Billionaire Whistle-blower Nig Og CR or ot Sieve yt Lata ele tly Pee EM CURIE CNC Meme aes tL) Prem essen eam eM eens ee es RCL Sees to get his money back. By VERNON SILVER and ANABELA REIS ? Pee Ler anaBerardo inp China for his Bus den Garden pee ern eau Oem LAD ae ene se Os ats attorney general's 18th-centuryhead- Picnerta re enc nena costs pee ote eine staked his fortune. Peete cea necone ca) Peteanere enter Monin r las Sine nets ena) Peer ioneie been once ness ios. Pertenece yon os een henemuenen cig Ste rege edly used offshore companies to try to boost the share price and their own bonuses. Berardo say eee sete cera i cron the Oporto-based bank's chairman, with whom the Moet tacce sarees coe he pas‘Nobody can guarantee you're going to have success, but it’s nother thing tobe crooked,” says Berardo, 65, who owns one of the world's most- valuable private modern-art collections, “I want the money back that they took.” In June 2008, prosecutorsaccused five former bankexecutives, including Chairman Jorge Jardim Gonealves and CEO Filipe Pinhal, of market ma- nipulation, falsification of documents and fraud. ‘Lisbon judge is considering whether to bringthe case totrial. The five executives, who denied the accusations in court filings and through their at ‘tomeys, declined to comment. Inhis book The Right to Defend My Good Name (Bnomics,2009), Pinhal says shareholders pre sented evidence to prosecutorsthat was one-sided and meant to push te executives outofthe bank. | The denunciations were nothing more thana edoor,tomake taking over the Pinhal, 63, wrote _aRDO, wo owns homesin Johannesburg, Lisbon, London and ‘Toronto, isan outsider in Portugal's financial community, says Carlos Peixoto, chief bank analyst at Banco BPISA in thenorthern city of (porto. Born on the Portuguese island of Ma- deira 965 kilometers (600 miles) from Lisbon, Berardo left school at age 13 to takea |jobatawinery where his father worked sa laborer. Heater began amassinghis fortune by extracting gold dust from min ing waste in South Africa before returning to Portugal in the mid-1980s to manage his investments. $He'sa force of nature, very hardworking and sure of him: self” says Horacio Roque, chairman of Bani SGPSSA, the big gest bankin Madeira, who has invested alongside Berardo. “Ye'saman who knows the value of money, especially because ofthe wayhe was raised.” Berardo’s all-black wardrobe and informal manners set him apart from Banco Comercial’s more-conservative executives and shareholders, He often bellows “Hello, baby” in English ‘when greeting employees and friends. The bank's other biggest shareholders have included Portugal's richest and oldest com. ‘mercial elans, such asthe Jose de Mello famil tate, chemical and bank holdings date to the 1890s. “The bank {is more formal than Berardo,” Peixoto says. ative, more aggressive than other shareholders.” Berardo’s public attack on the bank's executives, including animpromptu press conference he held immediately after his visit with the attorney general, was extraordinary in Portugal's whose real es- 's more prove: 90 ee with 8, Prosecutors say BCP loaned €590 million to offshore companies it controlled financial industry. Regulators andexecutives tend to address violations berween themselves wihout public disclosure, says ‘Antonio Ramitez, a banking analyst at Keefe, Bruyette & Woods in London. "You don’t normally gt scandals,” he says. From 19990 2008, BCP loaned590 million euros (8843 mil- ion) to 17 Cayman Islands-based companies controlled with ‘out accounting forthe debe onitsbooks, according toprosecutors accusations filed ina Lisbon court. The offshore companies used the cash to buy almost S percent of BCP's stockto boost its value, according tthe accusations, Prosecutors say the operation backfired when Portuguese stocks including BCP's, dropped in 2001 and 2002, preventing the offshore companies from paying ‘back the loans. Executives disguised the bad loans as real estate losses, which inflated the bank's exrnings and propped up the flagging shares, prosecutors say. Asa result, according tothe 2 ceusations, five executives were wrongly rewarded with €2 lion inbonuses. A bank spokesperson and the prosecutor leading ‘the case declined to comment. | andre Rodrigues, a banking analyst at Catxa~Banco de Inves- timento $A in Lisbon, says Beraréo’s revelations ignited aBattered Bank cP stock has decined since Berardo reported alleged misdes scandal that's damaged the bank, Portugal’s national newspa- pers such as Diario de Noticias, have regularly covered the story a their front pages. “The controversy was realy bad for the tank,” Rodrigues says. “It’s good to probe bad behavior, but to discussitalovand create turmoil wasn’t good. The stock went ‘down, and the management wasn't focused.” erardo, who owns stakes in Portuguese companies a from cable provider Zon Multimedia SGPS SA to winemaker Sogrape investimentos SGPSSA, lostabout 8660 milion nis honk shares in part because ofthe probe he provoked. The bank's shares plunged 6s percent to 60.924 onJan, 11 from Dec: 21, 3007, when authorities announced an