Epic Duel In Spain Between The Politically Connected CEO Of A Collapsed Bank And A Judge

By Don Quijones, a freelance writer and translator based in Barcelona, Spain and author of the blog Raging Bull-Shit. Originally posted at Testosterone Pit

In this interminable post-crisis reality we are living, one thing has become crystal clear: regardless of the crime, senior bankers never do the time — at least not in most Western countries (with the obvious exception, of course, of bankster-scalping Iceland).

In fact, in most places these days it’s probably easier to pass a camel through the eye of a needle than it is to pass a senior banker through a wide-open prison gate.

One country that tried to buck this trend was Spain. And not just once, but twice. Yet on both occasions the banker in question — Miguel Blesa, the former CEO of Caja Madrid who stands accused of irregularities in the purchase of a Florida bank, as well as a 27-million-euro loan he granted to the now-jailed businessman Gerardo Díaz Ferrán – was promptly sprung from Madrid’s El Soto prison.

In the first instance it was the country’s public prosecution (turned defense) service that provided the V.I.P. (Very Important Prisoner) with the metaphoric file and rope needed for escape; in the second it was Spain’s National High Court. [For more background on the case, click here, here and here]

On his release the second time round, Blesa and his defense team, in cohorts with the country’s heavily politicised prosecution service, went on the counter attack. They accused the judge in the case, Elpidio Silva, of overstepping his limits and turning the case into a cause célèbre against the banking profession as a whole. Silva was promptly charged with perversion of justice. If found guilty, he faces the prospect of indefinite expulsion from the bench.

Pandora’s Box

So far, so normal. Following the National High Court’s intervention, Spain was once again fully realigned with the rest of the West. But then, out of the blue, something happened that was in neither the government’s nor Blesa’s scripts. Somebody, somewhere, somehow, got their hands on a cache of over 8,500 emails and SMS messages from Blesa’s last three years at Caja Madrid — documents that Judge Silva had solicited during his investigation — and promptly leaked the whole lot to the Spanish online publication El Diario. 

Now that the emails are gradually seeping into the public domain, Silva is finally receiving some vindication for his actions, as a picture slowly emerges of shameless shenanigans at a publicly financed, not-for-profit savings bank. Hijacked by senior political figures in the People’s Party, Caja Madrid — now the rotting rump of Grupo Bankia — was used for years as an Aladdin’s den of political favours and cheap, easy money.

And the man guarding the door to that den was Miguel Blesa.

Politics and Banking: The Worst of Both Worlds 

In this golden age of revolving-door democracy, we have become all but inured to the sight of deeply compromised senior figures flitting between the hallowed halls of government and the gilded corner offices of some of the world’s most powerful banks, and making a packet along the way.

In the U.S. mass migrations of senior banking figures (Robert Rubin, John Corzine, Hank Paulson, Gary Gensler…) from Wall Street to government helped pave the way to the financial sector’s takeover of government.

In Blesa’s case, however, his movement was in the opposite direction: from government into banking. Indeed, when appointed to Caja Madrid’s board in 1996 by his close friend and then-prime minister of Spain, José María Aznar, Blesa had zero experience of banking, having spent his entire career in government and civil service. That did not stop him, however, from rising the ranks to CEO in the short space of just four months — a position he would occupy until 2009.

The question is: who was actually running the bank’s operations during that period? And for whose benefit?

Pulling the Strings From PP HQ 

Many of the emails sent and received by Blesa reveal how his position as CEO was exploited by former colleagues in the People’s Party to gain strategic influence over the bank’s board, request million-euro investments for white elephant projects and demand favorable treatment for friends.

One person who figures prominently in the emails is the former regional premier of Madrid’s regional government, Esperanza Aguirre. Like Teflon Tony (Blair), Aguirre has an uncanny knack of skirting scandal. Indeed, the populist, hyper-connected, regular Bilderberg attendee remains a hot favourite to succeed Rajoy, though perhaps not for much longer.

Multiple emails show how both Aguirre and her second-in-command and eventual successor, Ignacio Gonzalez, pressured Blesa into granting the faltering regional television station Telemadrid financing so that it could buy the broadcast rights to Real Madrid games (a deal that would ultimately fall through); giving jobs or seats on the bank’s board to friends or associates (many of whom had no experience whatsoever in the financial sector); and even enhancing the payment conditions of a friend’s mortgage.

