Spain jails former IMF chief Rodrigo Rato for 4.5 years over embezzlement

File photo shows former International Monetary Fund chief, Rodrigo Rato (C), walking between police officers as he leaves his office in Madrid. (Photo by Reuters)

Spain’s National Court has sentenced former chief of the International Monetary Fund (IMF), Rodrigo Rato, to four years and six months in jail over his involvement in embezzlement in two major Spanish banks.

The court, which deals with corruption and financial crime cases in Spain, said in its indictment on Thursday that Rato had misused funds during his tenure as head of Caja Madrid and Bankia from 2010 to 2012.

Rato had been accused of splashing out money through credit cards when the two financial groups faced difficulties at the height of Spain’s economic crisis.

The indictment said when Rato took on from Miguel Blesa in 2010, he maintained the "corrupt system" established by his predecessor in Caja Madrid. It said the convict then replicated the system when he took the reins at Bankia, a group born in 2011 out of the merger of Caja Madrid with six other savings banks.

Former IMF chief and ex-Spanish economy minister Rodrigo Rato (L) and former president of Caja Madrid Miguel Blesa sitting in the dock during the first day of the "Black cards of Bankia" trial over bankers' luxury sprees, at the High Court in San Fernando de Henares, near Madrid on September 26, 2016. (Photo by AFP)

Prosecutors had accused Rato of having paid for personal expenses with credit cards put at his disposal by both Caja Madrid and Bankia. The former Spanish economy minister has denied any wrongdoing, insisting that the credit cards were for discretionary spending as part of executives' pay deal.

Rato served as economy minister under conservative prime minister Jose Maria Aznar from 1996 to 2004 and then took over the IMF until 2007. His short-lived career as a banker also led to another banking scandal considered Spain’s biggest ever. Rato resigned as Bankia chief in 2012 shortly after it was revealed that thousands of small-scale investors had been persuaded to convert their savings to shares ahead of the flotation of the bank a year before. 

The case in Spain's National Court also involves 64 other former executives and board members at both Caja Madrid and Bankia. They have been accused of misusing 12 million euros (USD 12.7 million) between 2003 and 2012, when Spain was at the height of its economic crisis. There was no report about other sentences, except for Blesa, who was sentenced to six years in jail.