Santander will appeal the ruling that obliges it to compensate Orcel with 68 million

The battle in court between Banco Santander and Andrea Orcel, who was to be the group’s CEO until the entity reversed his appointment in January 2019, has several edges and is not yet finished. On one side, the bank has lost through civil proceedings against the banker and, from another, He has beaten him up to two times criminally, the most relevant case in which the Italian came to request even the imputation of the entire board of directors and that the Provincial Court of Madrid definitively dismissed the there is no data or evidence that a crime had been committed.

By civil means, the head of the Court of First Instance number 46 of Madrid has ruled in a sentence known this Friday that the entity will have to pay 68 million euros of compensation to Orcel for his frustrated signing. According to the ruling, the contract between Santander and Orcel was valid and the entity decided to unilaterally break it. However, when imposing the sanction, the magistrate has taken as a basis the first demand of the banker (he asked globally for 112 million euros) which, after being appointed CEO of Unicredit in April, he reduced by half.

In fact, Orcel initially asked for 35 million for the deferred salary that he stopped receiving from UBS, his original entity, when he left it to go to Santander, and later reduced this amount to 18 million. Likewise, the Italian eliminated from the lawsuit another 10 million that he requested for moral and reputational damages, after being signed by Unicredit. In this way, The compensation that Santander should assume based on these reductions made by Orcel himself would be 27 million euros below that dictated, according to the sources consulted.

The financial group, which respects the judicial decision, according to official sources, appeal the decision of the Court to the Provincial Court of Madrid, since he totally disagrees with it. Santander’s council hopes to win the appeal, as has already happened in the two criminal complaints filed in the courts in relation to this matter.

It should be remembered that Orcel filed a criminal complaint against the entity on two occasions, without success. In the first, he argued alleged falsehood in commercial or official document and procedural fraud, and both the head of the Court of Instruction number 4 of Madrid first and, later, the Provincial Court of Madrid, overturned the case when they did not see a crime. On the second occasion, he requested the imputation of the council for documentary falsification, alleged crime that according to the Madrid Court lacks “data or any indication” and therefore definitively resolves the case without the possibility of recourse. In fact, the court emphasizes with respect to Orcel that the right to judicial protection cannot be confused with the right that the decisions of the Courts are satisfactory for the litigants or in accordance with their wishes or aspirations.

Civil trial

The bank defended during the civil lawsuit against Orcel, both through the statements of the president Ana Botín and the former head of HR, Roberto di Bernardini and the general secretary of the council, Jaime Pérez Renovales, that Orcel breached the agreement so that his hiring as CEO of the Cantabrian group became effective. The entity considers that the offer letter that it sent to the banker had a clause in which he had to negotiate with UBS (the entity from which he left) to pay up to 50% of the deferred remuneration that corresponded to him for the 2018 financial year, to reduce thus the amount that Santander would pay him. This remuneration was around 35 million.

However, according to witnesses, the banker, far from complying with this agreement, ended up asking Santander for more money for the interest and dividends on shares that corresponded to him from this deferred salary. After this, the bank ended up reversing the hiring of Orcel as CEO. In addition, Botín assured in May that Orcel’s appointment was never effective because it was never approved by the entity’s board of directors and the shareholders’ meeting.

The head of the Court of First Instance number 46 of Madrid, contrary to Santander’s position, considers that the contract was “valid” and therefore obliges the entity to disburse the compensation, as reported Efe.

According to the judge, the offer letter constituted a “valid and perfect contract, since it contains an offer from one party, acceptance from another, with the consequent consent of both “. Everything” in exchange for a fee and a cause “, this is,” the direct and immediate purpose pursued by both parties ( …) in collaboration with a banking professional and an entity “.

In addition, the judge collects and dismisses as eloquent the statements of Botín on his social networks, where he published: “Andrea Orcel has been appointed CEO of the group with effect from the beginning of 2019.” And he refers to an interview in a specialized medium in which Botín assured that the banker “is very, very good at managing between different cultures and, which is very important, has a proven track record.”

Unilateral cancellation

In his opinion, Santander canceled the contract unilaterally since, as the talks did not prosper, he frustrated the signing after verifying that he would have to assume the commitments to pay the deferred salary of the seven-year banker. The magistrate takes into consideration the testimonies of witnesses such as Axel Weber, president of the entity from which Orcel came, UBS, who at the hearing defended that when Santander wanted to sign the Italian, he knew all the conditions.

Therefore, it determines that the Spanish bank resolved the contract “unilaterally and unjustifiably”, contrary to legal principles, “with the unavoidable consequences” that this entails, in reference to compensation for damages.

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