Corruption's Price: A Spanish Deceit (7 page)

"What did I just tell you, Señora?" His formality warned Marta that she had gone too far. "Simply reply that if they reinstate their cancelled orders in full plus pay a 20 per cent penalty up front I might just consider talking to them. But probably I won't. I had to make over two hundred of my people unemployed. That still hurts me and them even more. Those greedy bastards in Madrid can go stuff themselves. Now I suggest you depart to give them my message."

Tuesday: Alcobendas

Arriving at a tapas place local to the ORS office, Felipe showed Caterina and Emilia the choices organised around a u-shaped food bar. After finding out that they, like him, preferred soft drinks at lunch he ordered a litre bottle of
agua con gas
before making a selection. He joined them at a table where Caterina was standing whilst Emilia was sitting on a stool. They helped themselves to the food.

"So, Felipe, as it seems Ana is not coming, tell Caterina and me about your three clients."

"As you already know, the three are called Constructores Equilibris, ServiArquitectos and MultiMedia Hisperia, the last of which is normally shortened to MMH. Constructores Equilibris – CE to me – was a giant in the pre-financial crisis building boom that developed in Spain. It won vast numbers of tenders, and not only for building roads, airports and other infrastructure. It even speculated on its own behalf, purchasing land and buildings, or starting to build mini-cities."

"What on earth is a mini-city?" Caterina asked.

"The simplest way to explain is to show you. There are several partially finished ones around the periphery of Madrid. They were designed to house 20,000 to 40,000 people, at least at inception. Not only did the designs include apartments and houses but also the shops,
restaurantes
,
farmacias
, etcetera, which residents would need to be self-sufficient. Who was going to live in them, however, was never clear; nor was where the inhabitants would work or how they'd get to work. Yet that didn't stop CE or its competitors losing touch with reality and promising mass housing with profits, all to be delivered from hot, thin, Spanish air.

Felipe stopped, partly to catch his breath and partly to eat another tapas.

"Indeed, one of the reasons that ORS has CE as a client is that its new management, brought in by outside investors to rescue it, suspects that there are lots of old debts and overpayments that were never collected. Initial analysis of the past five years of CE's corporate purchasing, which ran into billions each year, shows this to be potentially true. But, and this is the downside, many of those suppliers that ORS shows as owing money to CE have gone bust themselves, so there's little or nothing left to obtain."

Another tapas interrupted Felipe's flow.

"Worse, the threat not to do further business, as our standard way to encourage repayment, is something of a damp squib because CE is now economically weak as a customer, buying far less than it used to do. In practice it's hanging on by its teeth, and by the grace of its many bankers who do not wish to see it crash and burn because this would oblige those same financiers to recognise huge loan losses, which might then drive their own institutions and themselves into similar bankruptcy.

"ServiArquitectos is very different. It is, as you might imagine from the name, primarily a services business. It started out as a mid-sized architects' practice whose partners expanded into offering anything from cleaning to security to managing projects. Ana tells me it's notorious in Spain for working on both sides of the political corridor. For example it remodelled both the headquarters of the PC on the right and
la Piz
on the left – the two main political parties currently cooperating in an uneasy governing coalition.

"For your information, ServiArquitectos is powerful and cash flow rich, unlike its competitors. This derives from its having signed many long-term service contracts before the financial crisis, all with ferocious cancellation penalties. While it's the smallest of our three clients, it employs the most people today.

"No, that's not quite correct. It does its best not to employ people, as Ana instructed me when I arrived. In the best, or worst, Spanish tradition it pays its people as self-employed contractors. This puts the social security burden on each contractor, which effectively makes each one an 'unemployee', and in so doing minimises the financial liabilities for the company. As you will discover if you stay here for any time, this is a pernicious practice made worse by successive governments that have imposed far too high contribution rates that are wholly unrelated to what the self-employed actually earn or can realistically afford. To me this is offensive, though I'm just an ignorant American."

He shrugged in disgust.

"The third is MMH, which has interests in many forms of media. It originally started publishing books. It expanded under Franco into newspapers, radio and eventually television. It has been hugely profitable in the past. It is highly politicised, a die-hard supporter, according to Ana, of the right. It grew rapidly after the PC was first elected to power and now has its fingers in many digital initiatives. MMH spends a lot, particularly on advertising and communications. In recent years, though, it has been decreasingly profitable. As with CE, it is desperate to find anything that it is owed. Like CE, our analyses show there is much potentially to recover, but not much is coming back."

He sat back. "Now you have some broad background. Any questions? Or shall I order some more tapas first?"

"I'd go for the latter," volunteered Emilia.

Caterina nodded her agreement "Is there any fish? Fish, not shellfish?"

"Often they do good fish, but not always. It's best when it comes piping hot from the kitchen. I'll find out."

He left their table.

Emilia said, "So, what d'you think?"

"Are you asking me about Felipe, Ana, or work? Yes, I saw your eyes, Emilia. I know you. Okay; the work. To be honest I'm fascinated. From what Davide said, and what Felipe describes, instinct says we should find something. But I have no idea what to start looking for. I guess it'll be back to what we've done before, searching for improbable correlations. What about you? What's your impression?"

"Like you, I'm interested, perhaps even more so after what Davide told us at the weekend. I think this could be fun."

Emilia looked at Caterina. She was about to add a different comment when Felipe returned with assorted forms of fish.

Emilia smiled invitingly at Felipe, saying, "Where do we start? Do you have any preferences? I mean with the data!"

Caterina squirmed. Emilia could be so consistently crass. It was almost one of her charms.

