Meanwhile Santander has sued the company for its failure to pay the debt, and argues that it is within its rights to enforce the contract. Its initial claim in court related to an unpaid bill of €7.7m back in 2013. Since then the bills have mounted and the interest rate has increased, resulting in the counter-suit in which the rail company wants to see the swap declared void. The case kicks off on Monday 12 October and is expected to see witnesses from both sides of the deal give evidence. The case is being fought in the UK because the deal was struck under English law. It could set an important precedent for local authorities and other public bodies which took out similar swaps and have run up unexpected bills of hundreds of millions of euros. Portugal’s authorities were initially reluctant to bring the case, but the intervention of former Goldman Sachs banker Jaber George Jabbour and the International Monetary Fund led to publicity around the deal and a financial scandal in Portugal. The IMF was particularly interested as it bailed out the Portuguese state in 2011 and wants to take action where it may be able to save money. Meanwhile Mr Jabbour runs a consultancy which specialises in cases against banks – his other work includes the ongoing legal battle between the Libyan Investment Authority and the investment banks Goldman Sachs and Societe Generale over claims they gave bad advice to gullible executives at the sovereign wealth fund, resulting in losses for the LIA and substantial fees for the banks. He is also running for election to the Welsh Assembly as the Conservative candidate in the Bridgend constituency, which is currently held by First Minister Carwyn Jones. Santander declined to comment.
Santander is preparing for a ﻿court battle, starting on October 12 in the UK, over allegations it misled Conservative rail company, Metro do Porto, into signing up to a complex derivative, which resulted in a €89m loan spiralling into a debt of nearly €500m. The company is arguing that the full implications of the imbalance between potential risk and reward were not fully explained and is looking for the swap to be cancelled. Santander, ﻿in turn, is suing Metro do Porto for failure to pay its debt, and its initial claim in court in 2013 relates to an unpaid bill of €7.7m.