- The Washington Times - Friday, January 17, 2003

RIO DE JANEIRO, Brazil, Jan. 17 (UPI) — BBVA, Spain's No. 2 bank, has admitted to a judge that it used cash in an offshore bank account to pay a former top official within its Mexican subsidiary who in the mid-1990s had sold his private bank to BBVA.

The admission by BBVA complicates a Spanish investigation into its alleged use of hidden slush funds to bribe Latin American officials and expand in the region.

The bank's actions are being examined by Spain's top investigative judge, Baltasar Garzon, who is best known for trying to extradite Chile's former dictator Gen. Augusto Pinochet from London in 1998.

Garzon is investigating BBVA's connection to secret accounts in Liechtenstein, Switzerland and the British Isle of Jersey. The bank is also facing an investigation in the United States on money laundering.

The Spanish investigation was turned over to judicial officials after having started with regulatory agencies last April.

It was late in 2000 that BBVA admitted that it had some $239 million in secret accounts, reporting them in that year as extraordinary gains.

The accounts had been set up before Banco Bilbao Vizcaya (merged with the bank Argentina to form BBVA in 1999.

Spanish judicial officials allege the funds were used by BBV to bribe Latin American officials as the bank expanded in the region, and also to trade in its own shares.

Last Friday, Garzon dismissed charges against former directors of the bank, including the chairman of oil giant Repsol-YPF, Alfonso Cortina.

But Garzon found reason to press ahead with the investigation of five top BBVA officials, including Emilio Ybarra, the former joint chairman of the bank who resigned in December 2001.

BBVA has said it didn't use the money for any illegal reasons.

In documents handed over to Garzon last month, according to Friday editions of the Spanish newspaper Estrella Economica, BBVA disclosed the existence of another Swiss bank account — one that had been closed in 1998 by BBV with a total of $810,000 in cash.

Those funds were paid to a company owned by Jose Madariaga on the British Isle of Jersey.

Madariaga was until last year the deputy chairman of BBVA Bancomer, the bank's subsidiary in Mexico.

He also, in the mid-1990s and in the midst of Mexico's financial crisis, sold his Mercantil Probursa bank in Mexico to BBV.

According to BBVA, the $810,000 payment to Madariaga was for "services rendered."

That payment has raised red flags for investigators, who allege the bank may have made other such payments to smooth out its growth projects in Latin America.

It also ties in with the U.S. Department of Justice investigation, whose investigators allege that the bank laundered money in Puerto Rico for top Latin American businessmen, again to gain favor and further expand in the region.

BBVA has extensive operations in Mexico, Chile, Argentina, Venezuela, Peru and Colombia.

It was just this week that the bank abandoned its operations in Brazil, saying it will sell its BBV Banco subsidiary there to the Brazilian bank Bradesco.

BBVA's shares ended down more than 5 percent on the Madrid General Index.

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