However, as El País reports, by far the most eye-catching messages focus on an attempt by former Prime Minister José María Aznar and his namesake son, José María Aznar Botella, to convince the Caja Madrid Foundation to purchase an art collection belonging to the late artist and sculptor Gerardo Rueda:

[Aznar] had asked Blesa to help Gerardo Rueda’s son, José Luis, in the sale of his father’s art collection, for which the asking price was put at 54 million euros. Aznar and José Luis Rueda gave the bank several appraisals that put the total value of all the pieces at more than 50 million euros. But the Caja Madrid Foundation commissioned its own experts, which appraised the works at three million euros….

Despite the scandalously inflated price, Blesa did all he could to get the board on board with the project, and it was only serious opposition from senior colleagues that put paid to the deal. Soon thereafter, the former prime minister’s son, José María Aznar Botella, gave Blesa a scathing dressing down.

“Of all the things we have done for you — and there have been many — it seems to me an utter disgrace what you have done or better yet, haven’t done. We didn’t deserve this kind of disappointment,” Aznar Botella wrote in an SMS on July 16, 2009.

Aznar Jr is clearly cut from the same cloth as his father. Although he retired from public life more than a decade ago, José María I, continues to cast his long dark shadow over Spanish politics. Despite the accumulating evidence against him, both in the Bárcenas affair and the Blesa case, he denies all allegations of impropriety and is threatening to sue just about anybody who uses his name in vain.

For that reason, I will try to phrase the next sentence as prudently as possible. As the man alleged to have helped put in place the political kickbacks system operated by the PP for the last 20 years; who took Spain into war in Iraq in 2003 despite overwhelming (90 percent) public opposition; who was reputedly involved in lucrative arms sales to Libya, Venezuela and other governments; and who is now facing allegations of involvement in dodgy art deals, Aznar might just want to think twice before airing his linen in public.

My guess is that as soon as all the dust dies down from this scandal, which it inevitably will, Aznar will quietly withdraw the lawsuits.

The Coup de Grace

By far the biggest scandal during Blesa’s 13 year tenure as CEO of Caja Madrid took place in 2009, his last year at the bank.

As the global financial markets ground to a standstill in the wake of Lehman Brothers’ collapse, liquidity had all but dried up and many Spanish banks suddenly found themselves priced out of the money markets.

For big private banks such as Santander and BBVA there was always the option of issuing new shares to raise capital — but not so for Spain’s unlisted cajas. And with Spain’s “socialist” prime-minister Zapatero in a state of chronic denial about the health of the Spanish banking system and determined to avoid a bailout at literally all costs, the cajas had to find more imaginative ways to raise capital.

The solution they stumbled on was to tap — and eventually half-inch — the life savings of thousands of their longest standing, most loyal, most trusting (A.K.A. gullible) customers. And this they did by getting branch managers to sell them high-risk investment vehicles called preferentes as if they were as safe as houses, all with the tacit approval of the Zapatero government, the Bank of Spain and market regulators.

What bank sales staff forgot to mention to most of these unsuspecting customers — customers that included people who were illiterate or who suffered from learning disabilities; pensioners with Alzheimer’s or dementia; and even children — was that preferentes are hybrid debt instruments (that is, half-bonds, half- shares) that pay higher levels of interest for one simple reason: they can never be cashed in with the issuing entity.

Instead, they must be sold on the open markets. When the market is buoyant, as was the case in the late ’90s in Spain, the instruments could be offloaded with relative ease. However, when the market is seized by panic and distrust, as has been the case since 2010, holders of preferentes have literally no chance of divesting their holdings. What they are left with is a tiny fraction of their life savings.

The biggest culprit in this Maddoff-ian scam was (yeah, you guessed it) Caja Madrid. Of its first batch of 29,000 preferentes, over 99 percent were sold to families. The second batch of 140,000 instruments were sold on the open international markets, but, as Diario Vasco notes, hardly any of them ended up in the hands of large institutional investors, the actual intended target market for such high-risk instruments.

