Gürtel ring got €115 million from PP administrations
Investigators believe kickbacks-for-contracts mastermind evaded €18 million in tax
The benefit of a few was to the detriment of the many. The corrupt business ring known as Gürtel obtained over 115 million euros in contracts from public agencies as well as local and regional governments under Popular Party (PP) rule, according to an ongoing investigation.
That is without counting all the private contracts that the PP awarded the business conglomerate headed by Francisco Correa ("correa" translates as "belt" in English and "Gürtel" in German). The ransacking of taxpayers' money could be even greater, though, as the investigation has not concluded yet, four years after Correa's arrest.
More than 70 people face charges ranging from money laundering to bribing of public officials in a major case of political corruption involving the PP.
The investigation shows that the hefty profits were shared out among members of the ring and some of the politicians who helped them secure the contracts.
Millions of euros were also concealed from the tax authorities. Correa has declared himself without income for the last 12 years, and is thought to have cheated the state out of an estimated 18 million euros in income tax alone between 2002 and 2007.
The regions of Madrid and Valencia were the ring's main theater of operations. The towns of Majadahonda, Boadilla, Arganda and Pozuelo de Alarcón, outside the capital, were havens of corruption for years, according to the report. In Majadahonda alone, Gürtel businesses were awarded nearly 3.5 million euros' worth of public contracts between 2001 and 2005.
The Gürtel network first came to light in 2009, when EL PAÍS obtained information on a judicial investigation being led by the since-suspended Judge Baltasar Garzón. The highest-profile trial related to the probe was that of former Valencia premier Francisco Camps, who was acquitted of taking bribes by a jury.
Rajoy releases tax returns, but fails to clear up doubts over Aznar years
PM’s financial records dating back to 2003 reveal salary rises in midst of crisis
Hounded by the scandal of the secret Bárcenas ledgers that allegedly show he accepted 25,000 euros a year in black money between 1999 and 2008, Prime Minister Mariano Rajoy did an unheard-of thing for a Spanish politician at the weekend: he opened up his personal finances to public scrutiny, releasing information about his income, assets and tax returns dating back to 2003.
Yet these reams of data afford room for criticism. For example, the figures reveal that Rajoy raised his own salary notably in the middle of the economic crisis, just when he was telling Spaniards that the country needed to be more competitive and companies were cutting or freezing their workers’ wages.
Between 2006 and 2011, Rajoy’s salary from the Popular Party (PP) rose from an annual gross 146,000 euros to 200,000 euros, which is a 36-percent rise. The greatest increase was between 2007 and 2009, when Rajoy’s wages grew 24 percent. Between 2010 and 2011, the rise was 10 percent.
That same year, Rajoy was insisting on the need for wage containment. In March 2011, he told El Correo: “During tough times it is much better to talk to workers and tell them, ‘Listen, we have a complicated period up ahead. Nobody is going to lose their jobs, but we’re going to put in a few more hours or else we’re going to reduce wages just a little.’ Flexibility, this is the key.”
Between 2007 and 2011, all of those crisis years, Rajoy was receiving less money from Congress after the chamber approved a cost-cutting measure to set an example; but his congressional losses were being compensated by his PP wages, which rose 27 percent over the same period.
As a matter of fact, global accounting data for the PP released last Friday show that the conservative party has been doing very well for itself during these crisis years. Between 2008 and 2011, PP personnel costs grew 22 percent. Party leaders argue that there were a lot of election campaigns during that period.
Book sales, property and stock boost PM’s income
J. SÉRVULO GONZÁLEZ, MADRID
Prime Minister Mariano Rajoy has paid 840,131.43 euros in income tax since 2003. This represents 38.9 percent of his income, what any other citizen with similar income levels — nearly 2.2 million euros over the period — would be legally bound to pay.
The head of the Spanish government paid a further 30,161 euros in wealth tax between 2003 and 2007, when this levy was mandatory. Since Mariano Rajoy’s fiscal residence is in Madrid, the only Spanish region that maintains an exemption on this tax, he has not had to make any further payments in recent years.