investigation of the bank. erardo says the drop in the value of stocks he owns forced him to use some of his art collection of about 40,000 pieces as collateral for bank loans, the size of which he declined to dis lose. “'ve got loans like everyone else, and I've got depos sts” Berardo says. “I'm not worried. Go ahead and say Thave homoney. all the better for me, That way, people won't ask meto lend them some.” The nationally broadcast television satire Contra Informacno, which uses puppets to skewer public figures, has featured Be ‘ardo,alling him the ent teribleof Portuguese business. A ‘kit in November poked fi atthe investor for giving aninter view tothe Portuguese edition of Playboy magazine last yew. Berardo’s puppet, its shirt unbuttoned to reveal ahairy chest, rvites women in bikinis who work forthe former chairman of BCPtoaecompany him tothe Cayman Islands. ‘Oneof Berardo’s holdings has alsobeen scrutinized. As parcof ataxprobe that examined recordsatabout 150 Portuguese Busi ‘eases, in 2008 police searched the offices of tobacco company Fmpresa Madeirense de'Tabacos SA, where Berardois chairman anda major sharebolder. The investor syshe doesn expect authorities toile charges. ‘With BGP's stock price nearhistoriclows this year, Berardo's rmost-valuable investment may be anartcollection that he says ‘rasvalued in 2009 at more than $750 million. The collections “among the highest priced. the world, says ain Robertson, head ng fart business studiesat Sotheby's Institute of Artin London. ‘His most prized works, such as paintings by Pablo Picasso and “Andy Warhol, are on display atthe Berardo Collection Museum. ‘Ona Monday afternoon in October, Berardo enters the white stone fortress-like museum in Lisbon's touristy Belem» ‘eighborhood, wth its tralley carsand cinnamon-scented pas try shops. Inside the museum, visitors recognize the 6-f00t-3 inch (19-meter) Berardo, wearing his typical blacksuitand Diack crew-neck sweater, and thank him for displaying his art Unlike many cultural instieutions in Lisbon, Berardo’s museum doesn’t changean admission fee. nasun-filed gallery, erardo examines the 1808 painting atipus andthe Sphinx by Prench master Jean-Auguste-Dominique Ingres that'son loan from the Louvrein Paris The paintings be inginstalled nexeto the work that inspired Prancis Bacon's 1983 ‘Oedipusand the Shins, fer Ingres. Berard owns the Bacon paint ing “You know who used to own this one? Stallone!” Berardo shouts, referringtoactor Sylvester Stallone, Berardo recounts how he raninto Stallone and tld im The museum is located ina state-owned cultural complex— the result ofadeal Berardocut with the Ministry of Culture in 2006, The government agreed to house part ofhiscollection and took 10-year option to buy 862 paintings and sculptures for 316 million ($459 million) based on a Christie's valuation in +2006. “Giving his collection public visibilityadds value toi “Foao Paulo Queiroz, vice director ofthe Lisbon University School of Fine Arts “It’s better and probably cheaper than having t stored up somewhere.” the investor has also poured millions of dollars into exotic personal projects, such as his Buddha Eden Garden that's open tothe public. In October, chauffeur drives Berardo in his Jaguar Daimler Super Bight sedan more than 160 kilometers perhour ona highway north of Lisbon tothe Buddha gardenin Bombarral. At the ste, set among live trees the investor joins about Buddhas, dragons and lions and 700 Chinese warriors. Berardo ‘'vegot your Bacon! dozen tourists whoare perusing hundreds of stone ee pe perme 1even bad streams and ponds installed in the garden, The tallest Buddha, at 21 me ters,looms above the garden on ahil ‘The investor says the project was an actof cultural restoration he undertook after Taliban militants in Afghanistan lew up Bamian Buddhas in March 2001. ‘Tocreate the garden, he imported 6,000 tons of custom-made statues From China, attempting to march the weight ofthe wrecked Buddhas. “Ifsomebody destroys, somebody has to rebuild” says Berardo,a Roman Catholic. Berardo’sunconventionality eachesback tothe way he began making hs fortune from gold-mining wastein South Afi Atage 18, Berardo says, he boarded a ship from Ma deirato Africa, While selling fruits and vegetables to miners in outh Africa in the mid-1970s, he spotted opportunityin, $459 peer Museum the piles ofleftover dir that contained gold dustataban- doned mines. erardo sayshe gained ownership ofthe dirt often at no cost by simply filing out government paperwork. ‘Asgold prices soared sixfold to $850an ounce in 1980 rom 1976, he cuta deal with mining giant Anglo American Plctoextractthe Sea ares Te eee peat 92 Berardo’s Bets ‘STAKE, I MILO $115 Te ene cr) $392 Cr eed ‘metal Berardo says the company took 40 percent the profi and he kept the rest, making his ist million. 