It is often said that no one responsible for the financial crash of 2008 ever went to prison. In Spain, however, a group of ordinary citizens are in the process of dragging one of Spain’s most eminent bankers through the criminal courts for fraud, money laundering, and embezzlement.
At the heart of this campaign is Simona Levi, a slight, dark-haired, softly spoken woman, born in Turin to left-wing intellectuals, and related to Primo Levi. She is a dancer and actress by training, a student of Turin’s School of Dance and of Jacques Lecoq’s theater school in Paris. She has lived in Barcelona since 1990. A theater director and a performance artist, she is also a prominent activist in a variety of movements for social justice.
Levi’s opponent is Rodrigo Rato, a former president of Bankia, one of the biggest banks in Spain, and a banker of global repute, once holding the top job at the International Monetary Fund (IMF) in Washington. As respected and powerful in Spain as JPMorgan CEO Jamie Dimon was on Wall Street, Rato presided over a massive fraudulent sale of the bank’s shares.
Rodrigo Rato is now facing jail, a success for Simona Levi and an unlikely group of people of which she is leader. It demonstrates that bankers can be brought to justice when ordinary people unite and force prosecutors to do their jobs.
The 2008 economic crisis hit Spain hard. The government brought in tough austerity measures, and inequality and unemployment rose sharply—at its peak, more than one-quarter of the working population was out of work. Despair was widespread and people were angry—as in other Southern European countries, conditions triggered popular protest.
Simona Levi reacted by setting up an organization with a group of activists. It became known as Xnet, “a peaceful guerrilla movement,” as she puts it. Their manifesto, Democracy, period, calls for greater institutional transparency; “wikilegislation,” giving citizens the right to participate in drawing up laws and proposals; and what Xnet calls a “permanent vote” that would ensure referendums are held regularly on important issues. Xnet and others also created a political party, Partido X or X Party. Like many others they wanted to break the hold of the People’s Party and the Spanish Socialist Workers Party, which had taken turns running the country since the death of the fascist dictator Franco in 1975 and whose misrule had led to the crisis.
Austerity in Spain didn’t work. Incomes continued to fall and youth unemployment reached a staggering 46 percent in the autumn of 2011. Popular protest movements grew. On May 15, 2011 the main squares in cities and towns throughout Spain were occupied for weeks; the movement that would later be called the Indignados, also known as 15M for the day it began, demanded radical political change, and out of the mass occupations, collectives of activists and citizens organized themselves into neighborhood and workplace assemblies. Simona Levi and Xnet were part of this movement.
Then in May 2012, one of the biggest banks in the country, Bankia, went bust and the long-suffering taxpayers, who had endured almost four years of austerity measures by then, had to bail it out. Levi was appalled and couldn’t understand how it had happened. She invited some other Xnet members to an informal meeting in a bar off Las Ramblas to discuss what they could do. Those around the table were activists Levi previously had gone to battle with and trusted, and were, she said, people she valued for their independence of thought. They included a gardener, a chef, and a young female IT expert. Sipping their drinks, they talked about how the government had given billions of euros to the banks, but despite this, the crisis had only worsened; now it was Bankia that had failed.
Levi had read two pieces of news that horrified her: Bankia had swallowed up a quarter of all the government financing, received by Spain from the EU, to bail out the banks. According to Levi’s calculations, the failure of this single bank accounted for one-seventh of the whole of Spanish government debt. She told me how shocked she was when she saw the latter figure in particular; it was her light-bulb moment, she said. She’d been reading about the fiasco in Iceland and following the work being done by one of the Indignado groupings, the Citizen Debt Audit Platform, but when she read the Bankia figures, it struck her, as she put it to me, that “you have to do something very wrong to have a debt like that.” No one gathered in the bar with her could explain it, so Levi proposed that Xnet try to investigate by focussing on this one bank, Bankia, and its president, Rodrigo Rato. The consequences of this meeting in a Barcelona bar are still unfolding.
