Chris Bambery and George Kerevan – Spain: the Kleptomaniac State

This is an excerpt from Catalonia Reborn: How Catalonia Took On the Corrupt Spanish State and the Legacy of Franco by Chris Bambery and George Kerevan, which will be published in June by Luath Press Ltd. It is an exceptionally long piece for BRAVE NEW EUROPE, but it is the weekend.

Chris Bambery is author and broadcaster. Co-author (with George Kerevan) of Catalonia Reborn: How Catalonia Took on the Corrupt Spanish State and the Legacy of Franco (Luath Press, June 2018)

George Kerevan is a Scottish journalist, economist, and former member of Scotland’s parliament.

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The ousting of Mariano Rajoy as Spain’s Prime Minister has put the spotlight on the corruption which blights Spanish democracy. Corruption exists in every state but its hard to think of another country where a ruling Prime Minster had to give evidence in court in a corruption case invlving senior members of his own party. Or a country where the King had to abdicate because members of his own, intimate family were found guilty of corruption or where the head of the Central Bank has appeared in court over charges of graft. That has happened in recent years in Spain.

On the Corruption Perceptions Index prepared by Transparency International (the global NGO concerned with monitoring corruption) Spain dropped seven points between 2012 and 2016, and now scores worse than most Western European democracies. According to José Ugaz, the Chair of Transparency International: Corruption in Spain distorts policy making and hurts people’s basic rights for the benefit of a few. Just looking at recent scandals like the Pujol case in Catalonia, the linkages between the ruling People’s Party and the construction group ohl, the Gürtel case, the Bankia fraud and Rodrigo Rato, gives a sense of the scale of the problem.112

No other Western European state has seen sunch levels of corruption. In the wake of Rajoy’s departure it is time to ask why?

The Spanish state which emerged under the Bourbon’s was seriously under-developed compared to its rivals. By the 19th century there was no industry of any size outside Catalonia and then the Basque Country. The state was concentrated on Castile, the kingdom which created Spain through leading the Reconquest of the peninsula from the Muslims.

The kingdom of Spain under the Hapsburgs and then the Bourbons was dominated by great landowners, including the Catholic Church, who were awarded land as it was re-conquered. By the 19th century this state, centralised on Madrid, and excluding Catalonia’s industrialists and bankers from the highest offices, to their chagrin, was a ramshackle and under resourced. Under paid civil servants and officials turned to corruption to survive. The parliament, the Cortes, was dominated by landed interests whose favourites were elected by votes delivered to them by the landlord. Once elected Deputies sold their votes just as atmy officers sold off equipment and officials awarded contracts to whoever paid them the biggest backhander.

But corruption reached new heights under the dictatorship of General Francisco Franco, from his victory in the Spanish Civil War until his death in November 1975.

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Francisco Franco

In the 1940s Franco tried is isolate Spain from the global economy but the result was a shortage of food and other necessities, hunger was also driven by falling living standards as the regime took its revenge on the working class. The result was a huge black market in which businessmen and senior members of Franco’s regime took a full part. The Caudillo’s son in law,  Cristóbal Martinez-Bordiú, the 10th Marqués of Villaverde used his connections to the regime, he made a fortune from banking, controlling import-export licences (at a time when Spain was a closed market with little foreign currency available) and property speculation. Martinez-Bordiú made a lot of this money through his association with José Maria Porcioles, Franco’s appointee as Mayor of Barcelona. Franco himself detested Barcelona and rarely went there. His son-in-law had a different relationship with the Catalan capital through his links to Porcioles and the Banco de Madrid. Despite its name, Banco de Madrid was based in the Catalan capital and had its registered business address at Porcioles’ Barcelona law office. One of its main shareholders was Cristóbal Martinez-Bordiú. As well as enriching himself through building speculation in Barcelona (courtesy of the mayor) the 10th Marques built a stake in dozens of companies through his relationship to the dictator – having Franco’s son-in-law on your board was a proven way of cutting corners in a corrupt regime.

Porcioles presided over a rash of property developments in the Catalan capital which ignored planning and other controls, blighting its elegant city centre.

