to consummate the strategy of subjugating Semapa's capital to GES. But he also intended to get rid of the participation that the Queiroz Pereira family had in GES.

A “problem” of the order of 2,5 billion euros

According to investigations made at the time by the weekly Expresso, Queiroz Pereira sent a confidential letter to the Governor of Banco de Portugal, Carlos Costa, on September 24, 2013, expressing his concern about the situation of GES, since the Queiroz Pereira Group participated in 7,67% in ES Control, which, in turn, held close to 50% of ES International, where a “problem” of the order of 2,5 billion euros was identified, consisting of indebtedness that was not reflected in the accounts and uncertain assets.

Now, Queiroz Pereira's concern lay in the difficulty in accessing the real accounts of ES Control. In view of the weight that GES had on the Portuguese economy, it requested help from the Luxembourg Court to confirm ES Control's financial situation, when it was also aware of ES Internacional's bankruptcy situation, through investigations carried out by lawyers hired by Queiroz Pereira.

This whole situation would have frightened Ricardo Salgado, who made GES release the participation he held in Semapa, assuming that, in this way, Queiroz Pereira would abandon investigations into GES. This tactic would allow Salgado to keep a low profile, containing GES 'internal problems within the walls of its Swiss societies.

Ricardo Salgado was not mistaken, because after Queiroz Pereira managed to cut the corporate ties that linked Semapa to GES, Banco de Portugal informed that he would have nothing more to say about GES or BES.

BBC elected Salgado as the worst executive of 2014

However, it was not this silence that saved Ricardo Salgado. Shortly thereafter, the main problems of GES and BES were made public. With great international media pomp, Ricardo Salgado was elected by the BBC as the “worst executive president of 2014”.

As soon as he left the leadership of BES, on July 14, 2014, at the request of Banco de Portugal - replaced by Vítor Bento, due to the revelation of losses and irregularities in the accounts, confirmed as consequences of the “ruinous management” practiced by Ricardo Salgado - he was elected by the BBC as the worst executive of the year, for having bankrupted the second largest Portuguese private bank.

The BBC then reported that BES had been the subject of a resolution in early August, presenting losses of 3,6 billion euros in the first six months of the year, which implied the injection of 4,9 billion euros in the Novo Bank, where good quality assets were later transferred, leaving the “toxic” assets at BES.

The BBC also explained that BES was partially owned by Espírito Santo International (ESI), which controlled non-financial investments financed through a complex scheme. He also mentioned the indebtedness of the holding company Rioforte, in the order of 2,9 billion euros, when it only held assets of 172 million euros, which, therefore, also went into insolvency.

250 family members in management positions

The BBC revealed that GES had 250 members of the Espírito Santo family in management positions, commenting that “Ricardo Salgado and his close family lived as sovereigns on large properties”. The BBC gave as examples of Ricardo Salgado's mismanagement ESI off-balance sheet financing, hidden from investors, the valuation of ESI's stake in the bank by 2,7 billion euros compared to a market value of 565 million, or , also, the guarantee given to the Venezuelan state oil company in the amount of US $ 364 million in return for ESI's investment in debt, which contradicted the instructions of Banco de Portugal that demanded the separation between the bank and family businesses, in addition to that these were operations that did not even have accounting records.

At the end of this scandal, there were several reports that apparently Ricardo Salgado had been left with nothing, and that he continues to deal with court cases.

Among the many “adventures” that appeared in the newspapers, the professional relationship and contacts provided in Africa by Ricardo Salgado to a well-known civil builder of Reboleira did not go unnoticed, nor the way in which this businessman expressed his recognition to the executive president of BES through “Liberalities” that filled many pages of diaries and weeklies.

His former friend Pedro Queiroz Pereira safeguarded the integrity of his industrial group - despite having died of a heart attack - by passing on to his daughters the testimony of the leadership of family businesses.

For posterity, the statements he made in 2014 in the Parliamentary Committee of Inquiry on GES were: “Ricardo Salgado has a problem: he does not deal wonderfully with the truth”.

Ricciardi tried to take Salgado out of the lead

It is recalled that in the second half of 2013, José Maria Ricciardi, cousin of Ricardo Salgado, defended urgent changes in the governance model and in BES's governing bodies. He admitted that Ricardo Salgado should leave the leadership of BES. At issue, as he publicly warned, was the lack of transparency in the governance of BES and GES. In that sense, he invoked as one of the examples of lack of transparency the “liberality” accepted by Ricardo Salgado and thus justified to legitimize the fact of having received the “gift” of 14 million euros that was offered to him by the civil builder José Guilherme.