The two people who oversaw this gigantic plunder were Blesa and his replacement as CEO in 2009, Rodrigo Rato (for more on Rato and his illustrious career in politics and finance, read Portrait of a Kleptocrat). On the eve of the launch of the product Blesa wrote an email to his second in command Matías Amat Roca in which he confessed his concerns about “the excessive zeal” of the banks’ branch staff.

But such fears quickly evaporated the moment the money began pouring in. In the first day alone the bank sold 2.7 billion dollars of preferentes — 48 percent of the total target for the month. As El Mundo reports, four days later Blesa sent another email to Amat Roca in which he expressed his disbelief at the success of the project:

“It’s amazing. And all of it by fleecing our customers!”

A Rotten Edifice

This email should be enough alone to warrant a one-way ticket for Blesa back to the can, but it won’t — for the simple fact that criminality is everywhere in Spain these days. Business model du jour, it extends to the highest reaches of government, the judiciary and the monarchy, and has infected the C-suites of the nation’s banks and a fair share of its biggest businesses.

If the likes of Blesa or Rato were actually made to pay for their crimes, so would most other people in high position, and the whole rotten edifice would come crumbling down. And for that reason alone, no matter what emerges from his trail of emails, Blesa will almost certainly remain a free man.

For Silva, by contrast, what awaits is a long, hard battle to clear his name and hold onto his career. Like former judge Balthazar Garzon, he risks paying a heavy price indeed, for in this country of corrupt and highly corruptible men (and women) of high position there is scant room, if any, for honour or integrity.

Print Friendly, PDF & Email


  1. from Mexico

    When it comes to a race to see who is the most corrupt, it looks like it’s a photo finish between Spain, the United States and Mexico.

    1. psychohistorian

      There is no contest about which country has the largest influence on international finance.

      The contest is trying to figure out what sort of world the coming collapse will bring and how to live through the crisis periods.

      1. Generalfeldmarschall von Hindenburg

        I predict an agonizingly slow grind down until the middle class is destroyed completely. A military takeover due to a breakdown of society outside gated communities inhabited by the .01% and their lackeys, guards and jesters. We an expect the rump of the state to take the form of a vicious tax farming intelligence-police apparat that’s going to make Central American dictatorships look benign. Welcome to The End.

    2. coboarts

      Since I advocate the integration of all of the Americas into a regional entity with the north and south embracing each other, it seems that the USA is taking the first steps to align itself with the correct cultural frame of reference. And one day we can clean our house and get on with life.

  2. Ignacio

    Don Quijones has done a good job in this article and I have nothing to object. He could have added some more colour and talk about some details on the private life of these amateur banksters. Within those emails there are many details on how these guys live, their expensive hobbies (Mr. Blesa loves big game hunting around the world) and their priorities as top executives of TBTF financial firms. Of course their priorities are themselves and their loved ones. An important issue that arises from the emails is that money was used to exert control on the Administration Boards (or Boards of Directors). This entities have a large board of directors (more than 100 in a Big Caja) and sometimes it was necessary to pay some of them to get a particular decision passed. In some minor decissions 6.000€ per advisor/director was enough.

    In my opinion corrupted governance at this level, not only in Cajas, but political parties, local, regional and state administrations is the key issue that will never be mended because the actors involved are interested on keeping the status quo. The fundational statutes of these institutions do not provide for good control/regulatory tools that would make corruption a risky business. I think that a few, simple statutory changes could help a lot to reduce corruption.

  3. David Mills

    (Panglossian sarc-on) Looks like a simple, innocent case of “mis-selling” to me… (Panglossian sarc-off). These games are happening all over the place, I have seen many “structured product” offers (Singapore / Malaysia) that are just thinly veiled designs to rip off the face of the client. Bail-ins for everyone, Merry Christmas.

  4. TimR

    So is it all just small-minded corruption all the way up to the top, or are Blesa and those like him just pawns in a more ambitious plan of some strategic master-minds above them?

    1. from Mexico

      I think that’s right. A stultifying, militant parochialism is the soft underbelly of almost all progressive economic analysis within the West, and it greatly limits its usefulness.