Corruption at the highest echelons became endemic as Spain’s economy recovered in the 1960s. In 1969 a scandal broke around the collapse of the Mantesa textile company, owned by Opus Dei member Juan Vila Reyes, who had misappropriated 10,000 million pesetas of state funding to line his pockets and to fund Opus Dei ventures. He was a close friend of the Minister in charge of Planning, Gregorio López Bravo y Castro, a key moderniser in the Franco government. Lopez Bravo and two other ministers were soon caught up in the affair. The New York Times reported on the findings of a secret Cortes session on this scandal: The report concerned the granting of a total of official export credits worth $140 million to a textile machinery company that exported no more than half of the 20,000 looms the credits were meant to cover… The Matesa case is the biggest, and by far the most public scandal that has hit the Franco Government. With three ministries involved in charges of favouritism and negligence, the prestige of the whole Government is affected.115

Juan Vila Reyes went to jail but the Supreme Court dropped any action against the government ministers – a trend that would be continued after the Transition.

But Franco did more than just turn a blind eye to the misdeeds of his cronies – he feathered his own financial nest. As the historian Paul Preston observes, “Franco left a legacy of corruption that was passed down to democratic Spain: It is true that the Caudillo used corruption both to reward and control his collaborators. Recent research has uncovered proof of how he used his power to enrich himself and his family. In general, the idea that public service exists for private benefit is one of the principal legacies of his regime.”

The endemic corruption was inherited by the new democratic Spain because there was no attempt to clear away the Generalissimo’s officials and appointees, or even to remove his family of the wealthy they had plundered.

Under Franco the state controlled key sectors of the economy in order to try an foster industrialisation and economic development. But state capitalism also led to high degrees of corruption, which tainted the Franco dictatorship at every level.

The privatisation programme of these state industries and utilities under first the Socialists and then the PP involved the transfer of these assets into friends and allies of the ruling administration, and often the old state run managers bought them out helped by easy credit funed by bank debt. In return they provided funding for their political friends. The process was not dis-similar to what happened in the former Soviet Union, though not on the same scale, with the emergence of a number of oligarchs controlling conglomerates which began operating in the global market, buying up utility cmpanies in Latin America and banks in Britain.

Miguel Blesa was a typical beneficiary of this corrupt system. At the height of his power, he headed Spain’s fourth-largest bank (by lending), with more than seven million customers and annual earnings of over €2 billion during the real estate boom.

Miguel Blesa

Born in Linares in Andalusia (long a centre of British mining interests) Blesa began professional life as a lowly tax inspector during the dying days of the Franco regime, before gently working his way up the civil service ladder in the Ministry of Finance. There he might have languished in well-deserved obscurity but for his close friendship with José Aznar, later to become leader of the Popular Party and Spain’s Prime Minister from 1996 to 2004. Aznar also started out as a tax inspector – which is how he and Blesa first met. But Aznar had political ambitions. As a student, he was a leader of the FES, a dissident Falangist youth group committed to the ideas of Primo de Rivera – ideas that supposedly had been corrupted under Franco.

At the end of the dictatorship, Aznar shifted to the new Popular Alliance (AP), the political front for sanitised Francoist technocrats that would evolve into the PP. Aznar’s political ascent had begun but his friend Miguel Blesa was not forgotten. With the Socialists in power (from 1982 to 1996), Blesa quit the civil service for the more lucrative field of advising Spain’s burgeoning private sector on how to minimise their tax payments. From here he was plucked by Aznar – when the latter eventually kicked out the Socialists at the 1996 election – to chair the board of Caja Madrid, Spain’s oldest savings bank. Blesa had no banking experience to speak of. This was a political appointment pure and simple.

The new PP government was engaged in a transparent political manoeuvre. The previous Socialist government under Felipe González had begun privatising the big state companies and conglomerates created under the Franco regime as the spearhead for industrialisation – a free market move designed to assuage the other members of the European Union such as Germany and the uk. Many of these public concerns were grouped under INI, the National Institute of Industry, a state-owned holding company modelled on Mussolini’s IRI.

