Corporate Black Card Scandal Rocks Spanish Banking

The last things struggling banks need is attention drawn to spending that is extravagant bordering on insane, and yet two Spanish banks – Caja Madrid and Bankia – find themselves enmeshed in just such a mess.

According to reports, the banks issued corporate chauffeurs Visa Corporate Cards in their own names so that purchases could be made on behalf of executives and board members.

The reveal of this infomation is new, but the practice is almost twenty years old–according to one of the chauffeurs involved in the scandal, the cards were issued in 1996 when Miguel Blesa took over at Caja Madrid.

Theoretically, the cards were for business purposes only. In actuality, executive took a generous view of what constituted a professional expenditure.  Many of the uses seem to be connected to private or weekend trips as well as for “road items,” gasoline and tolls.

“But most of the costs were simple whims of executives and board members who ordered us to make the payments directly, or sometimes, (it was) their secretaries,” the chauffeur told El Confidencial.

Personal expenses racked up  include items like expensive watches, iPads and personal car repairs. Drivers never handled the bills directly but monthly totals were often in excess of $10, 000.

If these reports are true, the total cost sum involved in a company credit card scandal that has rocked Spain could increase by hundreds of thousands of euros.

The scandal has seen more than 80 executives and employees of Caja Madrid and the Bankia group facing possible charge of corporate crime after allegations they spent €15.2 million on phantom company credit cards. Execs are also implicated on using such card scams to skip past taxes they owed and essentially used them as a hidden income stream.

Former IMF boss and Caja Madrid head Rodrigo Rato was hit with an almost $4 million dollar bond  while Miguel Blesa was told he would will owe close to $20 million in fines.

Both men have denied any wrongdoing.

The corporate scandal has angered Spaniards who believe it was exactly this type of corporate  behavior that led to the country’s economic crisis. Despite the lush spending habits of its leadership, Bankia faced bankruptcy in 2006 and needed a very public bail out.