Global Economics

Belgian Government Falls in Banking Scandal


After the collapse this weekend of Belgium's ruling coalition, King Albert II is faced with naming an entirely new transition government

Former Prime Minister Yves Leterme has taken himself out of the running to lead any new coalition after the resignation of his entire government. He faces questions over his cabinet's attempt to sell most of Fortis, Belgium's largest bank, at fire-sale prices.

After a turbulent weekend which saw the collapse of Belgium's ruling coalition over a banking scandal, King Albert II was faced with naming a transition government on Monday. Yves Leterme, who resigned Friday as prime minister, said Sunday that he wanted no part of any new government.

Leterme offered the resignation of his entire government on Friday amid questions over a bailout and sale of Fortis bank's Belgian operations to a French bank, BNP Paribas.

Fortis is Belgium's largest bank, and it was partially nationalized last autumn because of the credit crisis. Now Leterme's ministers are accused of trying to ease a cheap sale of Fortis to BNP Paribas at the expense of many jobs and the stakes of Belgian shareholders.

In particular, after a legal ruling ordered a postponement to the sale last week, Leterme's justice minister was accused of trying to block the decision. Belgian Justice Minister Jo Vandeurzen, announced he would stand down last Friday even before Leterme.

Bart Somers, chairman of the ruling Liberal party, said the scandal was, "Shocking. This does not belong in the rule of law. A cornerstone of democracy has been put in danger."

Leterme, from the Christian Democratic and Flemish party (CDV), denies any wrongdoing and says he will not seek to retain his seat because he wants to concentrate on clearing his name. Two men in line for his job have held it before. Jean Luc Dehaene, also from CDV, led Belgium for most of the 1990s, and Guy Verhofstadt, from the Flemish Liberals and Democrats (VLD), was Leterme's predecessor as prime minister.

Wreckage of the Finance Crisis

After the recent credit crisis forced Fortis to seek a government bailout, France's BNP Paribas said it was prepared to buy 75 percent of the bank's Belgian operations. But stakeholders with near-worthless shares last week won a postponement in an appeals court, which said they should have been consulted prior to the deal.

Vandeurzen, the justice minister, resigned after a report by the Supreme Court said the government had improperly tried to lift the appeals court's decision.

Leterme has tendered his resignation to King Albert more than once in his brief and stormy time as prime minister. After coalition talks threatened to split Belgium in two following its last election in June 2007, Leterme forged a fragile, five-party coalition in March 2008. Belgium is culturally divided between its Flemish-speaking north and French-speaking south.

The challenge for the king, some observers say, will be to name new ministers but keep the coalition agreement intact. "It would be enough simply to change the prime minister and the minister of justice," political analyst Herve de Ghellinck told European public broadcaster euronews. "If you include other (parties), you'd have to re-negotiate the governmental declaration, and that could be lengthy. But things should pick up pace with Leterme's withdrawal announcement."

Provided by Spiegel Online—Read the latest from Europe's largest newsmagazine

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