Over nearly 150 years, Portugal’s Espírito Santo family had built a conglomerate with interests ranging from banking and insurance, through healthcare, telecoms, energy and real estate, to agri-business, mining and hotels. The group had operations in 25 countries on four continents, employed 20,000 people and controlled 200 companies. Ricardo Espírito Santo Salgado, the patriarch and grandson of the bank’s founder, was nicknamed DDT (dono disto tudo, or owner of everything). In the summer of 2014 the unthinkable happened, and the group collapsed. One after another, its holding companies defaulted on their debt payments and were forced into bankruptcy. On July 24, police raided Ricardo Salgado’s home and he was questioned as part of an investigation into suspected tax evasion and money laundering. He was released on bail of €3 million and forbidden to leave the country. Just ten days earlier, he had been forced to step down from the helm of Banco Espírito Santo (BES), the bank started by his great grandfather; five other family members also left the board. On the first weekend of August, the Bank of Portugal, the country’s central bank, took resolution measures against BES and – in the first break-up and “bail-in” case of a European lender – placed the good assets from the bank in a new entity called Novo Banco. This was the final blow to the family as both shareholders and managers of their business group, which had weathered so many crises in the past, including nationalization in 1975. This time they lost not only most of their wealth and prized assets but also their once pristine reputation and they faced prosecution and lawsuits in several jurisdictions around the world. The case rocked Portugal’s establishment and fragile economy, and sent shock waves through Europe’s financial markets and banking system. Total losses were estimated at more than €10 billion, affecting not only the family but also over 30,000 institutional and private investors worldwide.
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