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Spanish recession may aid anti-corruption efforts

Source: Thomson Reuters Foundation - Wed, 6 Feb 2013 13:41 GMT
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By Anna Nadgrodkiewicz

For all the pain its economic crisis, Spain’s protracted financial troubles are having an unanticipated positive effect in one area: the fight against corruption. In recent weeks, the county has been shaken by a string of high-profile corruption scandals. The latest scandal broke on January 16 when Swiss officials discovered accounts worth 22 million euros registered to Luis Bárcenas, former treasurer of Spain’s ruling Popular Party. There are allegations that Bárcenas regularly dispensed cash kickbacks to party leaders – including the Prime Minister – from builders and other businesses that won government contracts. This is not the first time Bárcenas has been in the headlines for the wrong reasons; he was forced to resign in 2009 due to another major corruption case involving bribery.

The scandals don’t end with Popular Party. The Spanish king’s son-in-law is under investigation for skimming money from sporting and tourism contracts. In Andalusia, regional government officials are accused of using public funds to pay out fraudulent retirement packages. The president of the regional government of Madrid is investigated after admitting that he owns an expensive apartment listed as belonging to an offshore company. Unió, a governing coalition partner in Catalonia, is accused of siphoning public funds. And the children of the founder of Convergence, Catalonia’s other coalition party, are under investigation for influence peddling.

The influx of cash into the officials’ coffers can be linked to the real estate boom that preceded the current recession. Yet, the roots of the problem are much deeper and point to an entrenched system of political patronage that gradually worsened in the last decade. Transparency International’s (TI) Corruption Perceptions Index in 2002 ranked Spain 20th in the world with a score of 7.1 out of 10 (where 10 indicates highly clean and 0 highly corrupt). By 2012, Spain slid to 30th position with a score of 65 out of 100 (where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean).

Other indicators show that Spaniards are even more critical of their country’s condition: a recent poll showed that 96 percent of those polled believe corruption is widespread in Spanish politics. With approximately 800 politicians currently under investigation for corruption, the outrage against parties seeking questionable sources of funding and officials raiding public funds has been growing. Will the Bárcenas case be the straw that breaks the camel’s back?

The tide of public opinion is certainly turning. Not surprisingly, when the government is making severe cuts to spending on healthcare and education in response to the financial crisis, the charges of mis-appropriating the very same taxpayers’ money are particularly upsetting. Previously apathetic voters, who often did not feel that they had a viable “clean” alternative at the polls, are now coming out in force to speak out at town hall meetings. Investigative journalists have more corruption-related leads than they can handle. And demonstrators against the government’s austerity measures are also chanting "thieves" and "shame" to condemn the officials’ transgressions.

But it will take more than name-and-shame or even high-level convictions. The core of the problem lies in the rules for how political parties in Spain are financed and a widespread expectation that once a party wins the election that party’s officials will be placed in influential civil service positions. A degree of post-election rotation in public administration positions is an element of a healthy democracy but when meritocracy is almost entirely replaced with political considerations, dangerous incentives are created. That is especially apparent at the regional and municipal levels.

As TI-Spain pointed out a decade ago in a report on political corruption in party financing, “In response to this ‘demand’ there is a ‘supply,’ with interests that lie within the same institutions and territories. These are town-planning, land and housing permits, which depend on autonomous and municipal administrations for their authorization and price. The mechanism that the local authorities have created to alleviate the shortfall in their finances has created a land market that is to a great extent arbitrary, closed and likely to favor an illegal and secret financing system for all the parties in their local areas.”

Ten years later this assessment is still accurate. Not much has been done to alter the common expectations of political patronage, to increase the transparency of party financing, or to improve the public’s say in who makes it to the electoral party lists in order to hold officials accountable. Now would be a good time.

Anna Nadgrodkiewicz is the Senior Program Officer, Global Programs at the Center for International Private Enterprise

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