Former IMF Chief Under Investigation For Money Laundering, Now Arrested
Rato’s dealings include misappropriation of funds through a Visa card totaling 6 Million Euro, income from serving on the international advisory board of a Turkish bank in violation of Spanish banking laws, and a series of shell corporation divestments.
UPDATE: Spanish prosecutors have arrested Rato, charging him with fraud, money-laundering and fraudulent conveyance. A three hour search of his home on Thursday revealed sufficient evidence to file the charges.
Madrid, Spain (TFC) – Rodrigo Rato, former managing director of the International Monetary Fund, is now under investigation for money laundering related to a number of shell corporations held in offshore tax havens used to swap currencies prior to requesting a Spanish tax amnesty.
The Executive Service of Prevention and Money Laundering (SEPBLAC) has compiled a list of over 700 individuals requesting the tax amnesty that have undeclared non-resident corporate or individual incomes and those that have international incomes exceeding 50,000 Euro. Rato may have violated both aspects, using offshore havens in Gibraltar, the Virgin Islands and Luxembourg. Spanish Justice Minister Rafael Catala stated that SEPBLAC is investigating “whether the origin of those repatriated earnings was legal or illegal.”
Rato’s dealings include misappropriation of funds through a Visa card totaling 6 Million Euro, income from serving on the international advisory board of a Turkish bank in violation of Spanish banking laws, and a series of shell corporation divestments. Rato left the IMF to serve as general counsel to Caja Madrid, an investment bank. During this period, he also earned income from the Turkish Akbank, a violation of the Banks Act Madrid.
Rato has claimed, “I have received no document from any agency stating I am being investigated by SEPBLAC.” Both Spanish Finance Minister and Justice Minister, however, have confirmed that Rato is involved. While Catala states that speculation on the outcome is “premature,” Finance Minister Luis de Guindos maintained secrecy for Rato. “I have a duty to keep things under wraps, a duty of confidentiality,” he said. “The only thing I can tell you is that all state institutions will comply with any legal procedures.” Those institutions are under leadership of Prime Minister Mariano Rajoy, who’s Popular Party has included the official services of Rato.
In March, Min Zhu, Deputy Managing Director of the IMF, issued a press release on the effects of money laundering. Those effects “can threaten the stability of a country’s financial sector of its external stability.” Rato, in serving in official government capacities and as a board member for multiple banks, would be in a pivotal position to undermine the stability of government and economies. The conflict of interest, as well as the request for tax amnesty, cast suspicions on the former IMF chief’s ability to engage in good faith transactions. By closing his tax havens, Rato may be attempting to cover his tracks and destroy evidence of illicit transactions before the SEPBLAC investigation has the opportunity to uncover that evidence.
