Novobanco fire sold parcels of land worth €340 million for just €14 million

Portugal’s Public Ministry is investigating a number of real estate transactions made by Novobanco that may have left the Portuguese State out of pocket.

At the centre of ‘Operation Haircut’ is the sale of parcels of wasteland in Sesimbra and selloffs through real estate companies for €14 million despite these same assets having been valued at around €340 million in 2014 and around €100 million in 2019 according to Correio da Manhã.

The investigation, carried out by the Central Department of Investigation and Criminal Action (DCIAP) supported by the Judicial Police (PJ) carried out searches at the end of October.

The main target is Volkert Schmidt, the Spanish manager of GNB Real Estate, the entity responsible for administering the bank’s properties and successor department at Banco Espírito Santo.

The Public Ministry suspects that Schmidt took part in deliberately prejudicial sales in favour of third parties, causing losses to Novobanco and indirectly to the Portuguese State which had owned the bank until its sale this year for €6.5Bn.

The transactions under investigation refer to the Herded do Cabeço da Pedra estate (130 hectares sold for just €1.5 million), and a number of plots of land totalling 736 hectares sold for just €8.7 million.

According to the search warrant, the Public Ministry accuses Mr. Schmidt of trying to “value at zero and sell at 10 while taking a tidy back hander”, and also indicates that this strategy was known by the top brass at Novobanco.

In addition to the real estate patrimony, the investigation also covers the sale of several credit portfolios inherited from BES called ‘Viriato’, ‘Nata’, ‘Sertorius’, ‘Albatroz’, ‘Nata II’ and ‘GNB Vida’ which are also now beloved to have sold off at a cheaper price than the actual value.

The MP is considering three crimes: corruption in the private sector, qualified fraud and money laundering.

Source: ECO