Portuguese regulators investigating the Espírito Santo mess have identified at least four offshore investment vehicles whose securities, mostly preferred shares, were sold with the help of Credit Suisse to Banco Espírito Santo customers, according to the people familiar with the investigation.
Many customers didn't realise that these vehicles were loaded with debt issued by various Espírito Santo companies and apparently served as a mechanism to finance the family-controlled empire, according to corporate filings and people familiar with Portugal's investigation into the Espírito Santo affair.
The vehicles invested primarily in debt issued by Espírito Santo companies, including the Portuguese bank, its Luxembourg-based parent and an Angolan mining- and infrastructure-investment company called Escom, according to corporate filings and internal Eurofin documents reviewed by The Wall Street Journal.
Portugal's markets regulator late last year started examining the offshore vehicles' products after hearing from Banco Espírito Santo customers who were confused about what they had invested in, according to the person familiar with the investigation.
The Swiss bank was responsible for putting together securities that were issued by offshore investment vehicles and then sold to retail customers of Portugal's Banco Espírito Santo.
Read more here: Business Spectator