1vtit anp-1980s, with hs investments increasingly tied ‘pin Portuguese companies, Brardo began spendingthe bulkofhistime in Lisbon. He focused on stock radingand ‘by 200 had bought BCP stake of ore than 2 percent. ‘Since Jardim Goncalves helped found the bankcin 1985, ithad grown througha series of acquisitionsinto provider of retail and investment banking, creditcards and brokerage services. The strategy hitawall in May 2007 when the bank faledinitshostile takeover ofsmallerrivel Banco BPI After the misstep, the bank’ssupervisory board, led by Jardim. ‘Gonealves, proposed to shareholders that they give it the power ‘toname new CEOs—an authewity that had been heldby share- holders. The proposal also called forthe chairmantobe giventhe right to attend meetings ofthe executive board, which ran the ‘bank's day-to-day operations. Jardim Goncalves, 4, who had worked in Spanish and Port | guesebanks for more than thre decades, was raised ina Catho- Iicand conservative family, according tothe bank. Heisa member of the Roman Catholic group Opus De, which recruits, ‘and trains businesspeople andhews closely to church doctrine. He wrote about his experience with the group ina chapter of | the book Opus Dein Portugal (Edeline, 2002). ‘Berando, whoboosted his bankstake to as much as 7 percentby 2007, sayshe objected to whathe calleda power grabby the chairman.“Withhimit ‘was myway or the highway,” Berardosays, Bera-do ledagroup of sharehokiers who protested the board's proposal and called for Jardim Goncalves. step down, inthe media. The board withdrew its propos by the end of May 2007. Three ‘months later, Pinhal, who was then vice chairman of the executive board, became (CRO wren his predecessor resigned. ;Berardo has strong opinions, and he does what he wants todo,” says Evade Oliveina professor of human resource ‘management at Catholic University of Portugilin Oporto, Rerardo says bank insiders who sup- portedhis challenge to the chairman be ‘gan leaking documents tohim about theoffshore companies. Some documents were handed to the doorman of Berardo’s Lisbon office in envelopes lacking re evidence forthe turn addresses. Berardo says he then compiled th of wrongdoing into a sheaf of atleast 50 documet Salvador da Cunha, Jardim Goncalves’s spokesman, says that facts about the bank were presented to authorities out of con: text and dishonestly with the goal of removing former execu tive board members. “Only timeand the functioning of truly independent entities, the courts, willallow the truth tobe es tablished,” da Cunha says. ‘in January 2008, weeks after prosecutors announced their probe, Berardo won a boardroom victory at BCP. Shareholders electe 9, Carlos Santos Ferreira, and executive board, Four months later, shareholders elected Berardo as chair ind voted tocut the bonus ofthe compensation committee pool for top execut from 10 percent. Under Berardo, the committee suspended ives toa maximum of 2 percent of profit “1 Following Berardo ‘I've got loans like everyone else, Berardo says. ‘I'm not worried. Go ahead and say | have no money. All the better for me. That way, peopl won't ask me to lend them some. perks For retired executives, suchas the use ofthe corporate et 1 2008, to account for the offshore losses that Berardo helped disclose, the bank restate its prior-year earnings tore duce its equity by €00 million, The global recession has als Inurethe bank, with ts net income dropping 64 percenttoabout €201 million in 2008. Bank profitrebounded in the first nine ‘months of 2009 on the sale of meney-losingassets. “We'll pro ablyneedtolookbeyond eto more significant growth levels,” says Tlago Bossa Dionisio, bank Analyst at Banco Espirito Santo SA in Lisbon. He seesthe stock reaching €1.20—a third ofits 2007 peak—by the end of 2010 ‘Berardo the outsider is now an insider at the bankas he tries tosee the bank get b torecoup the lossin the value ofhis stake. While the provoce tive investor triumphed in the battle aver control of BOP, he ‘may not win back his bank fortune for years to come. B Vernon Silver i senior iter at BLooMBERG MaRkersin Rome. visilver@bloomberg.nst Anabela Rel s 2 roporter at Bloomberg, ‘News in Lisbon. aeist@bloomberg.nt With assistance from Jim Silver in Liston Tote letter tothe eto, type NAG a send an e-mail to bloombergmag@bloombers net Go> to use the News Search 5 of news stories that refer to ‘Type NSE "JOSE BERAROO’ function ta display head the Portuguese investor. To create an alert that will notify you when a new story that mentions Berardo appears, click tn the Save button on the red tool ar. Tab in to the Name field and enter a name for the search, Click on the arrow tothe right of Alert Type and select Message, for example, and lickon Save Type NURT to use the News Alerts func tlon to manage your alerts. Type NI PORTUG to.isplay headlines of stories related to Portugal You can use the Scroling Tick Chart (GIPT) function ta graph every bid, ask and trade price for Banco Comer PL GIPT . Type GPTR touse the Insider Transactions function to graph the bank's stock price. Click onan icon to display de~ tails of share purchases or sales by corporate in siders. Type HDS touse the Holdings, tugues shares, Type BCP 94 ‘search function to display a list of major owners of BCP shares. Clckon the Hist Held tabat the bottom of the screen ta display a table of holdings ave" time, as shown below. ON ASMUNDSSON