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CAM Bank deny at fault in Bank Guarantee court case

Source: Finca Parcs Action Group : Press Release - Sat 26th May 2012
CAM Bank deny at fault in Bank Guarantee court case

The trial brought by the Finca Parcs Action Group (FPAG) against the developer and Bank behind the project began earlier this week.

The case, centered around the collapse of the Las Higuericas Finca Parcs development, in Agramón, Albacete, was brought by a group of 70 families against the developer (Cleyton GES SL), and the CAM Bank, who failed to protect the deposits paid to the developer.

The Lawsuit, expected to last 4 days, was brought to recover € 1.5 million paid between 2005 and 2007.

During the opening days of the trial, the lawyer representing the developer told the court how his client now found themselves in negative equity following the crash of the property market and, although agreeing that they wished to continue the project to completion, complained of “a lack of support from the financier of the project, CAM Bank”.

He went on to say how the lack of cooperation from both the CAM Bank and Hellin Town Hall had led to the developer seeking new partnerships in order to bring the project to completion.

For their part the CAM Bank argued that they have honoured Bank Guarantees which were issued to some buyers, but they have no relationship with members of the Finca Parcs Action Group as they did not “formalise a contract of guarantee” with the Bank.

However, Keith Rule, who testified for the victims insisted that they were told by Cleyton GES that the 3 accounts were special accounts and in fact 200 Bank Guarantees were issued to other buyers in the project who paid into the same bank accounts as members of the Finca Parcs Action Group. Furthermore the 3 accounts were described as Cuenta Corriente Especial (Special Accounts) on each of the Bank Guarantees issued to other buyers.

During the trial Fernando Martinez Hernandez, an employee of CAM confirmed that he was the business manager at the Branch in which the Cleyton GES accounts were operated. He confirmed that CAM issued Bank Guarantees for deposits which were not necessarily paid to the special account.

When shown copies of several Bank Guarantees, many of which he had signed, from the 200 that CAM had issued on the development for deposits paid to the same accounts as those deposits paid by members of the Finca Parcs Action Group he said he did not know why this happened and why on each bank guarantee the 3 accounts were described as ‘Special Accounts’.

Furthermore, Fernando Martinez, when shown several bank account extracts, was unable to explain why CAM authorised many withdrawals from the Special Account, in complete contravention of the requirements of LEY 57/1968 including a cash withdrawal in excess of 80,000 Euros.

>> Click HERE to find out more about Bank Guarantees in Spain<<

He added that none of the buyers ever demanded Bank Guarantees directly with CAM and that this issue was only managed between the developer and the buyers.

The lawyer for CAM, Pablo Toran, argued that Cleyton GES bore full responsibility, accusing it of not fulfilling its commitments, especially when it came to handling money from the promotion in the special account and ordinary accounts. He pleaded therefore that CAM be absolved of any liability in this case, insisting that the plaintiffs did not have any contractual relationship with CAM.

Meanwhile the lawyer for Cleyton GES SL, Juan Munoz, said that there are sufficient financial means available to continue with the project and opposed both the demands for contract cancellation and for refunds. He insisted that Cleyton GES ‘wants to move on’.

Although scheduled for 4 days, the trial was completed in 2 days and now sentencing is awaited which could be delivered within 20 days.

Keith rule, on behalf of the Finca Parcs Action Group & Bank Guarantees in Spain Action Group summarised the nature of the case succinctly : “There has been a complete failure by both defendants to observe Spanish Law, in particular LEY 57/1968.”