      Unfortunately, this tendency began with Marx. But fortunately, a handful of those working in the tradition of Marx (e.g., Rosa Luxemburg, David Harvey, Giovanni Arrighi, etc.) have attempted to look at things in a more global perspective, as Banjamin Kunkel explains:

      “Marx himself somewhat curiously concluded the first volume of Capital – a book otherwise essentially concerned with local transactions between capital and labour, illustrated mostly from the English experience – with a chapter on the ‘primitive accumulation’ of land and mineral wealth attendant on the European sacking of the Americas. In the same way, Rosa Luxemburg, Marx’s first great legatee in the theory of crisis, insisted in the Accumulation of Capital (1913) that imperial expansion across space must accompany capital accumulation over time. Without the prising open of new markets in the colonies, she argued, metropolitan capitalism would be unable to dispose profitably of its glut of commodities, and crises of overproduction doom the system.”

      It is impossible to understand local events without some sort of global framework like the Marxist ones mentioned above or others like world systems theory (e.g., Immanuel Wallerstein), critical globalization studies (e.g., William I. Robinson), or realism (e.g., John J. Mearsheimer).

      As Robinson puts it:

      “We are living in troubling times. The system of global capitalism that now engulfs the entire planet is in crisis….

      [T]his new era is bringing us into a singular global civilization, in which humanity is bound together as never before, yet divided into the haves and the have-nots across national and regional borders in a way unprecedented in human history. This new transnational order dates back to the world economic crisis of the 1970s and took shape in the 1980s and 1990s. It is marked, in my analysis, by a number of fundamental shifts in the capitalist system. These shifts include, first, the rise of truly transnational capital and the integration of every country into a new global production and financial system…..

      Globalization is anything but a neutral process. It has produced winners and losers, and therefore has its defenders and opponents. There is a new configuration of global power that becomes manifest in each nation and whose tentacles reach all the way down to the community level. Each individual, each nation, and each region is being drawn into transnational processes that have undermined the earlier autonomies and provincialisms. This makes it entirely impossible to address local issues removed from global context.”


      1. craazyman

        some of those early “autonomies” and “provincialisms” weren’t all that hot for the guinea pigs on the ground. it wasn’t always like Bambi in the wooded grove with big eyelashes and a bashful shyness! But that’s how it looks from the library and the faculty lounge. That’s why these books get published.

        anyway, it’s nice to get these clips from the books so I don’t have to read the books, but even the clips sometimes are kind of long and the laziness is strong. It all get to be like a swarm of mathematics on a blackboard with symbols, swiggles, English letters, numbers, exponents, logatrithms, sines and cosines, integrals, matrices, Greek letters and you look at it and you say “faaaaaak” but then you really think about it, and it all factors down to 3x + 4y = 18. And then you say “Shit. I thought so.” hahahah

        1. from Mexico

          To charge that these global analyses teach that earlier “autonomies” and “provincialisms” were or are somehow superior is a straw man. That is not in any way, shape, or form what they are saying. Quite the contrary, what they are doing is describing the world as it works today, and asserting that if one wants to be effective in today’s world one must operate in the world as it exists today, and not as it existed in some bygone era.

          As Robinson explains, a critical global studies

          “must take a global perspective, in that social arrangements in the twenty-first century can only be understood in the context of global-level structures and processes, that is to say, in the context of globalization…. Any critical studies in the twenty-first century must be, of necessity, also a globalization studies.

          But global-level thinking is a necessary but not sufficient condition for a critical understanding of the world. Transnational corporate and political elites certainly have a global perspective. Global thinking is not necessarily critical and is just as necessary for the maintenance of global capitalism as critical global-level thinking is for emancipatory change. If we can conceptualize a critical global studies then we should be able to conceive of a ‘‘noncritical globalization studies.’’…. Such a non-critical globalization studies is thriving in the twenty-first-century academy.”


          1. craazyman

            when I was alive and in the Overworld I always thought that many generalities reached a point of ambiguity where they contained not only themselves but such a wide range of possibilities that they could mean almost anything beyond themselves.

            then I lost all my money, after reading Doom & Gloom macroeconmic analysis on the interenet and thinking I was getting smarter when I really was only getting more delusional, and I had to focus on working for a living in the Underworld.

            Now posting comments from the Ring of the Inferno where unlucky speculators sit at their desks all day and all night working. No more time to read philosophy since it’ll only lose you money unless you can sell it to somebody and nobody down here is buying it. if they spend their money on something down here, it has to mean something. haha.

