Tuesday, October 31, 2006
SPANISH CRACKDOWN AS CORRUPTION CASES ESCALATE
A growing number of senior officials in Spain’s major resorts have been sacked on charges relating to the reclassification of rural land for urban development.
With Spain’s Deputy Prime Minister, María Teresa Fernández de la Vega, announcing to the press last week that the government is adopting a zero tolerance policy against real estate corruption across the country, Typically Spanish reports a massive rise in the number of cases in places like Madrid, Alicante and Murcia.
The report highlights a number of recent cases all over Spain. For example, the Socialist mayor, Pedro Torrejón, has now resigned after being implicated in the illegal reclassification of land for the construction of 5,000 new homes in Madrid. In a separate case, a Deputy Socialist Spokesman in the Madrid regional parliament confirmed that the party was giving evidence to the Real Estate Prosecutor on two multi-million euro deals which allegedly benefited the family of the region’s president, Esperanza Aguirre.
While the Socialist party has so far sacked three mayors from the party in Madrid for their implication in ‘real estate irregularities’, there are currently six cases against Partido Popular officials. These include a €6 million embezzlement case against Luis Díaz Alperi, and the PP councillor Juan Zaragoza; an accusation relating to the ‘use of privileged information’ and the ‘fraudulent collection of commissions’ against Maria Anotonia Torres, PP councillor in Telde, Gran Canaria; and a charge of perversion of the course of justice (and other charges) against José Manuel Medina, PP Mayor of Orihuela, and five other councillors by the anti-corruption prosecutor.
The report also highlights a case in Murcia, where the region’s Chief Prosecutor, Manuel López Bernal, is investigating the Murcia Government about the sale of a protected area of Águilas which was resold at triple the price after reclassification.
What is being done to stop this?
With all of these cases mounting up, Spain’s Deputy Prime Minister, María Teresa Fernández de la Vega, has called for the cooperation of autonomous regions and local town halls in dealing with this corruption. While the local parties appear to making an attempt to get their houses in order at the local level, many hope to see some results from the newly created force of real estate prosecutors and 200 Civil Guards who have been charged with investigating real estate irregularities.
Another measure to prevent further abuse (recently highlighted in the latest issue of World of Property magazine), is the government’s strategy of issuing compulsory purchase orders to buy sections of coastal land of outstanding natural beauty. However, Typically Spanish reports that around 15,000 ‘illegal’ homes built in Chiclana de la Frontera were all awarded an amnesty by the local Socialist Town Hall – which might set a dangerous precedent for other parts of Spain.
Commenting on this, Martin Dell of Kyero.com said: "There's no other course the government can take regarding illegally constructed properties once the constructor has sold them. The problem is this: who will compensate the current owners for the loss of their homes? The developer will have set up a new limited company for the development - that will limit his liability to €2,000! If pressed, the company will be declared bankrupt - a common practice which allows developers to wash their hands of any 'after sales' issues. That leaves the local government to pick up the tab - which they're unlikely to do as effectively, the tax-paying owners (and voters) of legally built developments will be subsidising the shady practices of government and developer.
"Declaring an amnesty on existing developments which have been sold already is the only commercially and politically viable option. Hopefully, the government will focus first on illegal developments currently under construction and be a little more rigorous in issuing new building licences. In cases where the owner himself has built without permission, I have heard of demolition notices being issued - because there's no political or commercial fallout in these cases."
Compensation from the industry
In a recent interview in Spanish paper, Sur in English, the new town planning man for Marbella suggested that agents and developers would be liable for compensation when illegal homes were demolished. José María Ruiz Povedano, who had just taken up his new position in the municipal Urban Planning Office in Marbella (as chief representative of the Office of General Urban Planning) said: "If there has been over-building, either in number of houses or density of housing, we have to extend the parameters with regard to green spaces, parking areas, roads and so on. All this will require compensation to be made, and logically, those people who have benefited from this illegal development will be those required to pay this compensation."
When asked about the proportion of the 30,000 illegal homes that could be made legal, he added: "Initially we are talking about approximately 85% that can become legal, as long as they conform to the criteria we have drawn up in the new plan with regard to compensation for green spaces and basic infrastructure."
While many will have benefitted from this illegal development, it's not going to be easy to prove that they were behaving illegally. Commenting on the recent examples of making certain developments legal by amnesty, Mark Stucklin of SpanishPropertyInsight.com said that some examples would have to be made. "This government has taken the toughest line on real estate corruption and the Marbella authorities want to scare people into changing the culture," he said. "The government cannot afford to demolish all of these homes because too many people will have to be compensated, but examples will be made of some companies where it can be proved they have acted illegally."
A major issue, says Stucklin, is that while there was a culture of gaining permission through bribes, the town hall urban planning department sanctioned all of these projects so agents can argue they acted within the law. However, if agents continued to sell property after becoming aware of an order to halt new projects it will be much harder to plead ignorance.
