The granting of a public guarantee to cover the liability of authorities for damage to the Administration’s assets (i) –

By Ernesto Suárez-Puga

Introduction

The Catalan Institute of Finance (hereinafter, the “ICF”), an entity of the autonomous public sector of the Generalitat of Catalonia, has granted a precautionary assure required by the Court docket of Auditors for the potential scope during which sure individuals would have incurred in the course of the train of public workplace within the Catalan Administration. The fraudulent nature of an identical assure, that’s, charged to public sources of the duty to compensate the harm that the assured ones had induced to those self same public sources is past all doubt. In what follows, I’ll cope with process adopted at ICF to undertake the choice to grant the assure, that’s, concerning the validity of the settlement of the settlement of its governing physique (the Governing Board) approving the granting of that assure in utility of the Decree Law 15/2021, of July 6, creating the Complementary Risk Fund of the Government of Catalonia (hereinafter, the DLFCR and “the Fund”).

Nature and fundamental authorized regime of the ICF

The Catalan Institute of Finance is an entity of the autonomous public sector with its personal authorized character (art. 1.1 TRFLICF). That’s, the ICF is a separate patrimony endowed with company or capability to behave with the aim to grant financing in favor of people, freelancers and professionals, within the train of their financial {and professional} exercise in addition to authorized, private and non-private individuals (artwork. 6 TRFLICF). Mentioned patrimony is actually made up of endowments from the Autonomous Authorities of Catalonia’s public finances and from the property ensuing from its personal exercise (artwork. 31). The illustration corresponds to the Governing Board (arts. 16 and 18 TRLICF). The managing director executes the resolutions of the Governing Board and workouts its powers by delegation (artwork. 22 TRFLICF).

The TRFLICF states that the ICF

is a profit-making entity, the exercise of which consists of finishing up these actions, operations and providers of the banking enterprise normally which can be allowed by the laws of credit score establishments present.

However, in contrast to the Official Credit score Institute (ICO), the ICF just isn’t approved to function as a credit score establishment (artwork. 1 of the Law 10/2014, of June 26, on the management, supervision and solvency of credit institutions LOSSEC). Therefore, its mission is proscribed to executing the general public insurance policies of the Generalitat of Catalonia, equivalent to, for instance, the promotion of financial exercise, the promotion of commerce or R & D & I. On this function, the ICF has full independence of administration with respect to the Autonomous Public Administration (artwork. 1.2 TRFLICF) and «The operations that you simply perform in compliance along with your exercise with people and with authorized entities should be topic to the foundations of personal proper« (artwork. 4.2 TRFLICF) and abide by «by market standards » (artwork. 2 TRLICF). Nonetheless, the truth that it’s not a credit score establishment doesn’t forestall the ICF from making use of the particular laws of credit score establishments (artwork. 1.Four TRFLICF). Particularly, with regard to its governance, the ICF has a company construction just like that of credit score establishments and the statute of the members of its governing our bodies, when it comes to obligations and accountability, is assimilated to that of directors of credit score establishments (arts. 24 and ss LOSSEC).

Subsequent, I’ll look at some controversial points associated to the settlement of the ICF Governing Board to grant the assure

The assure doesn’t finance any financial exercise

It’s a matter of figuring out whether or not the granting of ensures equivalent to these which can be the thing of the DLFCR by the ICF falls throughout the enterprise or site visitors of the ICF or whether or not, quite the opposite, it needs to be thought-about that the Governing Board that approves their granting acts ultra vires.

If, as defined, the company function of the ICF is to offer financing to those that perform financial actions (whether or not people, personal or public authorized entities), it appears clear that the granting of a endorsement in favor of pure individuals investigated by the Court docket of Auditors exactly as precautionary protection of a potential declaration of accountability. And it’s that the duty to compensate for the harm to public sources whose success is assured causes the train by particular people of a job or public authority and not from an financial or skilled exercise. On this approach, the settlement to grant the aforementioned assure might represent an act extremely vires of the Governing Board.

This conclusion just isn’t modified by the truth that the Transitory Provision of the DLFCR exceptionally and provisionally entrusts the administration of the Fund to the ICF. Not due to the manifest unconstitutionality of the aforementioned Decree-Regulation and, subsequently, of the aforementioned fee, however as a result of the members of the Governing Board of the ICF would have recognized prematurely on the time of adoption of the settlement that the protection of accounting accountability didn’t it might have been granted neither by insurance coverage corporations (artwork. 1 DLFCR) nor by personal fairness monetary entities attributable to its fraudulent nature. This contradiction to the authorized system of the assure that was submitted to them for approval ought to clear any doubt concerning the inclusion of the operation within the company function of the ICF since it’s evident that this, in no case, consists of lend the entity’s property for fraudulent or unlawful actions. Briefly, the DLFCR, removed from implying a tacit growth of the ICF’s enterprise and site visitors, constituted an genuine warning of the absence of powers of the Governing Board to grant any assure below it. Or, in different phrases, attributing to a legit physique such because the ICF the administration of an illegitimate Fund nor does it lengthen the company function of the ICF nor does it make the acts of disposition on stated Fund legit.