In these early privatisations, Felipe González had himself appointed Socialist Party supporters to board positions. Indeed, the Socialists were soon drawn into the net of financial corruption that is modern, post-Franco Spain. In retaliation, Aznar and the pp were determined to put in their own placemen (there were few place-women), hence Blesa’s appointment to run Caja Madrid.

But the placing of pp and Anzar supporters to run state-influenced companies did not stop with Blesa and Caja Madrid: there was Alberto Cortina at Repsol, the power utility; Juan Villalonga at Telefónica, Spain’s main telecoms company; and Francisco González at another bank, Argentaria (now bbva). Like Blesa, none of these men had any experience of managing large corporations. Their main qualification was loyalty to Aznar and the pp. Blesa’s lack of banking experience mattered little in these circumstances. Besides, Spain was about to join the new Eurozone and replace the traditional peseta with the euro, starting in 1999.

The result of the new currency was a pan-European fall in interest rates and the start of the Spanish property bubble based on profligate lending. In this, Blesa’s Caja Madrid would soon lead the way. The percentage of total Spanish bank loans allocated to mortgages, to real estate developers and to construction firms shot up from 40 per cent to 60 per cent between 1999 and 2007, the peak of the boom. During these boom years, Miguel Blesa enjoyed the high life. But what really made Blesa stand out was the arrogant way he displayed his power and wealth. Remember, Caja Madrid had started out under his chairmanship as a public service savings bank dedicated to its depositors and local small companies. Leaked pictures published in the Spanish media showed Blesa on exotic hunting trips, posing with a rifle next to the corpses of recently-shot animals, including a bear, a lion, an oryx, a hippopotamus and the heads of two water buffalo. He paid himself a salary of 3 million euros a year plus unlimited expenses on the company credit card. Other board members followed suit.

Blesa’s name also popped up in the infamous Panama Papers, which showed that he controlled an off-shore company created by the lawyers Mossack Fonseca, which made large (but opaque) investments in Spain. Under Blesa, Caja Madrid also became a conduit for loans to cronies and friends on a truly massive scale. Between 2003 and 2010, Blesa approved major loans to for Gerardo Díaz Ferrán, owner of the Marsans Group and sometime president of the CEOE (Spain’s leading employers’ representative). Curiously, these loans – totalling 131 million euros – went not just to companies owned by Ferrán but to members of his family. Even more curious or  maybe not so – Ferrán was also a board member of Caja Madrid. He is also doing time for fraud.

The issue here is not the misdeeds of Miguel Blesa, but rather the corruption that was and is endemic throughout the entire Spanish elite, and the intricate web of contacts between the elite and the Madrid political class, especially the PP. It is the threat of exposure of this corruption that is, in part, driving the elite to protect its political dominance by doing everything in its power to thwart Catalonia’s desire for self-determination. The extent of the links between Caja Madrid and the ruling PP emerged during the judicial investigations of Blesa’s period as chairman. For instance, internal emails were recovered for the period 2007 to 2009 (when the property bubble was collapsing) recording communications between Blesa and leaders of the PP, including his old friend José María Aznar. These emails – more than 8,000 personal and professional messages – were leaked subsequently to the newspaper El País. They reveal how Aznar made suggestions about bank investments, including in works of art. On a more mundane level, they expose how PP leaders asked for cheap mortgages for acquaintances; and how the regional government ordered the bank to place party apparatchiks on its board (with lucrative fees). Under Blesa, over a period of nearly 20 years, Spain’s flagship savings bank became a refuge for dozens of politicians who were granted a seat on its board as a reward for their loyalty to the PP.118 But the political link between the bank and the PP went even further. The main Madrid parties lack a mass membership base and so require more imaginative sources of funding than members’ subscriptions. The solution is a scam whereby they ‘borrow’ large sums of money from major banks – debt which the banks eventually write off unpaid. Documents show that both the PP and the Socialist Party borrowed heavily from Caja Madrid but subsequently had most of the debts written off – 72 per cent in the case of the PP. There is also evidence that significant amounts of cash from the Fundación Caja Madrid, the bank’s charitable giving arm, found its way to PP front organisations, to fund election campaigns and undertake propaganda work such as ‘defending’ Spanish unity.

