But was it simply a case of financial mismanagement? If so, why did the Central Bank not act sooner? And why did a financial institution as big as JP Morgan back Mr Conde with Spain's biggest-ever capital increase operation last summer?
Foreign intelligence sources have told the Independent that the ousting of Mr Conde, a handsome, elegantly dressed 45-year-old who had become the symbol of the fast-upwardly mobile 'new Spaniard' after outwitting the establishment to grab control of Banesto in the late Eighties, may run deeper than the question of simple bad accounting.
They say the Conde case, which has shocked Spain and threatens the country's worst modern banking crisis, followed Spanish intelligence investigations of Mr Conde and may be connected to Italy's political and financial scandals.
Without referring to the ousting of Mr Conde and his board from Banesto the same day, Spain's Prosecutor-General, Eligio Hernandez, said on Tuesday he would send a judicial commission to Italy to investigate reports of corruption, including pay-offs to Spanish politicians over deals involving Spanish and Italian companies. The Spanish media made no connection between Mr Hernandez's statement, reported in inside pages, and the bombshell front-page announcement of Mr Conde's downfall.
Mr Hernandez, a political appointee named by the Socialist Prime Minister, Felipe Gonzalez, had been under heavy pressure for months from opposition politicians to take action over the 'Italian Connection' allegations.
It was none other than Antonio Di Pietro, the Milan judge directing Italy's 'Clean Hands' judicial operation, who indicated earlier this month that there were signs of illegal payments in at least two cases in which Italian companies bought into Spanish enterprises, according to Spain's leading daily, El Pais. One sale involved Mr Conde and both had links with the Italian industrial magnate Raul Gardini, who committed suicide in July.
Mr Di Pietro recently expressed surprise to an El Pais reporter that Spain had not sent judicial representatives to Italy. 'Without information from Spain, we can't go much further (on the Spanish- linked case),' he told El Pais.
The other case mentioned by the judge, according to El Pais, involved the 1987 sale of the Spanish pharmaceuticals concern Antibioti cos SA, jointly owned by a then virtually unknown Mr Conde, to Italy's Montedison, in which Gardini was a big shareholder. Mr Conde admits the deal made him rich and enabled him, in 1987, to take control of Banesto. In 1986 the Dutch Gist-Brocades company offered Mr Conde and his partner 27bn pesetas (then worth about dollars 200m) for Anti bioticos but was rejected.
In February 1987 the Montedison chief, Mario Schimberni, Mr Conde and Mr Gonzalez met at the latter's official residence in Madrid. Mr Gonzalez's government had always thought of Antibioticos as a symbol of the new Spain. A few days after the Madrid meeting, however, the financial world was stunned to learn that Montedison had paid no less than 58bn pesetas for Antibioticos. Mr Schimberni was put under house arrest earlier this month by one of the 'Clean Hands' judges on suspicion of illegal financial transactions.
As part of the deal, Mr Conde and his partner were granted a reported 3 per cent of shares in Montedison. Gardini won a leadership battle against Mr Schimberni and took control of Montedison. During the battle, Gardini accused Mr Schimberni of paying millions of dollars in commissions 'to the political parties involved'.
That led the Spanish and Italian media to recall that Mr Gonzalez and Bettino Craxi, then Italy's prime minister and head of the Socialist Party, had met in January 1987, a month before the Schim berni-Conde-Gonzalez meeting. According to a book on Mr Conde by the journalist Jesus Cacho and thought to have included detail provided by Mr Conde, Mr Craxi acted as intermediary in the sale of Antibioticos.Reuse content