One case has emerged as a direct result of the Italian investigations and involves alleged Italian company kickbacks to Spanish Socialist politicians. Other cases, including reported commission payments from multinationals such as the German Siemens empire, were already under investigation here but had been delayed or swept under the carpet.
Last week the Prime Minister, Felipe Gonzalez, forced the resignation of his Socialist Party's chief whip, Jose Maria Mohedano, for using a Jaguar sports car 'loaned' by a company owned by a multi-millionaire. Opposition politicians say Mr Mohedano's removal, billed as part of a party clean- out, was merely a 'smokescreen lynching.'
Giuseppe Berlini, a Swiss-based financier, told Milan magistrates last week that he had acted as a 'fixer' for the Italian multinational company Ferruzzi, paying commissions to Spanish Socialist politicians to help Ferruzzi buy into the Spanish olive oil giant Elosua between 1989 and 1992. Ferruzzi ended up with a 37 per cent stake and control of the olive oil company's management. A close friend of Mr Gonzalez, Enrique Sarasola, a leading businessman, has admitted working on behalf of the Ferruzzi takeover attempt.
Raul Gardini, the former head of both Ferruzzi and its chemical concern, Montedison, shot himself last week after former associates began revealing details of multi-million pound fraud and kick-backs.
Mr Berlini named no names, according to the initial report in Italy's business daily Il Sole-24 Ore. He indicated he had revealed the Elosua case merely as one example of how Ferruzzi bribed politicians abroad.
The Spanish daily El Mundo gleefully reports that the news 'has Spanish politicians and financiers trembling. The Great Olive Oil Slick could end up drenching them.' El Mundo reported that the Ferruzzi buy-in had been opposed in its initial stages by the agriculture minister at the time, Carlos Romero, but later given the go- ahead by Mr Romero's successor, Pedro Solbes, now Minister of Economy and Finance. Mr Solbes has said Mr Berlini's allegations will be investigated, describing them as 'very serious, if true.'
Under strong opposition pressure, Spain's Prosecutor-General, Eligio Hernandez, a political appointee of Mr Gonzalez's government, announced an investigation. He is said to have sent two of his staff to Italy.
The fact that the Italians were finally able to buy into Elosua so heavily last year surprised most Spaniards. Mr Gonzalez's government had billed the olive oil industry as a kind of national heritage, out of bounds to foreign control. However, the then minister of economy and finance, Carlos Solchaga, now the Socialists' chief whip, favoured foreign investment.
'This isn't Italy. Spaniards don't commit suicide,' a Madrid businessman said this week. 'But that does not mean blood will not flow. The knives are out.'
Mr Solchaga has already come under heavy attack over the crash of the Kuwait Investment Office's Spanish operations. It emerged last year that KIO had lost around pounds 3bn in risky Spanish investments. It accuses its local management in Spain, including the former manager, Javier de la Rosa, of syphoning off huge sums. Mr de la Rosa denies the accusations.
Mr Berlini's allegations recalled the controversial 1987 buy-out of the Spanish concern Antibioticos SA by Montedison, in which Mr Gardini was a major shareholder. Again, Mr Gonzalez's government had specified Antiobioticos as a key Spanish concern, with a virtual monopoly on penicillin sales in Spain, to be kept free of foreign control. In 1986, Antibioticos' joint owner, Mario Conde, now chairman of one of Spain's leading banks, Banesto, turned down an offer for Antibioticos by Holland's Gist-Brocades company of 27bn pesetas, then worth around dollars 200m.
On 29 December, 1986, however, Mr Conde met Montedison's then chairman, Mario Schimberni, at the Italian company's Milan headquarters. Italy's Socialist Prime Minister, Bettino Craxi, was reported to have acted as intermediary to persuade Mr Gonzalez, as the deal required state approval. The two Socialist leaders met a month later, in January 1987, in Palma de Mallorca at a scheduled summit.
The following month, Mr Schimberni and Mr Conde met Mr Gonzalez at the Prime Minister's official residence in Madrid. Within days, it emerged that Montedison had paid no less than 58bn pesetas, or dollars 453m, for Antibioticos, more than twice as much as the Dutch offer and 23 times Antibioticos' profits for the previous year.
The financial media were stunned by the sum. Shortly afterwards, Mr Gardini's shareholding in Montedison jumped from 26.6 per cent to 40 percent and he later won a leadership battle against Mr Schim berni at Montedison.
During that struggle, Mr Gardini accused Mr Schimberni of paying over the odds for the Spanish concern and speculated that millions of dollars in commissions had been paid 'to the political parties involved'. Mr Conde, something of a poor-boy-makes-good in the Bernard Tapie style, denied any illegal commissions were paid. He did not, however, deny making a fortune, which helped him buy into and eventually head Banesto.
The 'Italian Connection' has shifted the limelight from the scandals that threatened to cost Mr Gonzalez the recent elections, notably that of a shadowy former party accountant known variously as 'the Black Lady' or 'Opera'.
The latter were code names used to identify Aida Alvarez, a former secretary, then 'financial co-ordinator' at the Socialist Party's Madrid headquarters. Her name, or code names, cropped up in numerous cases involving financial irregularities. As a result, she has virtually gone to ground, holed up in a pounds 1m mansion.
The last time Ms Alvarez, 35, was photographed, leaving her home as a passenger in a car, she was wearing a rubber witch's mask. Newspapers here have published documents showing she received money from Siemens in connection with contracts involving Spain's high-speed Madrid-Seville train. Siemens has admitted paying small Spanish companies for such recorded items as 'commercial assessment' in connection with the train contracts, but says they were totally legal. One of those companies, Tecnologia Informatica 2,020, was run by Aida Alvarez.
A former senior aide to Mr Gonzalez, Florencio Ornia, handed back his Socialist Party card earlier this year after admitting that his company Atacir SA, which he set up after leaving the government's employ, had received a 2 per cent commission from Siemens for an electrification contract for the high-speed train.
Another case, involving alleged multi-million-pound payments by banks and big businesses to the Socialist Party via three 'front' companies, is being investigated by a Supreme Court judge, Marino Barbero. He has questioned a Socialist Party senator, Josep Maria Sala, and a former deputy, Carlos Navarro, both of whom had proven links with at least one of the companies, and has said that there are 'indications of criminal activity.'
At least two big banks admitted they paid large sums to the companies for reports that they can no longer trace. According to judicial sources, there were no reports. The thin line between coercion and voluntary payments in return for influence will be a key factor in the case.
Judge Barbero postponed his investigation until after the 6 June election 'in order not to distort the election result'. It has been further delayed, and no major developments are expected until after the summer holidays.
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