InterBolsa scandal dates back to 2003

InterBolsa, which was Colombia’s largest brokerage firm until its recent liquidation, was sanctioned as far back as 2003 for misallocating public funds, Caracol Radio reported Wednesday.

This revelation indicates that there was ample evidence suggesting stricter financial oversight was necessary in InterBolsa‘s dealings long before the company went under earlier this month.

Colombia’s Comptroller General, Sandra Morelli, claimed that she had cautioned Financial Superintendent Gerardo Hernandez prior to the collapse.

“Given the sensitivity of the issue, I verbally warned the Superintendent,” Morelli said on Wednesday.

Either way, according to Senator Camilo Sanchez, “there was no real control. A share rising the way it did should have [been] checked a long time ago.”

The stock Sanchez referenced belonged to Fabricato, also known as the straw that broke InterBolsa’s back. The brokerage firm made numerous repo transactions of Fabricato shares that purportedly went “above reasonable limits, [and left the company with] a serious lack of liquidity.”

The InterBolsa investor responsible for making the ill-advised repo transactions is Alessandro Corridori. According to InterBolsa President Rodrigo Jaramillo, Corridori was a reputable investor who had worked for several prestigous Italian brokerage firms including the multinational dairy and food corporation, Parmalat, and simply made a bad business decision.

According to Italian politician Beppe Grillo however, “in the hundreds of [Parmalat] documents [he has] reviewed, that name [Corridori] never came up.”

Earlier this month, financial regulators essentially shut down InterBolsa after the company failed to make a payment on an $11 million loan.

A criminal investigation is underway to determine whether the company is guilty of tax evasion, hiding information from the public and stock manipulation, just as they were nine years ago.

What originally seemed like just a case of poor investment choices and excessive ambition, has evolved into one of the biggest financial scandals in recent Colombian history and several people could wind up in jail.

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