Paradoxically, the biggest corruption scandals in the early transition period centred on a party which had stood in opposition to Franco – the Socialists.

The PSOE could claim the historic mantle of champion of the poor, but in reality the post-Franco organisation had been recreated under a charismatic leader, Felipe González. A lawyer from Seville, Gonzales had risen in the PSOE ranks despite clandestine conditions, becoming its leader at the age of 32. In 1977, with the first free elections in over four decades, none of the political parties had much time to prepare. The result was that campaigning focused on the performance of the leaders on TV, something at which González excelled. This deflected focus from the cancer of corruption that instantly afflicted the PSOE.

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Felipe González

The PSOE’s success in coming second to the UDC in the first post-Franco elections – eclipsing the Communists who had been central to the opposition to the dictatorship – meant that the party quickly became a magnet for those looking to build a political career, or, in the poverty-ridden South, to secure a job. In the 1979 local elections, many of those elected on the Socialist ticket had only just joined or did so after being elected. Vetting of their backgrounds was almost non-existent. This was compounded by the fact that fact that there is little tradition of mass membership of political parties in Spain. The PSOE took 48.4 per cent of the vote in 1982 with just 116,514 members. Lack of members meant that the established parties had to find other ways to provide funding. One way to achieve such funding was through the old established system of creating clientist networks. The PSOE soon fell prey to this temptation.

When first elected in 1982, the Socialist government of Felipe González used the slogan Cien años de honradez: A Hundred Years of Honesty. In fact, its first years of rule were what one author described as ‘bureaucratic clientelism’ – the systematic handing out of favours and sinecures to party favourites. For most people this was normal behaviour for Spanish politicians. But following González’s re-election in 1989, corruption scandals became endemic. First the Deputy Prime Minister had to resign in early 1990 after it emerged that his brother had been using PSOE offices for his private business operations. Then in 1993 auditors revealed that a PSOE Deputy and a Senator were running a group of front companies which paid off party expenses from 1 billion pesetas raised by charging banks and business for fictitious consultancy work.

That year saw two other high-profile cases. In one a Portuguese company, with no experience in the field, won a contract to build prefabricated structures for the Expo92 site in Seville. Having secured the contract, it then sold it on. It then transpired that they had paid 150 million pesetas to the PSOE as a ‘grant’. Then it was revealed that Siemens, which won the contract to build the high-speed Madrid-Seville rail link, paid large sums to former PSOE officials for ‘technical and commercial advice’. That railway had a troubled past. Two years before, the Health Minister, previously in charge of Transport, had to go when it was revealed that the state railway company had tipped off property speculators about land on the proposed line due for compulsory purchase.

By the time of the PSOE’s annual Congress in 1994, an amazing 72 per cent of the delegates held elected positions, reinforcing the public view that feathering their own nest took first place. This was especially true at a municipal level. Spanish municipalities are funded through selling licences and building permits, lending themselves to corrupt clientelistic relationships. Looking back at the years of González’s rule, the Spanish left-wing writer Carlos Prieto del Campo, noted: Corruption has pervaded every pore, flourishing most blatantly in the interface between the construction industry and the multitiered administration, but most profitably in the corporate deals, sell-offs and loans bartered between sections of the elite. Structural imbalances nurture a huge informal economy floating on credit, uninsured against recession.

PP corruption In 1996 the PSOE was thrown out of government, due to public revulsion at the party’s descent into a quagmire of corruption. José María Aznar was elected as head of the new Popular Party administration, with the promise of ‘clean government’. He did not deliver. In 2001 the Gescartera brokerage house collapsed, and its head, Antonio Rafael Camacho, was jailed after $100m (£68m) of clients’ money disappeared. The BBC reported: Camacho’s aggressive marketing garnered Gescartera a high-profile roster of clients, including senior church officials, the naval pension fund, and some big charities, including a police orphans’ fund, and Once, Spain’s main charity for the blind. Camacho had appointed the sister of the former General Director of Taxes turned junior finance minister, Enrique Gimenez-Reyna, as managing director. The family connection proved useful as Enrique was able to broker all sorts of meetings for Camacho. Also, members of the Gimenez-Reyna family – their father was a Guardia Civil general – ran the finances of charities and agencies that were clients of Gescartera. The minister claimed that he was innocent, but he had to resign. He now runs a tax consultancy.

