Thirteen former bankers of Monte dei Paschi di Siena, Nomura and Deutsche Bank were sentenced to prison on Friday after a case that shook the Italian establishment and fomented the rise of populism in the country.
The sentences – among the harshest inflicted on bankers convicted of financial crimes of memory – were pronounced in Milan after the men were found guilty of having helped Monte dei Paschi to hide hundreds of millions of dollars. losses between 2008 and 2012, using complex contracts.
The verdict, read by Milan judge Lorella Trovato, was delivered in front of a crowded courthouse in a Fascist courthouse, a venue for high-level mafia trials and that of former Prime Minister Silvio Berlusconi .
This is to put an end to the biggest Italian financial scandal, a history of mismanagement and fraud that led in 2017 to the nationalization of Monte Paschi. The bank based in Siena is the oldest in the world, founded in 1472.
The judges sentenced to seven years imprisonment Giuseppe Mussari and Antonio Vigni, former officials of Monte dei Paschi, and five years to former officials of Deutsche Michele Faissola, Michele Foresti and Dario Schiraldi. Sadeq Sayeed and Raffaele Ricci, former bankers of Nomura, were sentenced to three to five years.
Mr. Faissola was a senior executive of Deutsche, whose positions include head of asset management and responsible for commodities and rates. He left the bank in 2015 and became advisor to the Qatar Royal Family al-Thani, Deutsche's largest shareholder.
The penalties are longer than for the most prominent banking crimes. Tom Hayes, a former UBS star actor and Citigroup, was sentenced in 2015 to a 14-year sentence – reduced to 11 years on appeal – for conspiring to rig Libor, the court's interest rate. reference. Kweku Adoboli, a UBS trader, spent seven years in 2012.
However, under Italian law, the verdict is the first instance of judgment and the former bankers will remain free pending the appeal. Giuseppe Iannaccone, a lawyer for former Deutsche Bank employees, said he was "shocked" by the judgment and was ready to appeal. "I am fully convinced of the innocence of our customers," he added.
The three female judges also demanded that Deutsche and Nomura pay about 160 million euros to both of them. Deutsche said in a statement that he was disappointed with the verdict and that he would consider the reasons once published. Nomura said she was "disappointed" and would consider appealing. The managers of Monte dei Paschi were not immediately reachable.
The former leaders of Monte dei Paschi, President Giuseppe Mussari, and General Manager Antonio Vigni have been accused of colluding with Deutsche Bank and Nomura to hide the losses. They denied having done wrong. In 2016, Monte dei Paschi reached an agreement on a plea with prosecutors.
These losses come from investments in Italian sovereign debt made just before their value collapses during the European debt crisis. Prosecutors said that complex derivatives transactions, called Santorini and Alexandria, misrepresented Monte dei Paschi's finances during this period.
The scandal lasted between the Bank of Italy and its former governor, Mario Draghi, who later became head of the European Central Bank, while the Italian supervisor should have been aware of the losses suffered by what was then the third lender in Italy. The Bank of Italy stated that it had never been informed of the derivatives contract and that details were only discovered in a safe in the bank when Mr Mussari, the Former president, resigned.
The decision comes as the Italian establishment continues to struggle with the aftermath of the popular scandal in Monte dei Paschi and the subsequent frauds discovered by nearly a dozen other banks during the European debt crisis, when Italian economy was in a triple-dip recession.
Right-wing politician Matteo Salvini used the scandals to bolster support for his populist and anti-elite message.
Near to collapse
The state was forced to take more than 70% stake in Monte dei Paschi in 2017, while the bank was about to collapse due to a lack of capital and the leaking depositors. In terms of its rescue, Brussels has asked the Italian state to leave the bank by the end of 2021. Complicating an exit strategy for Rome, Monte dei Paschi remains weakened by 14 billion euros of bad debts and over 6 billion legal claims.
Giuseppe Bivona, founding partner of the activist Bluebell Partners, who is suing in Monte Paschi, applauded the "severe sentence". He added that this confirmed the activist's claims that Monte dei Paschi fraudulently accounted for derivatives as Italian sovereign debt.
– Copyright The Financial Times Limited 2019