This Is What Happens When A Spanish Judge Sends A Senior Banker to Jail

By Don Quijones, Raging Bull-Shit.

On October 3rd of this year, Miguel Blesa, the 66-year old former CEO of Caja Madrid, tied the knot with 39-year old Gema Gámez. No expense was spared as guests from the upper echelons of Madrid society, including former Spanish premier José María Aznar, converged on the exclusive Las Jarillas villa to witness the exchange of vows and the ritual signing of confidentiality clauses.

Despite the presence of groups of protestors on the site’s perimeter, it was an overwhelmingly happy occasion — especially for the groom. Not only was he marrying a lady 27 years his junior, but he was also a free man.

You see, just four short months ago Blesa was occupying a cell in Madrid’s notorious El Soto prison. Accused of felonies such as involvement in irregularities in Caja Madrid’s purchase of City National Bank of Florida, financial fraud and the wrongful “appropriation of funds” – legalese for white-collar theft — Blesa was not even granted bail by the judge.

As he languished in the crammed confines of the prison, trying no doubt to keep his mind off the next shower, a slight tremor of fear crept through the upper circles of Spain’s banking, business and political communities. One could almost imagine the sleepless nights and frantic late-night calls to their lawyers.

As I wrote in “The Unthinkable Happens: Former TBTF Bank Chief Goes to Jail”, the legal tradition remains essentially one based on the law of precedence. As such, had Blesa ended up facing the music for his crimes, there would be no telling who might have been next.

Clearly something had to be done, and fast. To the eternal relief of Blesa and his ilk, the government’s judiciary’s response was swift and decisive. Accusing Judge Silva of infringing the defendant’s individual liberty, of turning the case into a cause célèbre against the banking profession as a whole, and of perversion of justice, the chief public prosecutor (only in Spain can public prosecutors change bench at their own slightest whim) took the case directly to the National High Court, where the decision was made to liberate Blesa from his unseemly surroundings.

It’s incredible how quickly the wheels of justice can turn in Spain when a senior banker or one of the government’s own (prior to becoming CEO of Caja Madrid Blesa was a senior member of the governing Popular Party) finds him or herself on the sharp end of the law.

Since his release from prison Blesa’s defense team has called for the indefinite dismissal of the case against its client. As for Judge Silva, circumstances have not been quite so kind. He has spent the last four months suspended from the bench (sans salary) and now faces a legal trial of his own. If found guilty, he could well suffer the same fate as Spain’s prominent human rights judge Balthazar Garzon, and be disqualified from the bench for up to 40 years.

[For his part, Garzon was accused of wire-tapping one of the defendant’s cells in the high-profile Gürtel corruption case, which paved the way to the Bárcenas affair. However, the real reason Garzon was stripped of the robe was that he had dared to launch an investigation into the crimes of the Franco regime].

In a recent interview with the Spanish edition of Vanity Affair Silva lamented the failings of a justice system that treats high-standing citizens (bankers, business magnates, politicians and royalty) so much more kindly than all other members of society. He also discussed the chronic lack of judicial independence in Spain — an increasingly important subject given the ever-rising backdrop of political corruption and financial malfeasance in the country.

Here’s a selection of some of the juiciest quotes from the interview (roughly translated by my good self):

  • On the separation of powers in Spain:

Judges don’t have a solidly established position in Spain. We don’t have real power or independence.

  • On rising public indignation:

“Society is mobilizing because it’s tired of seeing charges pressed against so many public officials, but no sentences… You see constant problems with the banks, collapses of financial entities and the government in a very tenuous economic situation… and yet nothing happens… [The collapse of the saving banks] has led directly to loss of sovereignty and the explosion of sovereign debt to a level that will be impossible to pay off… We are talking about scores of billions of euros, of thousands of people who don’t know if they will be able to pay for their treatment against cancer, of students who don’t have enough money to enroll in college… We could be talking about generation after generation being left saddled with a debt they had nothing to do with. To investigate the delta of incognitos in the Bankia case, that is the big challenge. Compared to that, even the Bárcenas case is of lesser importance.”

  • On the importance of the Blesa case:

“While I was working on the Blesa case I received a lot of pressure, but nonetheless the case moved forward. When procedures were launched to separately investigate the purchase (by Caja Madrid) of City National Bank of Florida, however, things got more complicated. I don’t know exactly what could have happened with that entity or operation because I wasn’t given enough time to hear the case… What’s clear is that forces were mobilized against me at the behest of people who might also have been implicated in the investigation…“

  • On the state’s use of fear tactics:

They have used all the state’s resources to go after me. The only thing they haven’t used against me is physical violence… The Spanish system is not so corrupt as to kill a judge. But it can turn your life into a living hell, by opening a case against you and publicly stigmatizing you… Judges are afraid; they fear getting caught in a situation like mine.

  • On Spain’s international reputation:

It’s a great shame to see the justice system you have dedicated 20 years of your life to end up like this… It’s embarrassing when you go abroad, meet with colleagues and sense their disdain. Spain has lost a great deal of respect on the international stage.

Us VS. Them

Like the U.S. Justice Department, Spain’s judiciary — and in particular the public prosecution office — has morphed into a racket to protect society’s most ruthless and dangerous white-collar felons.

Unlike the U.S., however, Spain never really underwent a genuine separation of powers. According to Edward Punset, a Catalan scientist, economist and writer who served in Adolfo Suarez’s transition government, far too much power was ceded to the executive and legislative branches.

“Political power selects and controls the judiciary,” Punset says. “This was done in order to give more power and strength to the political parties. But with the aim that one day the political parties would give back some of that power. That moment has now arrived.”

Unfortunately, though, the politicians and bankers seem to have different ideas. As such, one can expect the Public Prosecutor’s Office to continue intervening on behalf of rich and powerful defendants while castigating “activist” judges like Silva and Garzon for “overstepping their authority”.

The result is inevitable: Under the watchless eye of the executive and judiciary branches, the financial overlords will continue plundering what remains of the real economy.

Chief among them will be Emilio Botín, the president of Spain’s biggest bank, Santander. In New York yesterday to launch the Santander brand in the U.S. market, Botín proudly declared that Spain is going through a “fantastic moment right now, because money is arriving for everything — for the stock exchange, for public debt and for direct investments.” 

And no doubt he’s right! Money is coming from all directions into Spain; the problem is that it’s going in only one direction: namely into his and his peers’ vast bottomless pockets. And for that, they’ve got all three branches of this failing state to thank. For more information about the Blesa case, click here and here. By Don Quijones.


Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.