Next to be fingered was Aznar’s Foreign Minister, Josep Piqué, a PP deputy representing Barcelona and head of the party in Catalonia. Piqué was from old Francoist stock. His father had been the last Francoist mayor of Villanueva y Geltrú. But Piqué had a curious (if not suspicious) political history, having been a member in his youth of the Communist PSUC and the Maoist Red Flag group in Barcelona, where he knew Jordi Solé, who would draft both the 1978 Constitution and the Catalan Statute of Autonomy. Whatever blinding conversion – or sudden bout of opportunism – he had, Piqué became a member of the PP and Minister of Industry when Aznar became Prime Minister in 1995. He was later appointed Foreign Minister.

In 1999, Piqué came under investigation for alleged financial irregularities relating to the sale of a Spanish oil company, Ertoil, to Nadhmi Auchi, a businessman of Iraqi extraction, who just happened to own the Luxembourg bank that looked after the personal fortune of Saddam Hussein. During the Iraq-Iran War, Auchi’s group of companies created a commercial empire throughout Africa, the Middle East and Asia – controlled from their Luxembourg tax haven. The implication was that they were part of Saddam’s arms trafficking and money laundering operation. Barely 24 hours after the transaction Ertoil was re-sold to the French state company Elf Aquitaine. Mr Auchi trousered a hefty commission. A few days after that, the West attacked and overthrew Saddam. Ertoil was previously owned by a Barcelona chemical company called Ercros, whose Executive Director was none other than the ex-Maoist (and soon to be Spain’s Foreign Minister) Josep Piqué. And it was Piqué who signed the authorisation selling Ertoil to Auchi, himself pocketing a commission on the deal. Along the way, payments to Ertoil that should have gone to Ercos seem to have disappeared.

In August 1999, the Spanish Anticorruption Prosecutor filed a complaint against Pique for tax fraud and misappropriation. Pique denied any wrongdoing. But the wheels of Spanish justice grind slowly and Pique became a PP minister. The State Attorney General, Jesús Cardenal, intervened to prevent prosecutors from the Supreme Court acting against Piqué. Eventually the case was dismissed for lack of evidence. However, the very first act of the PSOE Zapatero government in 2004 was to fire Cardenal for being politically ‘partisan’ in favour of the outgoing PP administration. This was not the end of Josep Piqué. In February 2012, Mariano Rajoy appointed him the Spanish director on the board of EADS, which manufactures the European Airbus. Since January 2017 he has been a member of the board of SEAT, where he chairs its audit committee. Throughout the recent Catalan independence struggle, Piqué has been vocal in opposition. He frequently pops up in the international media (including in the uk) masquerading as a disinterested business man, denouncing the Catalan ‘nationalists’ for being divisive, and urging Madrid to intervene. The ex-Maoist now represents the Spanish big bourgeoisie and its opposition to the right of ordinary Catalans to control their own destiny. Along the way, he has made himself a multi-millionaire.

