The major restructuring of Promovalor’s credit to Novo Banco, which took place in 2017, was not transferred to the Compliance Department, which ensures compliance with rules and verification issues such as conflicts of interest, to have a say – even if it is not binding.
“It didn’t really happen. I don’t remember the pass. I think I’ll remember it if it succeeds. I’m almost sure,” said Francisco Santos, who directed Novo Banco’s compliance between January 2015 and June 2017 (therefore, after Novo Banco was created and before the sale to Lone Star).
The conviction was left that there was no evaluation of the matter in response to questions posed by several MPs, and there is a document cited by the Bank of Portugal about this process, which raises doubts about the deal. This is because part of Novo Banco’s Vieira Group’s debt began to be managed by Capital Criativo (now known as C2 Capital Partners), which was partly owned by his son, Tiago Vieira, and was founded by Nuno Gaioso Ribeiro, a department. Colleague Benfica. Conflict of interest is one of the main areas of activity for compliance departments.
Part of Vieira’s debt was restructured by transferring € 219 million in credits from Promovalor to Novo Banco into a fund, FIAE, managed by C2 Capital Partners. Novo Banco owns about 96% of this fund, and the rest is in the hands of the Vieira family, which will attempt to recover the assets listed there, mainly real estate, in Portugal, Brazil and Mozambique.
Restructuring the debt of one of the bank’s largest debtors – even having more than € 400m in debt to the bank, with recognized losses of around 200m in 2018 – was not the only issue that was not related to compliance. The same happened with the sale of insurance company Tranquilidade to the Apollo Group, which happened in January 2015, when Francisco Santos was already in the department.
Free rein to rebuild
Francisco Santos was heard at a hearing in the Commission of Inquiry and it is assumed that when he took over the presidency of Eduardo Stoke da Cunha in 2015, he found the department in need of rebuilding. “I had an absolute mandate to do the restructuring that I wanted,” he explained. I rejected the lack of oath (one manager admitted, for example, that it was too difficult to deal with in Angola), but there was a lot more to do. In particular, he said, the strength of the compliance department “depends on the power the board wants to give; you either have power or you don’t have power, and who is in charge of the team has the power or not.”
The department manager defended between January 2015 and June 2017 that in any case, there are always fines to be faced for non-compliance with the rules. For example, “In the field of prevention and money laundering, the cases and fines are very serious, as they punish the managers.”
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