Fortisgate scandal topples Belgian government
David Gow in Brussels
Fortisgate, the growing scandal over the future of Belgian rump insurer Fortis, brought down the country's government soon after the justice minister resigned over suspected state meddling in legal decisions.
Jo Vandeurzen stood down after the court of cassation, Belgium's supreme court, said it had found "significant signs" but no hard evidence that the government had tried to influence judges ruling on the bail-out and sale of Fortis.
Within hours, prime minister Yves Leterme won a cabinet vote that the government should resign. King Albert now has to decide whether to accept the resignation.
Observers said the likely outcome would be a general election, an option few parties want amid deepening economic crisis.
Leterme's government had been accused of trying to block a court of appeal ruling to freeze the group's break-up.
Earlier, angry shareholders in Fortis, once Belgium's biggest financial services company, voted overwhelmingly to keep the business going in the desperate hope of brighter days.
As investors railed against an assault on democracy and the rule of law, Jan-Michiel Hessels, acting chairman, warned that Fortis would have gone bankrupt without nationalisation. It lost €23bn of value in a few days in early October. Hessels told about 3,000 shareholders at an extraordinary meeting: "We didn't have a choice and, if we didn't act then, there was a likelihood that the Belgian state would have gone bankrupt - like Iceland."
Shareholders voted against immediate liquidation - and 97% in favour of continuing operations.
The government's €11.2bn bail-out of Fortis, worth €40bn a year ago, failed as the bancassurer went into a liquidity crisis. Ministers handed over the group's Belgian banking and insurance operations, including substantial assets, for a knockdown price to France's BNP Paribas.
But last week the court of appeal ruled in favour of small activist shareholder lobbies who opposed the sale, and BNP this week froze its planned €14.5bn takeover.
Its shares, savaged by investment losses linked to the Madoff scandal, lost 30% in a day and were down more than 5% yesterday. Fortis shares were up marginally at €1.20, or double their all-time low.
BNP has said it could return to the Fortis deal if the court of appeal ruling is overturned, with judges last week freezing the deal for 65 days until mid-February. But, with lawyers warning that the case could take a year or more to unravel, Fortis's future is problematic.