Santander boss faces trial over £111m 'parachute' payouts

Emilio Botin, the chairman of Santander Central Hispano which recently took over Abbey National, is to stand trial in Madrid this week over misappropriation charges.

Emilio Botin, the chairman of Santander Central Hispano which recently took over Abbey National, is to stand trial in Madrid this week over misappropriation charges.

Mr Botin is in the dock together with two former board members. The High Court in Madrid is investigating whether "golden parachute" payments of €160m (£111m) to the former co-chairman of Santander and the former chief executive - Jose Maria Amusategui and Angel Corcostegui respectively - were legal, after a complaint by Rafael Perez Escolar, a disgruntled shareholder.

The trial was due to start today but has been postponed for one or two days. Instead, a special hearing takes place today to consider a complaint brought by Mr Escolar that the judge in the case, Javier Gomez Bermudez, is biased.

Mr Botin also faces charges of falsifying documents and violating tax laws in a separate trial that is expected to start this summer. In a third trial, he is accused of digging a well to provide water - a scarce commodity in Spain - for a golf course without obtaining permission from the authorities.

Mr Botin is alleged to have paid €56m to Mr Amusategui and €108m to Mr Corcostegui to quit. His case is that, at worst, it was a technical infringement and that his action was not only supported by the board but also endorsed by shareholders. Yet Teresa Palacios, the High Court judge, refused to strike out the action last year, stating that it "prejudiced the shareholders economically".

Mr Escolar is a former managing director of Banesto, a banking group that Mr Botin acquired after a controversial rescue by Spain's central bank in the mid-1990s. Santander's laywers point out that Mr Escolar himself was in court accused of false accounting at the time of Banesto's eclipse.

There is a vociferous lobby of 1,000 shareholders of Banesto who have spent the past 11 years trying to get satisfaction from Mr Botin or Spanish and international authorities on the grounds that they were cheated out of ownership.

Two factors are causing comment in Madrid. One is that the trial has been brought forward suddenly when it was originally set down for the summer. Secondly, the original judge, Angela Murillo, has been replaced by Mr Bermudez.

Mr Bermudez was responsible for disposing of Banesto's assets after Mr Escolar was convicted of serious financial irregularities, though Mr Escolar has always maintained that the bank was squeezed by unfair competition from Santander which was waiting to take it over.

A special tribunal will today compare Mr Escolar's complaint with a three-page denial from Mr Bermudez of any hostility, in which he points out that "never in his life has he seen" Mr Escolar and that he was not involved in his trial.

Whatever the outcome, the trial must start soon, due to pressure on court time from some major cases involving terrorism and human rights. If Mr Escolar succeeds with his complaint, the new judge will be Antonio Diaz Delgado.

Santander itself has been in trouble, and has recently paid a fine of $20,000 (£10,000) for transferring money to Cuba from its Bahamian subsidiary without notifying the US under the Helms-Burton Act.