In 2007 a whistle blower brought to light the Gürtel case, in which more than 37 PP members, including the premier of the Valencian Regional Council, the PP’s national treasurer, five mayors and 12 national and regional deputies, were charged with taking kickbacks from major public construction contracts. These cases arose from Spain’s housing bubble of 1997–2007. The investigation was given the codename ‘Gürtel’, a cryptic reference to Francisco Correa, the principal suspect. Correa means belt in Spanish, Gürtel the same in German. Correa just happens to be a close personal friend of Alejandro Agag, a son-in-law of José María Aznar, the former Prime Minister. Correa is charged with organising kickbacks in cash, prostitutes or gifts from real-estate developers, construction firms and other businesses in exchange for public contracts between 1999 and 2005. The bribes involved run to an estimated €120m. Another key defendant in the affair is Luis Bárcenas, former party treasurer of the PP, who is accused of stashing €48 million in Swiss bank accounts. It is alleged that this money was used to finance the PP illegally, funding election campaigns and providing undeclared wages for party leaders. The importance of the Gürtel affair is that it reveals that the organised nature of corruption inside the political process is on an industrial scale, and not simply restricted to a few rotten apples.123 Giving testimony in court, Correa recounted: In 1996, Luis Bárcenas told me: ‘You have contact with businessmen and I have contact with politicians. We’re going to try and make it so that when there are public tenders we favour businessmen who can later collaborate with the party.’

Correa went on: I spent day and night in Génova [the PP’s headquarters in Madrid]. I spent more time there than in my office. It felt like home.124 Bárcenas was put in pre-trial detention in June 2013 due to what judge Pablo Ruz of the National Court described as ‘a high risk of flight and to prevent the destruction of evidence’. He gave an exclusive interview to the El Mundo newspaper while in prison, in which he admitted that the PP had been illegally funding itself since it was founded by Franco’s henchman Manuel Fraga. Bárcenas would later tell the investigating judge that Fraga personally received backhanders from Spain’s largest employers’ group, the CEOE. When Fraga died in January 2012, his funeral was attended by Crown Prince Felipe. Bárcenas also revealed that the PP received illicit cash from businessmen channelled via dummy companies. He, as party treasurer, redistributed the money among top party members and covertly funded election campaigns. The key question is how high did this conspiracy go?

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Mariano Rajoy

In July 2017, Prime Minister Rajoy testified in the National Court that he had no knowledge of any slush fund and that he personally had never received any secret bonuses. ‘They’re absolutely fake,’ Rajoy told the magistrates when asked about documents on which his initials appeared next to amounts of money that allegedly constituted under-the-table bonuses. The Gürtel-Bárcenas corruption saga still drags on, partly because a lot of the potential evidence disappeared in 2013, when PP officials at the party HQ in Madrid destroyed the hard disks on computers belonging to Bárcenas himself. The latest corruption scandal to hit the PP is perhaps the biggest of all – the so-called ‘Lezo case’. This involves Ignacio González, the PP’s senior figure in the Madrid region until 2015, who is accused of profiting from investments made in Latin America through a state-owned water utility. González’s brother, and around a dozen former public officials and businessmen, were also indicted. The significance of the Lezo affair is that bugged conversations leaked to the press appear to show González using his political connections to try and evade justice. In one conversation, from 2016 (after he left office), González spoke to former PP minister Eduardo Zaplana about appointing a new and more pliable chief anti-corruption prosecutor. ‘The state machinery and the media are key,’ González was recorded saying. ‘Either you have them under control or you’re dead.’125

Not long afterwards, in February 2017, Rajoy’s government appointed Manuel Moix – the very man González wanted – as the chief anti-corruption prosecutor! Moix lasted only a matter of months in office before resigning when it was discovered that he was using a secret off-shore company in Panama to hide his ownership of property in Spain. It was hardly a coincidence that Mariano Rajoy should be orchestrating a major campaign of state repression against Catalonia just as the major corruption trials and investigations involving the PP were reaching a crescendo: diverting public attention is an age-old political tactic.126 The Lezo Affair shows every sign of dragging in yet more senior PP figures. In April 2017, the veteran PP leader Esperanza Aguirre – a former head of the Madrid regional council and current leader of the PP group in the city – was forced to resign from public office because of her links to Ignacio González. Aguirre was appointed Honorary Dame Commander of the Order of the British Empire in 2004 and is the PP’s ‘public face’ in the uk. Some 60 prominent political and business leaders are being investigated as part of the Lezo Affair. They include a former PP Labour Minister and the owner of the OHL construction group. The former chief executive of OHL is none other than Josef Piqué, who was implicated in the Ertoil scandal.

