Former Portuguese PM Socrates indicted on graft, money laundering charges

Former Portuguese Prime Minister Jose Socrates has denied any wrongdoing on many occasions, calling the accusations politically motivated.
Former Portuguese Prime Minister Jose Socrates has denied any wrongdoing on many occasions, calling the accusations politically motivated.PHOTO: AFP

LISBON (REUTERS) - Former Portuguese Prime Minister Jose Socrates was indicted on graft and money laundering charges on Wednesday (Oct 11) in the country's biggest corruption investigation, which prosecutors say exposed his illicit links to a business elite targeted by the inquiry.

Neither Socrates, a Socialist, nor his lawyers were available for comment, but he has denied any wrongdoing on many occasions, calling the accusations politically motivated.

A more than 4,000-page indictment issued after a four-year inquiry accuses Socrates of playing a pivotal role and receiving millions of euros in a scheme involving the disgraced former heads of the Espirito Santo banking empire and of Portugal Telecom, the country's main telecom operator.

Both entities have since ceased to exist, inflicting billions of euros in losses on taxpayers and shareholders, and their former top brass have been accused of other crimes in separate high-profile investigations.

Socrates, who was premier from 2005 to 2011, was arrested in 2014 on suspicion of corruption and spent months in prison before being shifted to house arrest while prosecutors and police continued investigating to yield the formal indictment.

He is now charged with three counts of passive corruption while holding political office, 16 counts of money-laundering, nine counts of forging documents and three counts of tax fraud. The alleged crimes occurred between 2006 and 2015.

A trial date for Socrates has not yet been set.

Prosecutors said Socrates, as prime minister and afterward, gave illicit commercial benefits to a large construction company, LENA, in return for payments received via middlemen, who were also indicted, via a Swiss bank account.

A former top-level manager at state-owned bank Caixa Geral de Depositos has also been charged with facilitating payments.

Ricardo Salgado, former CEO of Banco Espirito Santo (BES) and head of the Espirito Santo banking clan, is charged with paying Socrates for using his clout as prime minister to sway Portugal Telecom to follow a strategy defined by Salgado.

Salgado is also accused of paying Portugal Telecom former CEO Zeinal Bava and chairman Henrique Granadeiro - both of whom were also indicted.

BES, which was a major shareholder in Portugal Telecom, collapsed in 2014 under a mountain of debt, causing a default of nearly 1 billion euros at Portugal Telecom, which has since been sold off.

A total of 19 people and nine firms, including LENA and various others in the construction, resort development, consulting and investment areas, have been indicted in the process.

Socrates resigned as prime minister in the middle of his second four-year term in 2011 as an escalating debt crisis forced him to request an international bailout, which imposed painful austerity measures on Portugal.

The Socialists subsequently regained power in 2015 under Prime Minister Antonio Costa, who was a minister in Socrates' first Cabinet.