Wednesday, October 3, 2012

Andalucia's Government Funds Bogus Companies

Francisco Javier Guerrero Benítez used to be the Director General of Labor in Andalucia, the region in Spain most benefitted from aids and subsidies, both from Spain and from Europe. Most of the taxes paid by Catalans, and taken away by the Spanish government, end up in Andalucia, which not coincidentally has 17% of all voters in Spain. In other words, to win an election, Spanish parties need to win in Andalucia. In both Andalucia and Extremadura, European funds have been continually diverted to pay for bizarre projects, like the 365K€for a museum of the saints, or the 858K€ to study paranormal activity. Mr. Guerrero Benítez is at the center of a corruption scandal and an unbelievable racketeering scheme.It involved a 933M€ reserve fund which over the last decade he used to provide generous, early retirement payments, as well as to fund ailing businesses. It is known as the ‘fake EROs case’.

"Enormous amounts of money were presumably given away arbitrarily and without being subject to any kind of control by the regional government," reads the summary of the investigation. The police are now looking for leads in tax havens, where they suspect more money may have been salted away. The network was composed mainly of members of the Spanish Socialist Party, which has been opposing the right to Catalonia’s self-determination. The party went on to win the elections once more—even after the scandal had been uncovered. This is just one among many corruption cases in Spain, but apparently the pervasiveness of this culture of corruption is such that involved parties win elections over and over again. Much of this money comes from the European aid funds.

Juan Francisco Trujillo, Guerrero's former official driver for nine years, says he was given 900,000 euros in subsidies, and claims he regularly bought cocaine for Guerrero and organized parties involving prostitutes. "I would pick him up at 7AM, and we would have been out drinking for a few hours. He could drink like a fish and still keep it together. He would talk to everybody. He felt admired, and loved. He knew how to entertain," says Trujillo.

The network was based in the setting up, in 2001, of a cooperation agreement between the regional government's employment office and its investment branch. This was the tool that, as director general of the employment office, gave Guerrero the freedom to manage money as he pleased. By 2005, the regional government was sufficiently concerned about Guerrero's use of public money at his own discretion that it prepared two reports saying his office had "managed exceptional subsidies without recourse to the established administrative procedures." But nothing was done. Too many people were involved. The investigating judge's summary lays the blame squarely: "There has been a complete lack of administrative procedure, with exceptional subsidies being distributed by one person, the director general of human resources, who has no authority in this regard."

The corruption network was finally exposed when two businessmen recorded a conversation with the former head of Mercasevilla, who offered to pay him a commission. The men gave the tape to the police, who began an investigation into early retirements. This is only one example why Spain should be excluded from the European Union. If you’re European remember this when your government asks you to make extra efforts to help the “poor” Kingdom of Spain.

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