Bankia was formed in 2010 through the merger of seven small, highly indebted and vulnerable savings banks or “cajas.” The 300-year old Caja Madrid was by far the largest, and its president, Rodrigo Rato, became president of the entire group. The conglomerate was set up to absorb all the profitable business and surviving loans of these cajas, while their risky assets, a result of hugely speculative property deals, were hived off to another specially created bank. This toxic bank would be owned by the government, while the healthy Bankia, now the fourth-largest bank in Spain, with 4,000 branches and 25,000 employees, could be sold off. Its shares were offered to the public in May 2011. However, investment bankers and other financial institutions showed little interest in the IPO, and so most of the initial 3.1 billion euros was raised by selling the shares to small domestic savers—about 360,000 of them.
Rato, when he took over the banking conglomerate, stood at the pinnacle of Spain’s establishment: He was a former minister of finance and economics, vice president of the center-right People’s Party government; a former managing director of the International Monetary Fund (IMF); and a partner at Lazard, the prestigious international investment bank. As Simona Levi put it, “He was untouchable, the Margaret Thatcher of Spain, a god for Spanish conservatives, the destroyer of workers’ rights to his enemies, with vast influence, and the architect of the neoliberal policies followed by Spain and other countries.” Under his watch in May 2012 Bankia announced profits of 328 million euros.
Then, abruptly, Bankia went bust. Two weeks after Rato had announced Bankia’s profits, he resigned. Under pressure from the Bank of Spain, profit became a loss of more than 4 billion euros. A year later, it would be revised again to a gigantic 19 billion euros, an unimaginable reversal in the accounts for such a large financial institution. This was “the biggest financial debacle in Spanish history,” according to the newspaper El País. The Spanish government took control once more and Bankia was bailed out to the tune of more than 23 billion euros, a figure that has recently been revised upwards—to 46 billion euros. It was the biggest bailout ever of a Spanish financial institution, paid for by taxpayers in Spain and Europe. The deal rode roughshod over Spanish regulations that protect investors: Tragically, almost all of Bankia’s small investors ended up losing most of their money, a loss estimated to be close to 2 billion euros.
It was this total reversal in the company accounts that raised suspicions in Levi’s mind, and also galvanized the other members of Xnet. They started with two basic questions. First, the dramatic collapse of Bankia’s share price from about 3.75 euros when it was first listed, to 2.07 euros a year later to 0.01 euros or virtually nothing in just two years, suggested someone hadn’t been telling the truth about the state of the bank when its savers were persuaded to buy Bankia shares. Second, if Bankia’s bailout had absorbed one-seventh of the total amount spent on bailing out the Spanish economy, the managers of the bank must have had ample warning that something was wrong. Levi told me that all she really did was ask why, a question she has been asking since she was a child. “Why did the bank collapse?”
Soon after their meeting in the bar, Levi took the microphone at a huge anti-austerity rally at Plaça de Catalunya (Catalonia Square) in Barcelona in May 2012, announced to those assembled that a group, called 15 MpaRato, had been created to investigate the bank’s collapse, and asked for others to join their efforts. Photographs of the demonstration show a thoughtful, confident, striking woman in a black dress with a print of big red and white flowers. In front of a huge, enthusiastic crowd she announced that they would sue Bankia’s former chairman, Rodrigo Rato, and his accomplices at Bankia. In truth Levi had little evidence, but standing on the platform, thrilled by the response of thousands of people, she called on victims to come forward, appealing to the crowd for evidence and support. The campaign was launched. Levi and the others on the team set out a five-year plan to succeed in convicting Rodgrigo Rato by 2017.
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Spanish law allows individual citizens or groups to file criminal complaints for review by the court if they believe a law has been broken, regardless of whether they were personally affected. Levi and her Xnet network began by presenting, via lawyers, their two fundamental questions about the workings of Bankia to National Court Judge Fernando Andreu on June 14, 2012. Once he agreed to investigate and seek evidence on his own accord, as is not unusual in Spain, Simona and colleagues continued gathering information to support their case. They also made sure they were part of the case, rather than merely providing evidence and information.
