Police Raid Firms in Lisbon, Porto and Santarém Over a Suspected 20 Million Euro Fraud on Portugal's State Development Bank

Portugal's Judicial Police (Polícia Judiciária, PJ) carried out searches on Tuesday 10 November at companies in Lisbon, Porto and Santarém in an investigation into a suspected fraud of about 20 million euros against Banco Português de Fomento (BPF), the state-owned development bank that lends to, guarantees and invests in Portuguese businesses. The figure and the details below come from press reports; the PJ had not published a communiqué on the operation by Tuesday afternoon, and no one has been charged.

What investigators suspect

According to Observador, citing Correio da Manhã, the case concerns money that left the development bank to finance companies that had applied for its credit lines and that investigators suspect ended up in the personal hands of the companies' managers. The searches are being carried out by the PJ's National Anti-Corruption Unit (Unidade Nacional de Combate à Corrupção), and the case is run by the Central Department of Criminal Investigation and Prosecution (DCIAP) of the Ministério Público, the public prosecution service, Observador reported.

ECO, citing the television channel Now, and Observador both reported that the main suspect is the manager Paulo Caetano of Quadrantis, an investment fund management company, and that prosecutors are also looking at the role of a second businessman linked to several companies that obtained investment credit lines. Being a suspect is not a finding of guilt, and everyone involved is presumed innocent.

What the bank says

In a statement quoted by ECO, BPF said it had not been searched or been the subject of any other action by the authorities. It said its investments with the entities whose beneficial owner or manager is or was Paulo Caetano go back to before the bank was set up, between 2010 and early 2022, and were made through four lines:

• the Repayable Financing Line and the Operations Financing Line of FINOVA, a fund to support financing for innovation, worth 8.68 million euros in total;
• the Venture Capital Financing Line and the Business Angels Vehicle Financing Line of the Capital and Quasi-Capital Fund (FCQC), worth 8.64 million euros.

Together those two amounts come to about 17.3 million euros, below the 20 million euros cited in the press reports. BPF said it began cooperating with the competent bodies in 2020 on assessing possible fraud in the use of public funds, began working with the other authorities in 2023 and has cooperated fully since then.

What BPF is

BPF was created on 3 November 2020 by merging two state bodies, PME Investimentos and IFD (Instituição Financeira de Desenvolvimento), into the guarantee company SPGM, under Decree-Law 63/2020, as part of the government's economic response to the pandemic. It offers guarantees, debt and equity products to companies and manages a series of public funds, including FINOVA and the FCQC, according to its list of funds under management.

What it means for you

BPF says the investments in question date from 2010 to early 2022; it has not said that any current credit line is affected. Anyone who suspects irregularities involving BPF can report them, anonymously if they wish, through the bank's irregularities reporting channel, which goes to its audit committee. The case adds to a run of investigations into public and EU money, after European auditors flagged a Portugal 2020 project for suspected fraud in October.