Small-Town Mayor’s Millions as Exhibit A on Graft in Spain

LA MUELA, Spain — In the good times, the former mayor of this small, wind-swept village of 5,000 in northern Spain was busy building: the olive oil museum, the wind museum, the museum of life. If that were not enough, there was the new bullring, the sports center with 25,000 seats and the zoo with the exotic-bird park.

The former mayor, María Victoria Pinilla, seemed to be prospering personally, as well. Three stately houses took shape on her family plot. There was an apartment in Madrid, a beach house and a vacation home in the Dominican Republic next to Julio Iglesias’.

Now, however, the fence outside the former mayor’s family compound is in disrepair and half-built housing developments lie abandoned on the outskirts of the village. And last month, Ms. Pinilla, 57, became just one more in a growing throng of political officials in Spain to face corruption charges.

Investigators calculate that she and other family members accumulated about $24 million, mostly from shady land deals during Spain’s boom years. Searching her property, the police had to borrow a bill-counting machine from a local bank to help total up all the cash: $485,000.

For decades, corruption was accepted in Southern Europe as a fact of life, a way to distribute the spoils, and few people — including, in many cases, prosecutors — gave it a second thought. But the grinding economic crisis, which stalled projects and ended the flow of cash, has helped lift the veil on corrupt officials, exposing graft, bribery, payoffs, secret favors and other misdeeds on a scale that few imagined.

At a time when Spain, Italy, Greece and Portugal are imposing deficit-cutting austerity plans on their hard-pressed citizens, these revelations of widespread political corruption are stoking bitter resentment, destabilizing governments and undermining the credibility of the political class as a whole.

Corruption did not cause the euro zone crisis. But the economic problems will persist, regional experts say, until these countries remake themselves into modern societies with efficient, competitive economies.

“It’s the key challenge,” said Miklos Marschall, the deputy managing director of Transparency International. “The political class has no respect in Southern Europe. The public institutions need to be rebuilt, step by step, so the government can be a credible actor.”

Spain is by no means Europe’s most corrupt nation — Greece and Italy are considered more so. But the sheer volume of political corruption cases here is proving deeply embarrassing.

Judges here are now investigating about 1,000 officials ranging from small-town mayors like Ms. Pinilla to former cabinet ministers. Even the country’s conservative prime minister, Mariano Rajoy, has turned up on a list of his party’s stalwarts who were supposedly taking payments under the table.

Nor has the royal family been immune. King Juan Carlos’s son-in-law and daughter have been subpoenaed in a corruption inquiry that began with the investigation of officials in the Balearic Islands.

There are so many scandals that some newspapers have taken to organizing all but the biggest developments in a quick-list format, rather than writing whole articles.

Some experts believe there is still far more to come, the result in Spain of a political structure that puts huge power in the hands of local officials. Many of them can grant procurement contracts or rezone land with little or no consultation.

“Over a lunch, they can decide that you are going to make 100 million euros,” around $131 million, said Manuel Villoria, a professor of political science at the University of Juan Carlos in Madrid, who is writing a report on Spanish corruption for the European Union. “So, they could ask for what they wanted. It often wasn’t for them. It was an apartment for a daughter or for a sister’s children.”

No political party seems immune. Last month, an investigating judge jailed seven people, including one member of the Spanish Socialist Workers’ Party, in a scandal involving the use of regional development funds to pay fake early retirement pensions to up to 100 individuals. But many of the cases are more like La Muela’s, where local officials enriched themselves while planning vast developments. Some of this money was funneled into their political parties, experts say.

Unlike in Greece, corruption is not a way of life in Spain. Most Spaniards go about their daily business without ever paying a bribe. But experts say that the concentration of power in the hands of regional and municipal officials and their ties to the local savings banks created ideal conditions for corruption in the construction boom years.

The danger is not over, they say. New sectors of commerce may soon take its place. For instance, Mr. Villoria writes in his draft paper, the health care system, now undergoing privatization, could easily take the place of construction in future scandals unless changes are made.

Already there is talk of overhauling the country’s party financing and transparency laws, increasing sentences for corruption and strengthening the independence of auditors. At the same time, many experts say more needs to be done to bolster an underfinanced judicial system, which allows many corruption cases to go unresolved for years.

One case in the Valencia region, involving allegations that a provincial governor, Carlos Fabra, tried to sell government approval of pesticides, was under investigation for nine years. The case passed through more than a half-dozen judges, as each was promoted or moved on. Such cases are not considered good for one’s career.

Few politicians under investigation resign or even step aside temporarily. Spanish columnists have had a field day recently noting that in Germany a politician resigned merely for plagiarism.

While he stayed in office, Mr. Fabra, who now faces trial, was the driving force behind a project that has become a symbol of wasteful spending — the $183 million airport in Castellón that has never managed to attract a single flight since it was inaugurated in 2011. A statue there, meant to honor Mr. Fabra, cost taxpayers about $500,000.

Justice has not moved swiftly in the La Muela case either. The town’s current mayor, María Soledad Aured de Torres, remembers the day in 2009 when 200 police officers surrounded Ms. Pinilla’s compound and her City Hall office, shutting down village business for hours.

But soon enough, Ms. Pinilla was back at work serving out her term as mayor over the next two years. The investigating judge in the case, Alfredo Lajusticia, wrapped up the investigation only last month, concluding that Ms. Pinilla should be tried over embezzlement of public funds, tax evasion and money laundering, among other charges. More than 40 people are likely to face charges in the case, including family members, civil servants, property developers and contractors.

La Muela feels a bit like a ghost town these days. In the surrounding fields, fading billboards announce developments that were never built. An unfinished hotel looms grimly over one end of the village center, the nearly empty zoo bookends the other.

Ms. Pinilla, who served as mayor for 25 years, has maintained her innocence throughout. Outside her home recently, her son, Víctor Embarba Pinilla, who is also likely to face trial over money laundering, use of privileged information and tax evasion, said his mother had been told by her lawyers not to speak to reporters. But he said she had done nothing wrong.

He also said that reports of his family’s wealth were greatly exaggerated, but Mr. Lajusticia’s 70-page report painted a damning picture. He has impounded 127 properties from the various defendants in the case, including about 80 that belong to the mayor’s former husband. Her cousin is next on the list with about 25.

The current mayor said that Ms. Pinilla and her family made a lot of their money buying land in the village, then reselling it after she had rezoned it for development. She noted the numerous bronze statues of horses, lions and bulls scattered about the village, all purchased from one of the businesses of Ms. Pinilla’s son.

Some residents say they were stunned to hear the extent of the former mayor’s family fortune. But some shrugged it off.

“Yes, it’s incredible what happened here,” said Alfonso Guirao, 42, who bought his home in La Muela in 2006 and now owns a bar here. “But it’s all incredible. Look at what is going on all over Spain.”

By Suzanne Daley. Rachel Chaundler contributed reporting.

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