Ex-IMF chief Rato: fallen star of Spain’s conservatives

Former Spanish finance minister Rodrigo Rato was hailed for kicking off a golden decade of growth in Spain’s economy from the late 1990s and later led the International Monetary Fund.

Now the 67-year-old is on trial over alleged spending sprees on company credit cards by him and other ex-managers in the finance group Bankia, whose near-collapse sparked an EU bailout of Spain’s financial sector in 2012.

He faces another probe into the Bankia’s failed stock market launch which left hundreds of thousands of retail investors nursing heavy losses.

Rato has denied wrongdoing in both cases but for many Spaniards he is the face of Spain’s financial crisis and the alleged rule-bending that preceded the 2012 collapse of large parts of the Spanish banking market.

In 2010 former prime minister Jose Maria Aznar called Rato the “best economy minister” in Spain’s modern history.

But when asked by reporters about him after the credit cards revelations first broke in 2014, acting Prime Minister Mariano Rajoy would not even pronounce Rato’s name.

The allegations that Rato and dozens of others spent a total of more than 15 million euros, reportedly on luxuries such as nightclubs and safaris, have embarrassed Rajoy’s conservative Popular Party (PP) and sparked a string of resignations.

“It alarms and outrages us,” said the current leader of the party, Maria Dolores de Cospedal, who in 2014 had called prominent PP member Rato “the author of Spain’s economic miracle”.

– ‘No political future’ –
Rato was thought a natural successor to Aznar and was expected to run for prime minister in 2004, but mistimed his bid. Rajoy beat him to the candidacy but later lost the election.

Rato promptly left Spain to become managing director of the International Monetary Fund, the global emergency lender that later played a key role in tackling the eurozone debt crisis.

He left the IMF in 2007 for “personal reasons” and was later handed the job of managing Caja Madrid, one of the regional savings banks that fused to form Bankia in 2010.

Rato oversaw the stock market listing of Bankia in 2011, seen as a triumph after the previous three years of financial turbulence. But the euphoria did not last.

In May 2012 the government had to nationalise Bankia to save it from ruin. Spain then had to turn to the eurozone for a 41-billion-euro bailout to save its whole banking sector.

Seven months after Bankia was rescued, Rato found himself walking into court for questioning. Furious customers who said the bank had lost their savings yelled at him: “Thief! Go to jail!”.

The scene was repeated on Monday as he arrived at a courthouse at San Fernando de Henares just outside of Madrid for the start of his trial, accused of overseeing a “corrupt system” that helped him and other executives misuse funds with credit cards.

Prosecutors are seeking a prison sentence of four-and-a-half years and a 2.6-million-euro fine.

Rato at the end of 2014 suspended his membership of the PP, a previously “unthinkable” move, according to political consultant Antoni Gutierrez Rubi.

“He has no political future,” said Rubi. “There is a feeling that Rato has destroyed his shining reputation. He had a halo of superiority and triumph everywhere he went. Now he has fallen.”