They used a variety of approaches. First they worked with lawyers to locate a number of small savers who believed they’d been personally defrauded by the bank but couldn’t say how. Hundreds of citizens also began submitting information online. Evidence that Levi and her friends thought might take a year to gather was collected in just two weeks. The 15MpaRato activists helped analyze the material, and sent it to journalists and lawyers. They also published it online, allowing the public to analyze and share the information themselves. At the same time 15MpaRato launched a crowdfunding campaign to raise funds to pay for their lawsuit. In just 24 hours, much to Levi’s surprise and delight, they had raised 130 percent of their goal (15,000 euros). The campaign against Bankia quickly became a thriving network.
Xnet’s lawsuit against Rodrigo Rato initially represented 15 people, but grew to 44. Their case was based on five main allegations related to deliberate misinformation, forgery, and fraud. Levi told me that the people who came to them, without exception, had very sad stories. Many of them were pensioners with few savings who had trusted what Levi called “the smart young men in the bank,” and felt humiliated and stupid. Throughout the years Levi worked with this group of people, all of them assumed, as she did, they would never get their money back; they just wanted justice.
In early July 2012, after considering the evidence, as well as evidence from others, including one of Spain’s smaller political parties, Judge Andreu indicted Rodrigo Rato and 33 other board members of the bank as well as its parent company as targets of an investigation into alleged financial crimes in the run-up to the bank’s collapse.
It was a good start, but 15 MpaRato’s work was far from finished. Levi and the others on the team continued to investigate and in 2013 created an online tool, Xnet Leaks, inspired by Wikileaks. The tool was designed to ensure anonymity for people who wanted to submit information about Rato and others. It works like this: Anyone with information—someone with a complaint or a whistle-blower—is ensured anonymity by accessing the TOR network. This is software that conceals his or her IP address. According to Levi about 10 percent of what they receive is judged to be worth following up on and it is sent to a second mailbox that other Xnet members can access without seeing the original sender’s identity. Then the information or the allegations are handed over to the Spanish media so journalists can probe deeper—and also to legal experts so they can assemble evidence for the ongoing court case. As Simona Levi put it, “It’s an evolution and a domestic adaptation of what we learned from Wikileaks.
Less than one year into their five-year plan, by May 2013, they had circulated over 4,000 processed leaks and pieces of evidence, along with jokes and pictures. Important information came in from multiple sources, including Bankia employees. Judge Andreu expanded his investigation from the alleged fraudulent sale of shares at the time of Bankia’s flotation and opened a second front as a result of the leaks the activists had received. He now began investigating how the two biggest banks in the Bankia conglomerate in addition had sold one financial product in particular: “preferentes” or preferred shares to small savers for over 10 years.
Preferred shares are complex, high-risk financial products that can legally be sold only to people with demonstrated financial knowledge, after the risks had been explained to them. Some workers in Bankia leaked an internal document related to the preferred shares, which had been circulated to managers and branches, and which explained how to encourage small savers to buy these preferred shares. Printed on every page was a notice that read: “This information should not be visible to customers.” Despite the fact that these shares are considered to be suitable only for experienced investors, it later emerged that some who sunk their investments into the Bankia scheme were so poorly educated that they had to sign the contract with a fingerprint. A source within the National Stock Exchange Commission leaked an internal commission document to 15MpaRato showing how small savers were encouraged to buy these preferentes with intentionally misleading information.
Judge Andreu now had evidence of falsified accounts and information related to the public offering of bank shares, and, in addition, evidence of a 10-year history of bank customers’ being deliberately misled into risky products. Levi and her group were able to ask him to initiate criminal proceedings against Bankia, based on Article 282 bis of the Spanish Criminal Court, which covers fraud and misrepresentation in connection with the sale of securities. Judge Andreu agreed, thanks to leaks received by Levi and her colleagues. In Spain, violating Article 282 is punishable with up to six years imprisonment.
Judge Andreu then commissioned a report by two experts at the Bank of Spain who later were to reaffirm that there were inconsistencies in the published information regarding Bankia’s flotation and in later reports of the bank’s accounts—and that they were falsified by Rato and his successor, who had been aware of it and had deliberately concealed it.
