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Spanish tax authorities to probe credit card use at all Ibex 35 firms

Seven heads roll in 48 hours over expenses revelations at Caja Madrid and Bankia banks

A shopper pays by credit card in a store.
A shopper pays by credit card in a store.

A new scandal involving company credit cards is growing by the hour in Spain.

Five people resigned over the revelations on Friday, adding to the two who lost their jobs on Thursday.

Meanwhile, the Tax Agency has announced that it is launching an investigation into the way companies in Spain’s blue-chip Ibex 35 index manage their representation expenses, to determine whether they are being used to conceal irregular payments or undeclared salaries for top workers.

The decision comes after it emerged that 86 former board members and executives at the Caja Madrid savings bank and its successor, Bankia, spent a collective €15.5 million in company funds between 2003 and 2012 using undeclared credit cards.

The company cards were used to pay for personal expenses such as clothing, restaurant meals, trips, supermarket goods and cash withdrawals, according to an investigation being overseen by High Court Judge Fernando Andreu, who has identified preliminary evidence of misappropriation of funds.

Tax authorities swiftly denied that they were aware of this practice, as had been suggested on Thursday by Pablo Abejas, who was removed from his post as director general for economic affairs in the Madrid regional government. He had run up €246,700 on his Caja Madrid company card, the investigation shows.

The Bank of Spain also denied suggestions by Abejas that it, too, knew about the credit cards.

In a telephone interview just hours after his dismissal, Abejas told EL PAÍS that the existence of the cards was common knowledge. “Everyone knew about them, even though they are going through these antics now,” he said. “Especially now that election campaign time is coming up, nobody will admit to anything, but it’s not true. The Tax Agency was okay with it. So was the Bank of Spain.”

The case was reported by current Bankia chairman José Ignacio Goirigolzarri, who discovered company credit cards outside the legal circuit whose holders were not asked to justify their expenses in any way.

Pablo Abejas claims everyone knew about the company credit cards.
Pablo Abejas claims everyone knew about the company credit cards. EFE

The cards, which had no spending limit, came on top of recipients’ salaries and regular expense accounts. Holders included former Caja Madrid president Miguel Blesa and his successor at Bankia – the banking giant formed in 2010 by the merger of Caja Madrid with six other savings banks – Rodrigo Rato, who was head of the International Monetary Fund between 2004 and 2007.

The fact that Bankia received €19 billion in 2012 in Spain’s biggest bank bailout has only increased the social outrage at this evidence of unchecked spending by top officials.

Some of the beneficiaries, including Rato, have already returned the money.

The latest resignations are those of José María Buenaventura, the chief of staff for the state secretary of finance, and Manuel José Rodríguez, manager of the EMVS municipal housing authority in the Madrid satellite town of Boadilla del Monte.

Three other former bank officials resigned from their current posts on Friday: Rodolfo Benito, head of the studies department at the CCOO labor union; José Ricardo Martínez, secretary general of the Madrid branch of the UGT labor union; and Ángel Gómez del Pulgar, of the Madrid Socialist Party.

Both the Tax Agency and the Bank of Spain have denied suggestions they knew about the credit cards

The president of the Caja Madrid Foundation, Carmen Cafranga, announced her resignation on Thursday, the same day that Abejas was dismissed by regional authorities.

Meanwhile, Socialist Party secretary general Pedro Sánchez made a public appearance on Friday to “apologize” to all citizens for the 15 members of his party caught up in the credit card scandal. He said the party had launched an internal investigation and that the culprits would be suspended from the party and forced to return the money.

Recipients of the cards included 28 members of the Popular Party (PP), 15 Socialists, four members of the United Left and 10 labor union members.

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