Audit Court orders cancellation of onerous derivatives deals
Local administrators to comply or face gross negligence charges08 February, 16:28
''The risks are numerous and unpredictable,'' said the general prosecutor's office of the Audit Court in a statement. For this reason local administrations should ''take due measures to terminate excessively onerous contracts''.
The court said administrators could count on support from ordinary and administrative judges in cancelling contracts and that failure to comply could lead to charges of gross negligence against them.
The order follows the financial scandal surrounding troubled lender Monte dei Paschi di Siena (MPS), which recently disclosed previously undeclared losses to the tune of 730 million euros resulting from at least two high-risk derivatives operations, and the December conviction of four international banks for alleged fraud over the sale of derivatives to the city of Milan.
Prosecutors alleged Milan lost 105 million euros as part of the sale of bonds worth 1.69 billion euros between 2005 and 2007 by Deutsche Bank, JPMorgan Chase & Co., UBS AG, and Depfa Bank Plc, which stood accused of defrauding the city by hiding how much they earned.
The banks all denied any wrongdoing.