Interior & Police Minister Pedro Franco Badia is accusing former President Leonel Fernandez of not acting upon the findings of a diagnostic report despite being aware of the tenuous financial situation of the Baninter bank. Franco Badia called a press conference at the Ministry of Interior & Police to reveal that the audit was started in 1999 and ended in May 2000. On 16 May 2000, incumbent President Hipolito Mejia was elected.
In a press conference yesterday, as reported only in the government-intervened Listin Diario, Franco Badia said the diagnosis shows that then President Leonel Fernandez, former Central Bank Governor Hector Valdez Albizu and Superintendent of Banks Vicente Bengoa were aware of the high-risk situation of the bank. He said the government did not take measures to avoid the collapse of the bank back then that were recommended by the Spanish consultants, J.A. Asesores Bancarios y Financieros, placing the national financial system in jeopardy. He said that Fernandez, Valdez and Bengoa protected Baninter when it was their duty to intervene to avert the present crisis. He said that despite being aware of the delicate situation of the bank, the current PLD Presidential candidate accepted millions in donations for his Fundacion Global think-tank center. Franco Badia mentions that Fernandez received more than RD$60 million through one Luis Manuel Casado to open a Baninter account for the foundation.
Franco Badia says that the Summary and Conclusions section of the report is categorical in its revelations of the difficulties of the bank.
He said the report indicated: “The bank has a large concentration of risk, with 150 debtors holding 75.5% of the loan portfolio, which substantially increases the degree of vulnerability of the bank.”
Likewise, the same document reveals that RD$1.383 million of this portfolio accounted for loans with dubious collateral, and that the bank held a negative operational situation that was depleting its capital at a rate of 10% per year.
Interestingly, in his press conference, Franco Badia did not explain why the Mejia administration also neglected to act. While the audit was available as early as August 2000 upon the change of administration, Mejia’s monetary and financial authorities further postponed action on the available findings until May 2003, when, as telecast from the Presidential Palace, Central Bank Governor Jose Lois Malkum denounced the bank executives for grand-scale financial fraud. Before this date, Central Bank authorities had publicly reaffirmed the solidity of Baninter on several occasions.