Spanish credit card scandal hits politicians and union leaders

Up to €15.5m allegedly spent by senior figures, some of it on clothes and travel

Credit cards issued by Spanish savings bank Caja Madrid.

Credit cards issued by Spanish savings bank Caja Madrid.

 

A string of Spanish politicians and union leaders have been forced to resign from their posts due to a scandal involving their apparently lavish spending on credit cards handed out by a nationalised bank which used to employ them.

By Friday evening, seven former senior executives and board members of Caja Madrid and Bankia had stepped down from their public posts since the scandal broke 48 hours earlier.

Caja Madrid was the largest of several regional savings banks which were merged to form Bankia, Spain’s fourth-biggest lender, in 2010. In 2012, Bankia’s exposure to the country’s burst property bubble unleashed a financial crisis. The government part-nationalised it and the lender became the biggest beneficiary of a 40-billion euro EU bailout for the Spanish banking sector.

According to accusations being investigated by the High Court, between 2003 and 2012, a total of 86 senior figures in the two banks received the credit cards, which were not included in official company accounts or reported to tax authorities. The same allegations state that a total of €15.5 million was spent using the cards, frequently on personal items such as clothes, food and recreational travel, as well as withdrawing cash.

José María Buenaventura, head of the minister’s office in the Finance Ministry, was the highest profile resignation on Friday. He spent €63,000 with his credit card, according to Europa Press news agency.

Meanwhile, José Ricardo Martínez stepped down as secretary general of the Madrid arm of the General Workers’ Union (UGT) due to the scandal and Ángel Gómez del Pulgar resigned his position on the executive of the Madrid Socialist Party. A local politician from the governing Popular Party (PP) and another senior union figure also left their posts.

Economy minister Luis de Guindos said that the revelations made his “stomach turn” and that he backed the High Court’s attempts to discover exactly how the money was spent and why the practice was not stopped sooner.

Socialist leader Pedro Sánchez, apologised on behalf of those from his party who are implicated. “It’s shameful and it embarrasses me to think that there are Socialist militants involved in this kind of outrage,” he said.

When confronted by the Spanish media, several of the former members of the bank boards who received the credit cards have insisted they believed the practice was completely legal. However, it has also emerged that a number of their former colleagues, including former IMF managing director Rodrigo Rato, have already returned the money they spent.

The tax office has announced it will investigate the use of corporate credit cards by companies on its blue-chip Ibex 35 stock index.