Former Portuguese Bank Head Arrested for Money Laundering

Lisbon: Ricardo Salgado, a Portuguese economist and Banker, who was forced to quit as head of stricken Portuguese bank Banco Espirito Santo (BES) in May, was arrested today in connection with money laundering, the chief prosecutor's office told AFP.

Salgado was arrested early in the day at his home near Lisbon, a day after several premises of the Espirito Santo group were searched on Wednesday.

The 70-year-old was taken before a magistrate working on the so-called Monte Branco, or Mont Blanc, probe into a vast money laundering operation in Portugal, the office said.

Launched in 2011, the investigation is targeting tax evasion and money laundering relating to private wealth managers in Switzerland and clients in Portugal.

Salgado gave evidence voluntarily in December 2012 to investigators, who then said he was not a suspect.

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He was forced out as head of BES after 23 years on June 20 amid allegations of accounting irregularities at one of the bank's Luxembourg-based holding companies.

BES is a subsidiary of a cascade of three main holding companies.

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The first of these, Espirito Santo International (ESI), was placed under protection from creditors and put under insolvency administration on Tuesday after defaulting on its debts.

The next in the line of holdings, Rioforte, filed for the same protection process on Tuesday.

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BES itself is the biggest private bank in Portugal, where it has interests in many sectors of the economy.

BES shares have plummeted in recent weeks, raising concerns about possible repercussions for the Portuguese banking system and the country's fragile economy.