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Further explosive revelations were to follow, opening up yet another investigation. In December 2013, about 18 months into Levi’s five-year plan, the media and citizens learned about the contents of around 8000 e-mails from Caja Madrid (as noted previously, the largest of the seven small banks that united to form Bankia), which were leaked to 15MpaRato—“another extremely useful source” as Levi put it matter-of-factly. The huge tranche of e-mails, and the scandal itself became known as the “Blesa’s e-mails” or the “Blesa black-card case,” after Miguel Blesa, effectively Rodrigo Rato’s predecessor at the bank.
“Blesa’s e-mails” revealed that when Miguel Blesa was in charge, and during the transition to the leadership of Rodrigo Rato, bank executives used corporate credit cards to spend some 15 million euros of bank money on luxury goods, lavish holidays, and even petty supermarket purchases. Rodrigo Rato himself, the e-mails reveal, misused his company credit card, making 159 purchases between October 24, 2010 and November 28, 2011, spending almost 100,000 euros on alcoholic beverages, shoes, and tailoring; in restaurants and garden centers and elsewhere. They also showed that two days before he quit as chairman of Bankia, Rato took out 1,000 euros in cash on his corporate credit card. The e-mails reveal personal greed, but also that political favors, loans, and bribes were paid—and that political parties and trade unions were aware of this and took the funds from the bank regardless: Eighty-six people from every main political party and trade union were in receipt of the bank’s cash. To Levi, the details of such payoffs were “extremely significant,” starkly revealing “the complicity between politics and money, the hypocrisy and corruption at the top—the way the system really works in Spain.”
Xnet Leaks facilitated access to Blesa’s e-mails through an online search engine so that journalists, researchers, lawyers, and citizens could discover the true story as narrated in e-mail exchanges between Bankia’s board of directors. Judge Andreu agreed to investigate the existence of the so-called “black cards” as part of the Bankia case, adding a third strand to his investigations. Opening this third front in Judge Andreu’s investigation, the Blesa e-mails, was possible once again due to the work of Levi and her network.
In fact, former Bankia executives faced a deluge of court cases. From the moment Levi and 15 MpaRato announced its public campaign against Bankia, other serious allegations of corruption at the bank quickly floated to the surface; it was as if the genie was out of the bottle. One case, following the 15MpaRato’s initiative, was brought by one of Spain’s smaller political parties, Union, Progress, and Democracy (UPyD), and launched on July 4 2012. They accused 33 former Bankia executives (including Rato) of fraud, price-fixing, and falsifying accounts. The Spanish government itself started its investigation only after Xnet acted, announcing that it was launching a criminal investigation into Bankia in July 2012. And the Spanish Association of Minority Shareholder Listed Companies collected thousands of individual complaints from Bankia shareholders and launched a separate lawsuit against former directors for misinforming investors. There currently are other active lawsuits against Bankia, including one against Blesa and 20 others who are charged with fraud and other allegations related to the granting of mortgages between 2003 and 2009.
Levi’s original idea hatched in a dark Barcelona bar a year before had triggered an avalanche of disclosures that revealed the rotten core of one of Spain’s largest banks. The law was closing in. Judge Andreu assigned liability for the credit-card abuse to Rato and Blesa, and in October 2014 the former bankers and accomplices had to put up their own property (a total of 19 million euros) in personal bail. Rato was ordered to pay a bond of 3 million euros. He was also forced to resign from the People’s Party.
On April 16, 2015, Rato was briefly placed under arrest for alleged fraud, embezzlement, and money laundering—as a result of a separate investigation by another judge in a different court into suspected tax fraud, again triggered by the main case. According to information leaked to the Spanish media by court sources, he is reported to have amassed a personal fortune using a web of companies and over 70 bank accounts. The judge overseeing this investigation ordered the freezing of all Rato’s bank accounts, and in October 2015 his passport was confiscated. He denies wrongdoing, and this case also continues.