            1. from Mexico

              Well again, you are attempting to make a highly reductionist, cartoon-like characterization of something where such a portrayal just doesn’t fit the bill. The “Ring of the Inferno” does not operate in a separate, independent universe from “the Overworld,” and vice versa, as Robinson explains:

              “To engage in a critical globalization studies means to maintain contact with everyday concerns, a connection with social forces from below, in its theoretical and empirical research concerns. Such engagement with everyday concerns is the ‘‘act locally’’ of the oft-cited aphorism. People experience global capitalism in their localities and everyday lives. For a critical globalization studies, the local–global link means identifying how global processes have penetrated and restructured localities in new ways, organically linking local realities to global processes. Burawoy et al. have shown in their diverse locally situated studies what they call a ‘‘global ethnography,’’ how ‘‘ethnography’s concern with concrete, lived experience can sharpen the abstractions of globalization theories into more precise and meaningful conceptual tools’’ (2000: xiv).

              It is at this local, experienced level of global capitalism that intellectuals engage in active participation in everyday life, acting as agents or organizers, or in Gramsci’s words, as ‘‘permanent persuaders’’ in the construction of hegemonic social orders (1971: 9–10). The intellectual in this case contributes to the active construction of hegemony by particular social forces that construct and maintain a social order on an ongoing basis. But such intellectual labor can also entail a connection with opposing initiatives, with forces from below and their attempts to forge a counterhegemony by drawing out the connections, through theoretical reflection, that link the distinct lived realities, everyday spontaneous and organized forms of struggle. By propagating certain ideas, intellectuals play an essential mediating function…by performing a valuable supporting role to subordinate groups engaged in promoting social change (5–23; 52–55).”


              I certianly understand the allure of anti-intellectualism, but it is worth recalling something Joseph Huber wrote:

              “Reform activists aiming at getting new monetary policies onto the political agenda will ask why it is necessary to bother about engaging in a discussion of mainly academic concern. The answer is: academic expertise matters. Weak expert support is currently a main bottleneck for advancing monetary reform. Parties and politics will not seriously move as long as there are not 5–15 per cent among the economic experts at universities, in think-tanks, editorial offices, ministries, financial authorities, central banks and MFIs who understand the relevance of modernising money and banking theory, and who acknowledge monetary reform to be a relevant issue…”


              1. craazyman

                ok you got me. :)

                as soon as I recover my losses from all the macroeconomic sky-is-falling Doom & Gloom I’ve read here at NC — and other places, like the 4 Horsemenn of the Finnancail apocalypse — I’ll get a 2nd wind and re-engage cerebrally with a panache of erudition. But for now, it’s looking for a way to get rich quick and I won’t apologize for that. We all need money to support our habit of laying around wasting time.

                Where do these intellectuals get their moral compass? It may be something from the Watchers but not from Nature. It may be something people have to invent new words for. Once they have the words, the logic runs on autopilot. That should show who’s boss.

              2. Calgacus

                Sure, but one can go to far in globalism. And I think you may be, referring to Huber. The key case where the mainstream among progressives or elsewhere is excessively global thinking is in the lunatic idea that “fiat” currency issuing states with no or minor foreign denominated debt or guarantees face a foreign constraint on their domestic spending. They just don’t. Otherwise sensible people like Wynne Godley & Ramanan subscribe(d) to this nutty, and quite novel idea.

                One can and should economically analyze and direct separate societies, separate states from a mainly domestic perspective. Outside of MMT, Lerner and a few other great economists and philosophers, foreign purely economic power is greatly exaggerated. In the modern age, the only real exception is oil.
                Huber’s theorization, which is greatly divergent from MMT is quite, quite, wrong. It just doesn’t make sense. It doesn’t do the accounting right, and is largely a backward step.

            2. Murky

              Craazyman, here is a key to unlock the genius within. It’s called the ‘postmodernism generator’. You too can have effortless clarity, depth, and precision of thought, with just a click of your mouse. Have fun with it!


  5. diptherio

    A couple quick copy-editing notes. Quijones’ by-line needs to be italicized and bolded, as per standard NC practice. Also, the first sentence of the fifth paragraph should read, “…Blesa and his defense team, in cahoots with the country’s heavily politicised prosecution service…”, not “in cohorts with…”

    What happens when the populace at large wakes up to the fact that darn-near all our political and business leaders are criminals? Revolt? Revolution? Despair and Apathy? Spain may be out test-case.

