Rahman Ravelli
Rahman Ravelli Solicitors Logo
Switchboard: +44 (0)203 947 1539

About Us Expertise PEOPLE International Legal Articles News Events Contact Us toggle button for phone toggle button for search

Understanding Global Bribery & Corruption Investigations in Spain

Author: Azizur Rahman  10 July 2014
4 min read

But now it looks as if it is tightening up its anti-corruption procedures, which could have implications for anyone doing business there.

Spain has always been known as a country where the odd discreet payment can secure a favour here, a blind eye there. The informal use of strictly secretive back scratching has never been fully exposed. Any attempt to put a precise figure on the extent of corruption in the land of sun, sangria and flowing football would be impossible. After all, corruption can hardly be effective if it is identifiable.

But after a series of corruption scandals it finally seems as if Spain is keen to shed its reputation as the most easily influenced country in Europe. The past decade has seen events to shame any nation: almost all Marbella’s city councillors imprisoned for fraud and corruption, Princess Cristina questioned in court over a financial scandal involving her husband, corruption probes into the ruling Popular Party as well as the opposition socialists and a survey earlier this year that showed 63% of Spaniards believing they were personally and directly affected by corruption.

The public patience seems to be wearing thin at a time when many believe that companies, political parties and even the royal family are free to indulge themselves in financial wrongdoing with seemingly little danger of having to face the consequences, seemingly acting with impunity after graft allegations. As if in response to these sentiments, legislation has been formulated that will force all levels of government to disclose full information of which companies they have contracts with and exactly how much those contracts are worth. It is the first steps toward Spain’s political elite making sure the country cleans up its act after years of economic crisis, a corrupt and over-inflated construction and housing sector and a sense that Spain is no longer at Europe’s top table.

Until now, Spain was the only European Union country which did not give the public the right to know how public funds are spent. Transparency International believes the legislation is a step in the right direction. It means the publication of public contracts, rules on good governance, better access to financial information and a clear explanation of people’s and organisations’ duties when it comes to financial probity. Observers believe that more could and should be done. But for now perhaps that is not the point. Supporters of the legislation would argue that the country is taking steps, after many years, to try and remove the potential for corruption.

In Spain’s defence, its new Penal Code was enacted in 2010 without the international attention received by the Bribery Act. Spanish law has been expanded to include corporate criminal liability for acts of employees and associates over whom they have not exerted proper controls. Much like the Bribery Act, it makes it an offence to offer, give or solicit a bribe in order to ensure someone acts in breach of their duties or acts or refrains from acting in a particular way. Critics point to its ineffectiveness and claim it has done little or nothing to tackle corruption or speed up action against those believed to be behind the corruption. In its defence, however, there were never going to be any quick fixes for Spain’s problems. In the UK, the Bribery Act has been on the statute books several years and only now are the first substantial prosecutions being brought. There is no reason to believe that a similar series of events will not occur in Spain.

But what will a tougher anti-corruption climate in Spain mean? Certainly the new legislation will make it harder to bribe public officials – and anyone who tries to now runs a higher risk of being detected. Similarly, the anti-bribery measures can only lead to more prosecutions. Like the UK’s Bribery Act, the Spanish anti-bribery measures include activities both within and outside its borders. We cannot make any rash predictions but it does seem as if Spain not only understands the problems it faces – it now wants to be active in doing something to reduce or remove them. As a country that fell ten places last year in Transparency International’s Corruption Perceptions Index – only Syria fell further – something has to be done. And it looks like the fightback against corruption starts here.

As a nation that has become known as the boiler room capital of Europe, Spain’s tougher approach may have implications for many people working in such operations, whether knowingly or unknowingly. It is possible that many such operations will move away, with eastern Europe and south east Asia the most likely destinations. But any clampdown on such operations within Spain’s borders could have severe repercussions for anyone involved. Three months ago, 110 people were arrested across Europe and the US in a coordinated international effort to tackle the problem of boiler rooms. The majority of arrests were in Spain – specifically Barcelona, Madrid and Marbella – which indicates that investigators are taking a very close eye on such operations in that country. The authorities involved maintained that they were going after those at the top of the operations rather than the hired hands; who often do not suspect that the investments they are selling are in any way illegal. But that is not to say that many people who thought they were simply earning honest euros may not find themselves on the wrong end of a prosecution. Such people should be viewing the hardening of the Spanish position on corruption as a warning to check the legality of the firm they are working for or even just get out without making any such enquiries.

Spain may have a bad reputation for corruption but, as February’s international operation showed, it is not short of partner countries when it comes to running investigations. The globalised economy and technological advances have made it far more logical and much easier for agencies from various countries to work together to tackle crime that goes beyond borders. If Spain can achieve such arrests with its current unenviable reputation it remains to be seen just what it can achieve in tackling crime when it hits its stride and earns the further trust and assistance of its foreign crime fighting counterparts.

When you also consider that the draft EU anti-money laundering directive (AMLD) is set to create a public central register in each country of the ultimate beneficial owners of legal arrangements such as companies, foundations, holdings and trusts it appears that Spain is already about to receive outside assistance. AMLD is also set to order banks, financial institutions, auditors, lawyers, accountants, tax advisors and real estate agents to be more vigilant about suspicious transactions. The aim is to take a risk-based approach so that EU states can better identify money laundering and criminal financing risks.

Things are now happening both within and beyond Spain’s borders to make the country more resistant to corruption. Quite how many people fall victim to this resistance remains to be seen.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

+44 (0)203 911 9339 vCard

Download Profile PDF

View Profile

Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

Share this page on