The obvious question arises is how can this dense web of financial corruption continue to exist in a modern industrial state? The answer is twofold. First, far from being an aberration, corruption is an integral part of the 1978 regime. Post-Franco Spain is akin to post-Communist Russia and China, where the privatisation of former state assets led to the creation of a corrupt oligarchy with close relations to the ruling party. Second, as an integral part of the 1978 regime’s bureaucratic architecture, the judiciary is heavily politicalised. As a result, this judiciary acts as a bulwark against effective prosecution of corruption cases.

In Spain, individual judges lead an investigation into corruption charges and public prosecutors are meant to back them up. In practice, this split can be used to delay or confuse proceedings. The prosecutor’s office provides resources and manpower for a judge’s investigations, which means that they are in a position to call into question the actions of judges and, with some exceptions, delay or reject bringing formal charges so that the case can go to court. This was precisely the interference of which Manuel Moix was accused during his time as anti-corruption prosecutor – activities which led to an office revolt by his own staff. The chief prosecutor is appointed by the government of the day. The governing body of magistrates – the General Council of the Judiciary, or CGPJ – is selected by members of parliament. The CGPJ then chooses the judicial hierarchy, including the magistrates at the Supreme Court.

As a result, the judicial hierarchy is appointed for its ideological or political closeness to politicians. ‘The system is badly designed and generates some concerns, to say the least,’ said Judge Jesús Villegas, who heads the legal association Plataforma Cívica por la Independencia Judicial  (Civil Platform for Judicial Independence). Viada knows all about attempted influence from his days as an anti-corruption prosecutor in the Audiencia Nacional, the most important nationwide court investigating corruption. One chief prosecutor ordered him to stop investigating a politician. The problem was solved when Viada asked his boss to write the order down in a formal statement, which he refused to do. On another occasion, Viada said that a state secretary (ranked just below a minister in government hierarchy) had asked him to talk to a judge and convince him to stop an investigation against a banker. Viada refused.

Under the 1978 constitution, ministers and elected politicians enjoy significant privileges when it comes to prosecution and trial. Any investigation into them must first be approved by the legislative chamber to which they’ve been elected. Even if this is granted, investigators lose the surprise factor – documents can disappear or, as in the Gürtel-Bárcenas case, computer disks can be destroyed. Also, investigating opaque financial transactions, as in the Lezo case, relies heavily on councils and government departments providing key documents. But transparency laws in Spain are very weak and many cases fall apart once the government or politicians under suspicion leave office.

In 2013, the Group of States Against Corruption – which was set up by the Council of Europe – said in a report about Spain: While the independence and impartiality of individual judges and prosecutors have been broadly undisputed to date, much controversy surrounds the issue of the structural independence of the governing bodies of the judiciary and the prosecutorial service – the primary concern being the appearance that partisan interests could penetrate judicial decision-making processes. The organisation issued 11 recommendations to help Spain tackle corruption. Three years later, it concluded that none of the recommendations had been ‘implemented satisfactorily’.129

One factor cited by supporters of Catalan indepenence is that the Spanish state is incapabale of rooting out the corruption at the heart of the system. Spanish nationalists respond usually by pointing the finfer at corruption in Catalonia. There is no denying this. But the argument in response is that Catalonia is contaminated by being part of Spain and that an indepenent Catalan state has the possibility of putting its own house in order.

Spain is a kleptomaniac state. But the corruption is not reducible to personal wrongdoing, even if it is on a heroic scale. The endemic fraud, theft, bribery and malfeasance served a political and economic purpose. When the old Dictatorship fell, Spanish capitalism was technologically backward, underfinanced and facing the full gale of European competition. The robber barons and oligarchs who seized control of the economy certainly enriched themselves to an obscene degree. But they were also forced by circumstances to accumulate investment capital in the fastest, crudest manner possible in order to modernise the Spanish economy, rather than rely on foreign inward investment. The tragedy is that having done so, they used this capital not for productive purposes but instead to finance an unsustainable property boom. A boom which popped with catasrophic consequences in 2008. The people of Spain are still paying the bill for that.



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