PWCthe auditor of People’s Bank who will sit alongside those responsible for the entity, has designed a merger of the entity with Unique in 2016 to justify the capital increase of the same year, according to sources close to the matter. This operation did not take place because the Andalusian entity backed down when verifying the accounting problems du Populaire, they add.
In this expansion, the bank chaired by Angel Ron needed to raise 2.5 billion to try to resolve its serious problems of solvency -something he did not realize and that is why it had to be resolved the following year-, which led him to force the machine and allegedly commit the continuous crimes of accountant lie And investor scam of which he is accused.
But PwC offered Ron an alternative to justify this expansion: the merger of Banco Popular with Unicaja. In this way, it could be presented to the market as an offensive operation, aimed at expanding with the purchase of another bank, and not as a defensive operation aimed at the survival of the bank. In theory, presenting it this way could allow for better acceptance of the walk and a better price for actions.
According to the sources consulted, the two entities had been negotiating for a few months and a distribution of power was even planned for the resulting bank – which is always determined first – in which Popular would have control due to its larger size. However, the president of Unicaja at the time, Braulio Medelwithdrew after studying the accounts of Banco Popular.
Although he found no evidence of a crime, since he only had access to public accounts, Medel detected that he was running a lot of risk in his balance and that he did not have provisions enough to deal with it in case there were problems, as eventually happened.
Auditor and advisor
At that time, it was common for auditors to carry out audit work. advice and even own investment bank for the companies whose accounts they examined, despite the fact that the audit law that came into force that year limited these activities. These jobs provided much higher income than auditing, so they were considered to represent a conflict of interest that could relax the criteria with which accounts were analyzed.
In the case of Banco Popular, the judge Jose Luis Calama of the National court believes PwC (PricewaterhouseCoopers) and its partners Pedro Barrio Luis and José María Sanz Olmeda necessary cooperators in the offenses allegedly committed during the aforementioned capital increase and for which they will sit on the bench.
According to Judge Calama, investors attended the 2016 capital increase “deceived”, since the financial statements of this year and 2015 “did not reflect a faithful image of the balance sheet or assets”.
Last March, the judge prosecuted the accused, led by Ron himself, considering that it was proven that on May 25, 2016, the Board of Directors of Banco Popular decided to carry out and execute the increase of capital decided at the General Meeting of Shareholders. on April 11. Prior to this meeting, he explained, a meeting of the Audit Committee of the Board of Directors took place on the same day, the second item of which on the agenda was “the approval of a report favorable to the capital increase”.
The resolution stated that the Audit Commission had published a report in favor of enlargement, without having a detailed written study that could be debated. Were present at this meeting PwC external auditorswho did not warn the members of the said commission of any problem in Popular’s accounts (annual -2015- and quarterly -2016-) with a view to the capital increase.
Regarding the brochure of the capital increase, explains the judge, “deliberately altered financial information is offered – which hid the major investors provision deficits– extracts from the 2015 annual accounts audited by PwC and the financial statements as of 03/31/2016 with a limited report from the said auditor. PwC has not placed any condition to these accounts.
Indeed, if the necessary provisions had been correctly constituted, the deficit of which caused Medel to decline, Popular would have suffered losses of at least 2.5 billion in 2015 instead of the profits declared, according to Calama.
