“I trust in the justice system,” says ex-IMF head Rato after arrest

Rodrigo Rato, a veteran Spanish politician who served as an International Monetary Fund (IMF) chief and senior government official with the governing Popular Party (PP), has told EL PAÍS that he “cooperated actively” with investigators who raided his home and office on Thursday afternoon, and actually arrested him during the eight-hour search.

Rato added that he has “complete confidence in the legal system.”

Customs officials from the Tax Agency searched two of Rato’s properties, both located in the upscale Madrid neighborhood of Salamanca, after the Madrid Attorney’s Office filed charges of tax fraud, asset stripping and money laundering against him.

Two PP voters insulted Rato repeatedly, calling him “shameless” and saying they hoped he would end up in prison

The move came shortly after it emerged that Rato applied for a 2012 tax amnesty sponsored by the PP that may have been used by some individuals to launder money. Rato, who headed the IMF from 2004 to 2007 and held top government positions in Spain in the late 1990s and early 2000s, is allegedly on a list of 705 individuals being investigated by the Tax Agency in connection with this.

Following the four-hour house search, Rato walked out of his home in the company of several customs officers, who put him inside a patrol car. He was not handcuffed, but an agent grabbed him by the back of the neck to guide him into the vehicle.

Two women on the scene, who told reporters they were PP voters, insulted Rato repeatedly, calling him “shameless” and saying they hoped he would end up in prison. A dozen police officers cordoned off the area to avoid further incidents.

The former economy minister and deputy prime minister was driven 200 meters to his office, located in the basement floor of a nearby building, where investigators spent another four hours searching the premises. Officers took away several boxes of documents from both properties.

Sources familiar with the investigation told the Efe news agency that a judge had to sign an arrest warrant so that Rato could leave his home and be taken to his office. He was released after the search, however, and will be summoned to appear in court when the inquiry has progressed further.

Some sources said that the investigation is focusing on Rato’s private business dealings rather than what he earned as a public official. Others said the probe involves “a complex network of family-owned businesses.”

The Tax Agency had been examining Rato’s assets abroad for several months, and found a number of companies established abroad that led to tax havens.

In the last six months, Rato has traveled to Switzerland at least three times, the last time this April

This week, investigators detected several suspicious movements at several of Rato’s foreign businesses, and quickly moved to have the Madrid Attorney’s Office act before evidence could be destroyed. In the last six months, Rato has traveled to Switzerland at least three times, the last time this April.

Customs officials also searched a law firm in Sotogrande, a luxury estate in San Roque (Cádiz), as part of the investigation.

While the government claims that the move against Rato proves that the law is the same for everyone, Prime Minister Mariano Rajoy was described by an aide as “very affected, on a personal level and also because of the serious damage this inflicts on the PP, the government and on Spain.”

Other veteran PP leaders expressed open consternation at the news. “We have the right to know what’s happened here, because when such a public humiliation is allowed, you cannot simply say that the case is sealed,” said Vicente Martínez Pujalte, the congressional spokesman for economic affairs and a long-time colleague of Rato’s.

Despite his 34 years as a party member and a reputation for being the man behind Spain’s economic miracle in the late 1990s and early 2000s, Rato had fallen out of grace with Rajoy and his closest aides since 2007, when he suddenly resigned from the IMF and returned to Spain without offering any explanations.

Rato fell out of grace with Rajoy when he suddenly resigned from the IMF and returned to Spain without explanation

When Rajoy forced him out of Bankia in 2012, shortly before the lender had to be partly nationalized, relations between both were shattered.

Those who know him personally said that Rato, 66, had undergone a change in temperament in recent years.

“It seemed like he had lost contact with reality, and was not very focused,” explains a bank executive who was frequently in contact with him.

In July 1996, when he was the all-powerful economy and treasury minister, Rato made a point of combating fraud. His statements from that time have come back to haunt him: “We cannot convey the feeling that taxes are always paid by the same people and that regularizations always favor the same people.”

Rato was declared the best economy minister of Spain’s entire democracy by the deceased Emilio Botín, chairman of the Santander Group. Under his guidance, Spain created five million jobs and he was described as “the great architect of the Spanish miracle.” But some people note that this was made possible by liberalizing land laws, which led to a real estate bubble whose effects are still being felt today.