January 24, 2013

Rotten dealings in Valencia

Yes, Spain again. In Valencia, football clubs' inability to pay back debts has left the provincial government as the main shareholder in three teams.

The former premier of Valencia, Francisco Camps, who was forced to step down after his implication in a kickbacks-for-contracts corruption scandal, is a fan of Valencia soccer clubs, reports El Pais.
So much so that his last act in office was to use the Valencia Finance Institute (IVF) to guarantee the loans that Valencia CF, Hércules and Elche had asked the banks for in recent years: 118 million euros in total.
But oh dear, the teams can't pay their debts, so the lenders will trigger the deal in place with the regional government, making it the biggest shareholder in all three sports clubs.
This contravenes the Public Limited Sports Company Law, which prohibits any one entity from holding over five percent of more than one team participating in the same competition.
So the provincial government now owns 45% of Elche, 65% of Hércules, and 70% of Valencia football club.

These illegal holdings in football clubs have come about at a time when "the region's unpaid invoices from pharmacies, care workers and privately run hospitals are stacking up, while massive cutbacks are being implemented in education, healthcare and scientific research". Just some of the football club deals:
  • Hércules borrowed the money for player bonuses and an unpaid tax bill - which hardly looks like regular bank lending. The club was then owned by Enrique Ortíz, who is also embroiled in a corruption scandal and is accused of illegally financing the Popular Party, which now forms the national government.
      
  • At Valencia the new president embarked on what El Pais dubs "a pharaonic plan" to build a new stadium. As the construction industry crashed, the new stadium remained half-built, the land on which Mestalla stands could not be sold and Valencia's debt rocketed to 550 million euros.
      
  • Villarreal refused five million euros of public money, but has a sponsorship deal with Castellón airport that was worth 20 million euros over five years. "The aerodrome is another legacy of Camps' administration. To date, not one plane has landed or taken off from it."
More signs of Spain's political and financial rottenness. And there's still the little matter of the undeclared €22m  held in a Swiss bank by Luis Bárcenas, none other than the former treasurer of the Popular Party.

Spain's attempt at democracy is recent. Too many of its politicians have been unable to resist the lure of the honey pot. With youth unemployment 60%, the economy still contracting, the property market in freefall, support for the government down to 15%, and so many government bills from critical sectors unpaid, it's not alarmist to wonder if Spain can hold together in its present form, and inside the euro.

Spain is Europe's fifth largest economy.

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