Even at the end of 2013 Ricardo Salgado and José Maria Ricciardi fought a battle for succession, “counting shotguns” to confirm who would be leading the bank and the family group. Ricardo Salgado won, maintaining the leadership, while José Maria Ricciardi resigned from his duties on June 20, 2014, which proved fatal for GES and its irremediable bankruptcy, and also for BES, which in August 2014 was the subject of the resolution process decided by Banco de Portugal.

Seven years later, José Maria Ricciardi came to be surprised by the scale of the fraud and the number of crimes alluded to by the prosecution of the Public Prosecutor's Office, guaranteeing that he had never imagined that the situation was so bad. As he had focused on the development of Banco Espírito Santo de Investimento (BESI) - later sold to Haitong Bank -, of which he was president, he did not live the daily reality at BES, so - although he was also a director of BES and a member of Superior Council of GES and administrator of ES International -, he told several newspapers that if he had known everything, he would have further pressured the departure of Ricardo Salgado from the positions he held.

Ricciardi commented several times that he did not know more than "5% of reality", comparing his position with that of the Tax Authority and the Public Ministry, which needed several years of investigations in order to try to identify those responsible. Ricciardi also said several times that he tried to "do something", which did not happen with most members of GES and the Espírito Santo family. In fact, among the members of the Espírito Santo family, José Maria Ricciardi was one of the elements who contributed most to publicly denouncing some of the biggest problems of GES and BES.

José Maria Ricciardi was eventually cleared of any crimes committed at GES and BES, being listed as a witness by the Public Ministry. Ricciardi continues to defend the thesis that if Ricardo Salgadio had been removed in 2013, and if the governance models of the bank and the group had been altered at this stage, the collapse of BES and the losses caused to many investors would have been avoided.

“Normal” childhood and youth

Ricardo Salgado's childhood and youth were spent in Lisbon, on a “normal” journey, just like that of so many young people from the middle class. He studied in public schools - he attended elementary school in Lapa and high school at Pedro Nunes. He graduated in 1969 in Economics from the Higher Institute of Economic and Financial Sciences - the current ISEG - of the Technical University of Lisbon.

He went to the Portuguese Navy, where he attended the Training Course for Naval Reserve Officers, before going to work for BESCL - Banco Espírito Santo & Comercial de Lisboa, in 1972, where he took over the management of the economic studies office and then the management until 1975, when the bank was nationalized.

Reconstruction of GES

Outside Portugal he participated in the reconstruction of the GES, first in Brazil (1976-1982) and then in Switzerland (1982-1991). Returning to Portugal, he created the International Credit Bank in 1986, before the reprivatisation began. In 1991, after the reprivatization, Ricardo Salgado assumed the executive chairmanship of BES, increased BES 'market share from 8% to 20% and advanced towards its internationalization.

In 2002 he was appointed to the Supervisory Board of Euronext NV (in Amsterdam) and in 2006 he participated in the merger of Euronext with the New York Stock Exchange (NYSE). He was a non-executive director of Banco Bradesco (in Brazil) from 2003 to 2012.

He was chairman of the executive committee and vice chairman of the Board of Directors of BES. He was also a member of the senior council of GES. He accumulated these functions with those of Chairman of the Board of Directors of Espírito Santo Financial Group (in Luxembourg) and Banco Espírito Santo de Investimento (BESI).

He was also a director of Espírito Santo Bank of Florida (in the USA), ES International Holding (in Luxembourg), Espírito Santo Resources (in the Bahamas), Banque Privée Espírito Santo (in Switzerland) and Banque Espírito Santo et de la Vénétie (on France). Currently facing the biggest financial scandal in Portugal in court. Several people who know Ricardo Salgado well today still find it difficult to assimilate the entire tragedy of GES and BES and the number of investors and companies that have been harmed by this catastrophe.

“Brutal destruction of value”

Luís Todo Bom, who organized the merger of the telecommunications companies that were at the origin of Portugal Telecom (PT) and who also carried out his first privatization, as president of PT - a group that also collapsed after the problems created by the GES universe, then PT shareholder - recently commented, in an interview to Jornal Económico, the “brutal destruction of value” caused in other companies by the collapse of GES.

Regarding the feeling he felt towards Ricardo Salgado, Luís Todo Bom commented that he does not have “states of mind in relation to people. We are all passengers, we are transitory in this world. And there is never a single culprit ”. The first president of PT considers in this respect that “the forecasting models and the compliance models did not work. There were a number of aspects that did not work. And there were several complicities. PT's supervisory models did not work. The risk management model did not work. The internal audit model did not work ”.

