| Santander's Emilo Botin is the latest target of Spain's judiciary |
Botín is the latest high-profile target for Spain's very active judiciary. Judge Teresa Palacios has been given permission to begin proceedings against him and four former directors of Banco Santander (as it was at the time of the alleged offences) by the Audiencia Nacional, Spain's highest court. The charges relate to the bank's activities in the late 1980s.
In 1987 the Santander Group began to market its now infamous cesiones de crédito, or loan assignments. The assignment was developed by Santander. It involved selling investors the credit risk on corporate loans without, in most cases, withholding the returns. In this way, the investor was able to avoid paying tax on the holdings at 25%.
Santander sold some Ptas430 billion ($2.6 billion) of loan assignments up to 1991. At the time the product was marketed the practice was legal. But a tax loophole was subsequently closed, creating a tax liability of around Ptas145 billion.
That debt was settled. But then allegations emerged of irregularities in some of the accounts. It was alleged that the title deeds on nearly 10,000 of the securities had been changed with the intention of concealing from the Spanish treasury the true identities of their owners.