  6. Chauncey Gardiner

    As this post abundantly demonstrates, the bank and corporate criminals need help to avoid incarceration for their crimes against humanity. And they are getting it… from the highest levels of governments and supranational organizations around the world. In fact, as the author indirectly observes, they ARE the government.

    Thank you for this post, disturbing as it is with respect to the loss of both the Rule of Law and basic ethical conduct. Reader “From Mexico’s” comment above that this behavior must be considered in a global context is very well considered.

    How does the so called “global elite” think their behavior is going to be reflected in the behavior of other members of human society? Maybe they just don’t care.

    Judges like Silva and Rakoff have my vote… for whatever that’s now worth.

    1. OMF

      There is more to the lack of Banker prosecution than the support of governments. The two other critical lynchpins are: 1) The support of the media, but most importantly 2) the support of the legal system.

      Don’t let the presence of a judge on the opposite side of this particular story confuse things. Bankers in the western world rely principally on the advice, support, and power of lawers, law firms, and the court system in order to maintain their de facto immunity from prosecution. The role of the law societies, bar associations, and courts in general is the as yet untold aspect of the financial crisis to date.

      In fact, principally this crisis is a crisis of the rule of law.

  7. The Heretic

    We need a strategy to split the elites (and their servants among the 10%) against each other, even as we need a strategy to unite the poor and the middleclass to work together. Surely there must be characteristic that can divide them…. There must be some among them who still feel a pang of consciousness, who abhor the impoverishment of there own nation, but they do not not know of any alternatives, vs those who feel no sympathy toward their own nation. And their are others who are minorly corrupt as compared to those who have power to pervert the system… There must be some way to split them….

    I suspect that whatever the movement, it will need some elite support. Find the ones who are palatable.

    1. Gerard Pierce

      We need a strategy to split the elites (and their servants among the 10%) against each other, even as we need a strategy to unite the poor and the middle class to work together”

      It’s an excellent idea, but the nature of the system is that the system controls the individual actors. If you want to see how it works on a small scale, read Babbit. When he steps out of line in a small way, his real estate group squashes him until he gets back into line.

      I don’t think you can count on the good-will of any segment of the 10%. You might get them to react in response to a severe threat to their own interests, but the nature of the system is that it contains its own mechanisms for dividing up the loot and resolving conflicts.

      If one group is too successful, such as tort lawyers, other groups organize to cut them down to size – and that is without any actual attempt at rebellion.

      And it can’t be a small issue. Unless it’s a mater of complete survival, no one wants to take the rist of going against the system and losing.

      If your idea is to work at all, you have to think in terms of groups and the individuals who lead those groups And that almost puts you into the realm of politics again. The idea still might work, but you have to consider some of the things I mentioned and look at how the current system works.

      It worked for the unions long ago, but the most successful unions were based on ethnic divisions and an existing leadership structure.

  8. steelhead23

    I thought public banking was supposed to end all these mal-incentives. This story really bugs me because I have espoused reducing the risk-taking of commercial banking by offering “People’s Banks” – non-profit institutions that would focus on low-risk ventures, ala George Bailey’s bank in Its a Wonderful Life and would pay straight salary, not paper-profit based bonuses. I get it that corruption knows no bounds, but am quite curious about the incentives that led to this level of corruption – selling illiquid securities to the unsophisticated. I suspect the real reason they stole from old folks is that Spain would have had trouble borrowing the money to shore up the bank – not to mention Brussels breathing down their necks. If creating non-profit banks doesn’t solve the problem, I’m at a loss as to what would.

    As regards imprisoning banksters, I mildly disagree with Yves here. We’ve got enough folks in prison. I’m all for corporeal punishment in such cases. Half a dozen whacks from a Singaporean caning officer and I would bet a month’s pay, Jamie would see the light. And heck, government could recoup some of its cost of prosecution if they were to hold a lottery for deputy caning officers du jour. I for one, would suddenly be interested in lottery tickets.

  9. Bobito

    All this supposedly criminal activity predates the financial crisis. The not-for-profit cajas were under the indirect control of regional governments (via the power to appoint directors) and certain sectors took advantage of this to loot.

Comments are closed.