In early 2016 there was another development in the Blesa-e-mails strand of the case. Judge Andreu and Spanish prosecutors filed charges against 66 individuals related to the case, demanding a jail sentence of four and a half years for Rato, six years for Blesa, and multimillion-euro fines for each. The trial opened a month ago on September 26; both deny wrongdoing, and this case continues, too.
On February 17 of this year, Bankia announced it would refund hundreds of thousands of savers who lost most or all of their money because of the bank’s disastrous—and dubious—efforts to shore up its books five years before. This announcement followed quickly on the heels of a Supreme Court decision a few weeks earlier that Bankia had to return the money to two such customers because they had been “intentionally misled,” the court said, by the bank during its ill-fated IPO in 2011. The bank clearly saw the writing on the wall and, in an effort to avoid thousands of potentially expensive lawsuits, it has now offered an out of court settlement to the hundreds of thousands of others. The loss to these ordinary savers has been estimated to be close to 2 billion euros, and so far about 1.2 billion euros has been paid out.
Thanks to the work of Simona Levi and a network of activists and supporters, hundreds of thousands of small savers are getting their money (plus interest) back, crooked bankers and even politicians may be jailed and systemic corruption exposed. As Simona Levi put it, “Bankia was a fraud, and we, the people are winning. None of the savers we worked with throughout these years has ever mentioned money, but it is important that we can help many people who have been scammed to recover what is their money, thanks to the evidence we have made available to all.”
And who exactly will pay the bill of about nearly 2 billion euros to compensate savers? Bankia will stump up some of it, but the Spanish government still owns nearly two-thirds of Bankia’s equity. So Bankia’s wholly state-owned parent bank BFA will cover most of the bill. In short, the taxpayers of a country still severely affected by the crash and with an economy remaining far below pre-crisis levels will pay yet again—a fact Bankia’s new chairman likes to gloss over.
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For Simona Levi and other activists who worked on the Bankia case, all the targets in their five-year plan have been reached—or nearly reached—well ahead of schedule. But Levi says their work on this case is not yet over. For one, the cases have not been closed and they are watching proceedings in the Madrid courtroom very closely. Levi and her fellow activists would also like to see the regulators held responsible—but that would be an expensive venture. She believes the government itself should be called to account for the Bankia fiasco. As she says this to me she waves a hand dismissively and lets out a deep sigh. But then she smiles. There is also the unsettling thought of the millions of euros they could be liable for if they lose their case. Levi remains optimistic on that score and tries to focus on “the beautiful things we could do if we win and our costs are paid.”
Levi continues to run projects and to teach, as before, and she is setting up a Master’s program in law because it has proved so difficult to find lawyers with the relevant training to work on the Bankia case. But what she is most focused on now is the play she wrote and is directing based on the Bankia saga. She is a theater director, after all. Levi told me that the story is Shakespearean and had to be given back to the citizens of Spain and elsewhere. The play’s title is Hazte Banquero—Become a Banker—a quote from an advertising slogan used by Bankia to flog its dodgy shares to its small savers. It opened in July and has been packing in audiences as it tours the country. An English version has been completed, and discussions are taking place about whether to proceed with a play or film. And, of course, Levi and her network continue to work on other cases—the e-mails keep coming in.
The story of how a group of organized citizen activists brought a huge bank and key members of the Spanish elite to account is relevant to the ongoing debate about the role of the Internet in social change. For Xnet and 15 MpaRato activists the digital media are critical not only for communication and organization but a also as a way to effectively and securely link individual citizens with evidence of corruption—whistle-blowers, in effect—to journalists and to lawyers, in order to fight impunity and restore democracy.
Simona Levi puts it this way: “By creating 15MpaRato, and lodging a complaint that moved the Bankia case forward, and a year later with the leak of Blesa’s e-mails, the documents that brought to light the ‘Bankia black credit cards’ scandal that involved all the political parties and main trade unions in Spain, we’ve learned many things. But one of them was completely unexpected: It isn’t so difficult to indict bankers and politicians. What is difficult is to communicate to a wider public that it wasn’t members of the elite that brought this case to court but normal, everyday people. Normal, everyday people can take on the banks and win.”