“Ricardo Salgado was the CEO of GES. It is in this perspective that he is appointed as the most responsible. Regardless of who is responsible, I feel enormous sadness for PT, for this company where, for four years, I worked 16 hours a day to build it. A company that was worth 11 billion euros on the market has disappeared ”, underlined Luís Todo Bom, concluding:“ I feel an enormous sadness ”.

METHODOLOGY

Jornal Económico (JE) selected the 25 most relevant personalities for Portugal in the last 25 years, referring to the period marked out between 1995 and 2020, highlighting those who had the greatest influence on the development of civil society, the national economy, and the international growth of our groups business, in the way the Portuguese Diaspora and Portuguese-speaking communities evolved, in the process of attracting foreign investors and, in short, in the way the country has established itself in the world. This list was published on September 4, 2020, before the first weekend of the ninth month of the year. Resuming the initiative from the last weekend of September, but now extended to 30 personalities, the JE will publish, every Saturday and Sunday, texts about the 30 selected personalities, in descending order. To the 25 names initially published, JE now adds the names of António Ramalho Eanes, António Guterres, Pedro Queiroz Pereira, Vasco de Mello and Rui Nabeiro.

It is necessary to explain to the reader that the methodology followed was guided by journalistic criteria, without privileging eminently political personalities, who tend to have a greater media profile than that given to entrepreneurs, economists, managers and lawyers, but also without ignore the politicians who have been determinants in society during the last quarter century. Also not ignored were the personalities who, having died shortly before 1995, had an economic, social, cultural, scientific and political impact until 2020, as is the case with José Azeredo Perdigão and the work he built throughout his long life. life - the Calouste Gulbenkian Foundation.

The ranking is initiated by the historical leaders of five Portuguese business groups, with Alexandre Soares dos Santos in first place, distinguished as a major employer in the area of ​​food distribution, and for promoting the internationalization of his group in geographies such as Poland - with the brand “Biedronka” (Joaninha) - and Colombia. He also assured the passing of testimony to his son Pedro Soares dos Santos. The Jerónimo Martins Group has been encouraging the use of marine resources, by increasing Portuguese aquaculture production in the Madeira Sea - although several economists have highlighted the importance of the Portuguese maritime platform as a source of wealth, few entrepreneurs have supported projects in this area , being the group led by Soares dos Santos one of the cases that did not neglect the potential of the Portuguese sea.

It follows in second place Américo Amorim, who in addition to his cork empire - the only sector in which Portugal has achieved world leadership -, stood out in the world of energy and oil, ensuring the continuity of family control of his business through your daughters. Belmiro de Azevedo appears in third place, consolidating the activity of his Sonae, as well as participation in the competitive world of telecommunications and the development of his food distribution group, with testimony passed on to his daughter, Cláudia Azevedo.

In fourth place is António Champalimaud and the work that the “captain of the industry” left, in banking consolidation, as a shareholder in Grupo Santander - one of the largest in Europe -, but also in terms of research carried out in the health area, at the Champalimaud Foundation . Fifthly, Francisco Pinto Balsemão is the one who focused his business life on building a communication group with integrated platforms and solid positions in the leadership of the press and television during the last quarter of a century.

The politicians appear among the following individuals, led by Mário Soares (who appears in 6th place). António Ramalho Eanes is in 7th place, António Guterres in 8th, followed by Marcelo Rebelo de Sousa (9th), António Costa (10th), José Eduardo dos Santos (11th) - due to the weight that his family members had in the Portuguese economy , especially his daughter Isabel dos Santos, and for the investments made in Portugal by the group of Angolan politicians and businessmen close to the former president of Angola, currently questioned, mostly, by the Angolan justice - and Aníbal Cavaco Silva (12th). Jorge Sampaio comes in 13th, followed by Mário Centeno (14th), José de Azeredo Perdigão (15th), António Luciano de Sousa Franco (16th), Pedro Passos Coelho (17th), Álvaro Cunhal (18th), Ernesto Melo Antunes (19th) , Luís Mira Amaral (20th), Pedro Queiroz Pereira (21st), Vasco de Mello (22nd), Ricardo Salgado (23rd), José Socrates (24th), Ernâni Rodrigues Lopes (25th), Francisco Murteira Nabo (26th), Rui Nabeiro (27th), Leonor Beleza (28th), António Arnaut (29th) and Joana de Barros Baptista (30th).

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