Most of the income Rajoy has received in the last 10 years comes from his party salary (1.39 million euros). He also makes some money as the landlord of an apartment he rents out, and enjoys some additional income from share dividends as well as interest from investment funds and bank accounts.
Rajoy’s five wealth tax statements show a significant increase in personal wealth, allegedly because of a rise in share value on the stock that he owns. The value of his properties varies depending on their assessed worth, but the value of Rajoy’s stock and investment funds rose from 428,276 euros in 2004 to 701,609 euros in 2007, coinciding with the property boom, when the blue-chip Ibex index appreciated nearly 150 percent.
The released documents also reveal Rajoy’s remarkable liquidity: in 2007 he had 231,527 euros in bank deposits and current accounts, although several tax experts said this is normal for someone in that income bracket.
The tax information available on La Moncloa’s website does not include the complete returns, just summaries that leave out any other sources of income that might be exempt from taxes.
A more in-depth analysis shows a significant increase in Rajoy’s income in the tax year 2011, when he published a book that netted him 163,305 euros. The year before that, he made 5,528 euros on the recapitalization of an insurance policy.
The prime minister also takes advantage of existing income tax breaks, including contributions to private pension plans.
On four occasions (2006, 2007, 2008 and 2010) Rajoy got money back from the tax agency.
Typically, a taxpayer with income of around 2.2 million euros over the last decade would use some kind of tax planning to reduce his tax payments. Yet Rajoy’s returns are not particularly complicated nor are they made in such a way as to deliberately reduce his tax payments, according to two experts consulted by EL PAÍS.
Rajoy’s salary is a controversial issue and one that he has never been keen to discuss. Last week, he stated that he could be making a lot more money outside of politics as a property registrar (his old job). That is certainly true if he is referring to his salary as prime minister of Spain, which was 75,000 euros in 2012, the lowest for a head of government in the entire European Union. Before that, as opposition leader, he was making an average of 240,000 euros a year from 2004 onward.
In 2007, Rajoy refused to divulge information about his salary when a member of a TV studio audience — a retired woman, whose income was 400 euros a month — asked him about it. “\[I earn\] a lot more than that,” was his reply. After being badgered by the press for weeks, however, Rajoy stated that he made “around 8,000 euros a month — 3,000 from Congress and 5,000 from the party. I look at my bank balance at the end of the month because I need it, I need it badly. I have the same problems all other citizens have,” he said at the time.
The information provided on Saturday by Rajoy — and which the PP is trumpeting as a worthy exercise in transparency, given that no politician had done anything similar before — also shows that the current prime minister earned three simultaneous salaries between 2003 and 2005: the first as deputy for Madrid, the second as a PP party official, and a third in the form of compensation for former ministers. This latter stipend lasts two years, and when it ended, the party raised Rajoy’s salary significantly, possibly to compensate.
As expected, the documents did not shed any light on the secret ledgers allegedly kept by Luis Bárcenas, the former party treasurer involved in a bribes-for-contracts scandal. EL PAÍS recently published these secret accounts, which show thousands of euros in party funding from construction magnates and under-the-table cash payments to party leaders, including Rajoy.
It is significant that the prime minister only released his tax returns from 2003 onward, the year that he left José María Aznar’s administration to become PP secretary general and run for office. It is impossible to know whether Rajoy declared any income from the PP in his tax returns before 2003.
On Saturday, Rajoy did not mention Bárcenas’ papers. He merely said he never took black money, yet did not deny that payments were made. But Bárcenas’ ledgers show that secret payments to party leaders ended in 2008, precisely when Rajoy began declaring significantly more income from the PP.
Although political parties’ finances are opaque, for the most part it is all taxpayers’ money. The PP has admitted that around 95 percent of the funds it handles, and which pay the salaries of Rajoy and other party leaders, comes from public subsidies. But even though no party had ever released salary information about any member before, transparency is still a distant goal. The PP refuses to release its official accounting, which would show whether it includes the confirmed amounts that show up in Luis Bárcenas’ secret ledgers. In fact, the party will not even say whether the items are there or not. The only thing that is clear is that most of the recipients of payments on the former treasurer’s list have admitted that they accepted money in cash.