Time has passed, and the sale of Puerto Targa still has not been concluded. Meanwhile the risk mounts. For his part, the vice-chairman has continued to maintain that the increase noted was caused partly by the liquidation of assets, paper discount, and pure funding, but that the sale of shares will take place imminently, thus ensuring the expected significant reduction in exposure. Our investigation has, however, revealed that the increase in exposure is due to items that were deliberately concealed at the time and that came to light only upon probing. These amounted to twenty billion pesetas, of which only seven corresponded to the Puerto Targa operation. The vice-chairman continues to maintain that the purchase of the Puerto Targa shares by Sun Qafer Alley will rectify the situation.
The investigation has revealed that Puerto Targa is a company that, following a complex operation revolving around Gibraltar-based companies, has been financed, from its foundation to the present day, almost entirely by the Cartujano Bank. This situation has been kept hidden from the majority of Board members. It could be said that the company was set up, firstly, to record a fictitious profit on the previous balance sheet of the Cartujano Bank, in that the seven billion pesetas spent on the purchase of the company were entered as profits, when the Bank actually paid itself that sum when it sold itself Puerto Targa through the Gibraltar companies acting as fronts for the operation. The second purpose of the company was, with the capital gains produced by its subsequent sale to Sun Qafer Alley, to restore the Bank's balance sheet. In other words, to restore the shortfall of over ten billion pesetas produced at the Cartujano Bank by the present vice-chairman's dealings and the burden resulting from previous transactions.
The sale, which, according to the present vice-chairman, will triple the value of the company, has not yet taken place. A new date for the sale has been set for the middle or end of this month of May. It is possible that, as the vice-chairman maintains, the Puerto Targa operation may return the bank's internal situation to normal. But, for the time being, it is definite that the systematic concealment of the true situation is proof of a cover-up in the income statement of the Cartujano Bank. This means that for the past year, the Board has been kept in the dark concerning the risks of the situation and the lack of positive results, as well as with respect to management errors and irregularities, although in truth the vice-chairman cannot be held entirely responsible.
Some of the methods used to conceal the true situation were as follows: frenetic searching for new and expensive sources of funds; false accounting
and infringement of banking regulations; and risk-taking that should the expected sale of Puerto Targa to Sun Qafer Alley (forecast to fetch some hundred and eighty million dollars) not take place will deal a serious blow to the Cartujano Bank and cause a public scandal, considerably diminishing the Bank's high standing with its shareholders, most of whom are conservative by nature and have small shareholdings.
As for the irregularities for which the present vice-chairman is directly responsible, the investigation has uncovered a general lack of financial prudence. Considerable sums have been paid to professionals and private individuals without due documentary proof These include cases of payments to public figures and institutions that can only be described as bribery. The investigation has also discovered that the vice-chairman has intervened in transactions with clients and, although this is not proven, has received certain sums as commission.
For the reasons set out above, and quite apart from the management irregularities uncovered, it is evident that the failure of the Puerto Targa operation would place the Cartujano Bank in serious difficulties. Another cause for concern is the possible negative effect that knowledge of the operations carried out by the vice-chairman involving the church of Our Lady of the Tears and the entire Puerto Targa project might have on public opinion and on the traditionally middle-class, conservative and Catholic customer-base of the bank.
In general terms, it was all true. In the past two fiscal years, Gavira had needed to perform great feats of juggling in order to present his management of the bank in a favourable light. He had taken over a bank damaged by uninspired, conservative policies. Puerto Targa and other, similar operations were simply ways of playing for time while he strengthened his position at the helm of the Cartujano. It was like building the staircase on which one climbed; but until the final coup, which would ensure his position, this was the only possible tactic. He needed a breathing space and credit, and the deal involving Our Lady of the Tears bait for the Saudis buying Puerto Targa was crucial: it would turn north Santa Cruz into a prime location for upmarket tourism. The project was a small, exclusive luxury hotel only five hundred metres from Seville's ancient mosque, a personal whim of Kemal Ibn Saud, brother of the King of Saudi Arabia and principal shareholder of Sun Qafer Alley. The file with all the plans was protected by a password on his computer, along with the report on his management of the bank and a few other sensitive documents. Copies on diskette and CD were stored in the safe just below the Klaus Paten. He couldn't let four board members ruin things. There was too much at stake.