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Friday, 21 September, 2001, 12:06 GMT 13:06 UK
Heads roll in Spanish finance scam
Former Gescartera boss Antonio Rafael Camacho
The flamboyant Mr Camacho had a penchant for Armani
A corruption scandal that has been shaking up the Spanish financial community for the past two months has now started to rattle the country's politicians.

The Gescartera brokerage house collapsed, and its main shareholder was jailed, in July after $100m (68m) in clients' money was found to have disappeared.

As the investigation into Gescartera proceeded, one junior minister was forced to resign, and Pilar Valiente, the Spanish stock market regulator, stepped down on Wednesday.

Now, economy minister Rodrigo Rato is facing calls for his resignation, as the links between Gescartera and senior politicians become clearer.

Asked on Thursday if he would be resigning, Mr Rato replied: "Not at this time."

'Old-boy network'

The Gescartera affair has exposed the what critics claim is the "old boy network" at the heart of the Spanish establishment.

The Madrid Stock Exchange
The Gescartera affair has shaken the Spanish financial community

Antonio Rafael Camacho, the firm's boss, was briefly one of the stars of the Spanish financial world, promising investors record returns, and amassing a considerable personal fortune - including a rumoured collection of 100 Armani suits.

His aggressive marketing garnered Gescartera a high-profile roster of clients, including senior church officials, the naval pension fund, and some big charities, including a police orphans' fund, and Once, Spain's main charity for the blind.

When the $100m shortfall at Gescartera was discovered, there were allegations that Mr Camacho's connections with politicians and regulators allowed him to paper over the cracks in the firm's accounts for so long.

Mr Camacho allegedly gave gifts and jobs to staff at regulator CNMV, and installed the sister of junior finance minister Enrique Gimenez-Reyna as managing director.

Members of Mr Gimenez-Reyna's family held the purse strings at some of the charities and agencies that became Gescartera clients, and he is accused of having brokered the relationship with Once.

Some Gescartera clients were reportedly tipped off ahead of the firm's collapse, but most were not.

Heads roll

Mr Gimenez-Reyna has resigned, followed this month by Ms Valiente, whose position became untenable when her candid diaries were printed in a Spanish newspaper.

Former CNMV chief Pilar Valiente
Ms Valiente claims to have a "clear conscience"

The diaries contradicted her claim to have no knowledge of Gescartera's finances.

But Ms Valiente claimed to be stepping down in order to spare the CNMV further "harassment", and said she was leaving with a "clear conscience".

On Friday, the government nominated Blas Calzada, a director of the Madrid Stock Exchange, to replace Ms Valiente.

The move should placate opposition politicians, who had demanded an apolitical replacement to win back credibility at CNMV.

Opposition glee

The affair has been a gift to the left-wing opposition in Spain, which has so far found it hard to attack the tightly-run government of prime minister Jose Maria Aznar.

Spanish PM Jose Maria Aznar
Mr Aznar is no longer so triumphant

The socialists fell from office after a series of corruption scandals in the mid-1990s, which were gleefully exploited at the time by Mr Aznar's People's Party.

The trial of seven former socialist government officials on corruption charges is currently under way in Madrid.

But Mr Aznar's government, which once prided itself on its clean reputation, has become engulfed in a series of scandals of its own.

Aside from Gescartera, there has been uproar over the sale of a telecoms company, Sintel, to a group of Cuban exiles, who then promptly shut the firm down.

And foreign minister Josep Pique is under investigation for alleged financial irregularities, relating to the sale of a Spanish oil company, Ertoil, to France's Elf 10 years ago.

See also:

10 Aug 01 | Country profiles
Country profile: Spain
13 Mar 00 | Europe
Aznar: The quiet man who roared
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