Former IMF chief Rodrigo Rato was acquitted on Tuesday of fraud charges and falsifying accounts after a high profile trial over the IPO of Bankia, when he was chairman of the Spanish bank.
Rato, who always denied any wrongdoing, resigned as chairman of Bankia in May 2012. He is serving a 4-1/2 year sentence in after being found guilty of embezzlement in a separate trial over the misuse of company credit cards while he was at Bankia.
Another 33 people and entities charged in the trial relating to the bank’s ill-fated 2011 listing were also cleared of any charges, a sentence published by Spain’s High Court showed.
This included Bankia BKIA.MC itself which is in the middle of a merger with Caixabank CABK.MC.
Rato’s lawyer did not reply to a request for comment, while Bankia, which had denied any wrongdoing, declined to comment.
The ruling, almost two years after the trial started, is politically and socially charged as more than 300,000 retail shareholders lost their investments in Bankia, which within a year of its float had to be bailed out by the government.
As part of separate civil proceedings, Bankia has already paid retail investors around 1.9 billion euros ($2.22 billion) in compensation relating to losses they sustained in the IPO.
In its 442-page ruling, the court said that the financial information included in Bankia’s initial public offering (IPO) prospectus was accurate and more than enough for institutional and retail investors to form a reasoned opinion about the value of the bank and that any risks had been well flagged.
Spain’s public prosecutor had sought an eight and half years jail sentence for Rato, a former Spanish Economy minister was International Monetary Fund chief between 2004 and 2007.
Less than a year after Bankia raised 3.1 billion euros in the share offering, it restated a 2011 profit of slightly above 300 million euros with a 3 billion euro loss.
This was done by Bankia’s current management team, headed by chairman Jose Ignacio Goirigolzarri, who is poised to become chairman of the new combined entity with Caixabank.
During the trial, Rato attributed the accounting changes to writedowns against future losses when the bank changed management rather than to actual losses on his watch and said that the Bank of Spain was aware of his decisions.
Bankia, formed in 2010 from the merger of seven unlisted savings banks, was bailed out in a 22.4 billion euro state rescue in 2012, at the height of Spain’s financial crisis.