A growing number of senior officials in Spain’s major resorts have been sacked on charges relating to the reclassification of rural land for urban development.
With Spain’s Deputy Prime Minister, María Teresa Fernández de la Vega, announcing to the press last week that the government is adopting a zero tolerance policy against real estate corruption across the country, Typically Spanish reports a massive rise in the number of cases in places like Madrid, Alicante and Murcia.
The report highlights a number of recent cases all over Spain. For example, the Socialist mayor, Pedro Torrejón, has now resigned after being implicated in the illegal reclassification of land for the construction of 5,000 new homes in Madrid. In a separate case, a Deputy Socialist Spokesman in the Madrid regional parliament confirmed that the party was giving evidence to the Real Estate Prosecutor on two multi-million euro deals which allegedly benefited the family of the region’s president, Esperanza Aguirre.
While the Socialist party has so far sacked three mayors from the party in Madrid for their implication in ‘real estate irregularities’, there are currently six cases against Partido Popular officials. These include a €6 million embezzlement case against Luis Díaz Alperi, and the PP councillor Juan Zaragoza; an accusation relating to the ‘use of privileged information’ and the ‘fraudulent collection of commissions’ against Maria Anotonia Torres, PP councillor in Telde, Gran Canaria; and a charge of perversion of the course of justice (and other charges) against José Manuel Medina, PP Mayor of Orihuela, and five other councillors by the anti-corruption prosecutor.
The report also highlights a case in Murcia, where the region’s Chief Prosecutor, Manuel López Bernal, is investigating the Murcia Government about the sale of a protected area of Águilas which was resold at triple the price after reclassification.
What is being done to stop this?
With all of these cases mounting up, Spain’s Deputy Prime Minister, María Teresa Fernández de la Vega, has called for the cooperation of autonomous regions and local town halls in dealing with this corruption. While the local parties appear to making an attempt to get their houses in order at the local level, many hope to see some results from the newly created force of real estate prosecutors and 200 Civil Guards who have been charged with investigating real estate irregularities.
Another measure to prevent further abuse (recently highlighted in the latest issue of World of Property magazine), is the government’s strategy of issuing compulsory purchase orders to buy sections of coastal land of outstanding natural beauty. However, Typically Spanish reports that around 15,000 ‘illegal’ homes built in Chiclana de la Frontera were all awarded an amnesty by the local Socialist Town Hall – which might set a dangerous precedent for other parts of Spain.
Commenting on this, Martin Dell of Kyero.com said: "There's no other course the government can take regarding illegally constructed properties once the constructor has sold them. The problem is this: who will compensate the current owners for the loss of their homes? The developer will have set up a new limited company for the development - that will limit his liability to €2,000! If pressed, the company will be declared bankrupt - a common practice which allows developers to wash their hands of any 'after sales' issues. That leaves the local government to pick up the tab - which they're unlikely to do as effectively, the tax-paying owners (and voters) of legally built developments will be subsidising the shady practices of government and developer.
"Declaring an amnesty on existing developments which have been sold already is the only commercially and politically viable option. Hopefully, the government will focus first on illegal developments currently under construction and be a little more rigorous in issuing new building licences. In cases where the owner himself has built without permission, I have heard of demolition notices being issued - because there's no political or commercial fallout in these cases."
Compensation from the industry
In a recent interview in Spanish paper, Sur in English, the new town planning man for Marbella suggested that agents and developers would be liable for compensation when illegal homes were demolished. José María Ruiz Povedano, who had just taken up his new position in the municipal Urban Planning Office in Marbella (as chief representative of the Office of General Urban Planning) said: "If there has been over-building, either in number of houses or density of housing, we have to extend the parameters with regard to green spaces, parking areas, roads and so on. All this will require compensation to be made, and logically, those people who have benefited from this illegal development will be those required to pay this compensation."
When asked about the proportion of the 30,000 illegal homes that could be made legal, he added: "Initially we are talking about approximately 85% that can become legal, as long as they conform to the criteria we have drawn up in the new plan with regard to compensation for green spaces and basic infrastructure."
While many will have benefitted from this illegal development, it's not going to be easy to prove that they were behaving illegally. Commenting on the recent examples of making certain developments legal by amnesty, Mark Stucklin of SpanishPropertyInsight.com said that some examples would have to be made. "This government has taken the toughest line on real estate corruption and the Marbella authorities want to scare people into changing the culture," he said. "The government cannot afford to demolish all of these homes because too many people will have to be compensated, but examples will be made of some companies where it can be proved they have acted illegally."
A major issue, says Stucklin, is that while there was a culture of gaining permission through bribes, the town hall urban planning department sanctioned all of these projects so agents can argue they acted within the law. However, if agents continued to sell property after becoming aware of an order to halt new projects it will be much harder to plead ignorance.
Comments:
Post a Comment