To the purpose that – making use of analogically the art. 234 LSC – It’s tough to contemplate {that a} third celebration offering the assure required by the Court docket of Auditors counting on the assure of the ICF Governing Board and the bonding of its property was performing “in good religion and with out severe fault”.

In any case, the non-existence of protection or counter-guarantee of the assure on the time of its granting and the free nature of the assure for these assured (artwork. 5 DLFCR) are parts that forestall contemplating that the operation is carried out with «market standards » since any monetary entity that assumes the situation of guarantor of an operation of this kind would require each a minimal prior protection of the monetary danger assumed as compensation or remuneration for the service offered.

Thus, it may be concluded that the operation accepted by the ICF Governing Board is null and void: guaranteeing earlier than the Court docket of Accounts the accountability for the scope of the political-administrative positions of the Generalitat of Catalonia doesn’t fall throughout the company function of the ICF that has not been modified as a result of it has been entrusted with the administration of the Fund. This conclusion is corroborated by the impossibility of the ICF to behave with market standards when offering such a assure. Exactly, the truth that the liabilities which can be supposed to be coated by this assure haven’t been coated by the civil legal responsibility insurance coverage exhibits that no monetary entity – not even the ICF – can cowl them.

The duties of the members of the ICF Governing Board

The dearth of protection or counter-guarantee of the assure on the time of its granting and the free nature of the assure for the assured ones (artwork. 5 DLFCR) implies that the ICF assumes the danger and insolvency of the identical, which clearly reveals that the operation just isn’t ruled by market parameters as has simply been defined. Beneath these circumstances, it’s unimaginable to simply accept that the members of the Governing Board have complied with their obligation of care when granting the assure. As is well-known, the obligation of diligence of the social directors – relevant, no doubt, to the members of the ICF Governing Board – obliges them to adequately put together selections, acquiring the mandatory info to make sure that they won’t trigger harm to the patrimony. of the company, particularly, within the case of economic entities, finishing up an sufficient evaluation of the danger assumed by the entity. As well as, they need to undertake the choice with independence of judgment, in the very best curiosity of the entity and freed from any battle of curiosity. And, lastly, the members of the Governing Board should guarantee – obligation of guarantor – that the ICF acts always in accordance with the legislation (Legality). Failure to adjust to these duties generates, as is thought, the joint and a number of other indemnification legal responsibility answerable for all of the members of the physique who’ve participated within the settlement within the phrases of articles 226 and following in relation to articles 236 and following of the Regulation of Capital Firms with out prejudice to the provisions of the infringed authorized laws. These duties are required, throughout the framework of their powers, to the CEO who executes the settlement of the Governing Board.

In keeping with some public information, the settlement of the Governing Board would have been adopted due to the casting vote of its president after the resignation of several members. It’s uncertain, to start with, that the president didn’t have a trigger for abstention given his private curiosity within the matter (artwork. 23 Regulation 40/2015, on the Authorized Regime of the Public Sector LRJSP and artwork. 228 LSC). And it’s that, as published by the ICF itself, the appointment as a member of the Governing Board of its present president would have occurred exactly on the proposal of one of many individuals in whose favor an endorsement has been granted when the latter held the place of head of the Division of the Administration of the Generalitat competent in economics matter. And it’s that based on the provisions of article 17.Four of the TRLICF, it’s as much as the one that holds that authority to undergo the Authorities of the Generalitat the proposal for the appointment of members of the ICF. Whatever the interpretation that comes from the LRJSP, it’s clear that, in accordance with artwork. 228 LSC, the President of the Governing Board needed to abstain from collaborating in a call that benefited “a associated particular person.” The truth that that particular person held a public workplace and appointed the president within the train of his public powers just isn’t an impediment to understanding that the particular person thus “freely” designated can’t take part in making selections that have an effect on “transactionally” the one that appointed him.

If the origin of the trigger for abstention is verified within the chairman of the Board of Governors, the settlement to grant the ensures would endure from an extra reason for nullity since it might have been adopted with out the bulk required for the legitimate adoption of resolutions by the Board. of presidency.

Briefly, it’s not appreciated how the Court docket of Auditors might contemplate legitimate and adequate the assure supplied by the ICF in view of the objections which have been uncovered as much as right here and within the earlier entry.


Picture: JJBOSE

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