Wednesday: Madrid

Marta had exited the taxi with markedly more success than on Saturday before meeting Inocenta. It had helped that she was dressed for business, austerely at that. She wanted to give no overt encouragement to her contemporary.

Alfredo's law firm's Madrid offices were located in the smartest area of the city between calle Serrano, one of the best shopping streets in the capital and the Paseo de la Castellana, the broad multi-lane highway that splits Madrid more or less north to south. A bit further on was the American Embassy with the
Cuerpo Nacional de Policía
protective armoured car outside. Beside this stands an elegant mansion, which Banque Paribas occupies. In contrast, the concrete block in which the law firm resided was dull.

She had taken the elevator to the top floor where Alfredo had his personal offices. Reception for the law firm was on the level below. This was a deliberately intended illusion of separation. Alfredo was determined, now that he was no longer a practising partner, to appear distinct from 'his' law firm in order to pursue his political ambitions. Marta, and most of the powerful in Madrid, knew better.

Entering the reception area, Alfredo's usual stunning receptionist greeted her. This one looked foreign. Nevertheless, he spoke immaculate Spanish, albeit with a light Buenos Aires accent. He apologised that Señor Gómez was running very late and had called to ask if Marta would join him for lunch at two o'clock. Meanwhile, the receptionist offered her a guest office to use.

As it happened this change of plan suited Marta rather well. She had always intended to do some shopping in the excellent stores nearby, after first seeing Alfredo. She had declined the use of the office but said she would be back before 2 p.m.

She was now sitting at a table in a smart
restaurante
waiting for Alfredo. The shopping had proved productive, if expensive. She glanced up to see Alfredo approaching with a big smile on his face.

"Marta, how lovely to see you! You look as delightful as always, if a little severe in that very smart suit. Pinstripes always look much better on a lady than a man." He kissed her before sitting down.

"You're as charming as ever, Alfredo, which is probably as bad for your health as it is for mine. Nevertheless, thank you for the compliments."

"You've always been stunning. I can clearly remember seeing you for the first time at university. You have only improved with time, which does not happen to most."

"Generosity of words may get you most places, but not all."

"You're right. It does. But not all places, more's the pity."

Their reciprocating smiles were hardly those of friends, but more like a pair of wolves circling before deciding whom to chew next.

In fact Marta was relieved. The flirting charade usually had to be played at some point by Alfredo. It seemed to flatter his ego. Now it was out of the way, and not waiting in the wings to make an unwelcome appearance, she could focus on why she had come to Madrid.

She looked at Alfredo. He seemed pleased with himself. She hoped her news was not going to spoil this good humour though she feared it would. They ordered. Neither chose wine. She preferred a tonic water and he a Vodka Martini.

Once the waiter disappeared she started describing the ORS letters and how she feared they might affect Alfredo and his firm. Like Luis the previous day, Alfredo did not interrupt. That alone was unusual. He was rarely short of words or interruptions.

When she had finished he sat there like a stone. She waited. It was for him to react.

When eventually he did it was in a way that surprised her.

"I already know of this ORS company. Between you and me, other clients of my firm have received similar letters from it on behalf of CE, ServiArquitectos and MMH. Those clients have consulted with my ex-colleagues, who approached me because I was then the senior partner.

"On the basis of similar letters the firm looked into ORS. It's genuine. It's also being run by a rather unimaginative Texan who sees only the financial dimension, though I guess that's what he's paid for. Even so, in my view, ORS has some real potential to do damage, but probably not for some years given how slowly our legal system works, aided and abetted by the likes of my firm and its equivalents."

Alfredo smiled sardonically, though more to himself than at Marta.

"So, if you already knew all this, where does it leave everybody?"

"A good question, my dear Marta, and one to which I must add a further complication. You may have remarked on my good humour earlier. Yes?"

Marta nodded.

"This is for your ears only. I will not even tell my dear wife for the moment. She'd broadcast the news to her world without thinking. I've just come from a meeting where I was asked by a very senior official in the prime minister's office whether, if I was offered it, I would accept the post of an ambassadorship."

"Congratulations! I can just imagine your revelling in being addressed as Your Excellency or Mr Ambassador. It would stroke your ego no end and your wife would surely love it."

"Thank you, Marta. Your asperity stinks. However, I'm not sure I'm inclined to accept."

"Why ever not? Surely it's an honour? Wouldn't it be insulting to decline?"

"You didn't quite hear what I said. I was asked 'whether, if I was offered, I would accept?'. No actual post was named.

"You still look puzzled. Let me explain. My fear is I am being bought off for something I've done or am about to do. That's what political ambassadorships are about. The party in power uses the state buy off its internal problems with the tax payer picking up the bill. It's a form of corruption I dislike, though you never heard me say this. In addition I don't want to go somewhere inappropriate where I'd feel a fool. That can happen. One political-appointee was sent to a major English-speaking ally without being able to speak English. Can you imagine?

Marta shook her head incredulously.

"In contrast, professional diplomats speak at least three languages. It was a sad appointment for all concerned, especially Spain. We just looked foolish – and all to keep someone sweet.

"But I wander off my main topic. Not only don't I know where I might be sent but I have to weigh up why I'm being bought off or whether it's to get me out of the way. Plus there's the beauty of their words, borrowed, I suspect, from the British."

"Sorry, Alfredo, you've totally lost me."

"In Britain, before you're offered any of their weird honours, like a Member of the Order of the long defunct British Empire or a knighthood, you're asked 'whether, if it was offered, you would accept a such-and-such an honour'. If you say no, for whatever reason, the system will always say the honour was never actually offered. Think about the words."