A dodgy connection

Energy provider Iberdrola, Spain's second largest company, is one of several massive corporations set to receive a chunk of the EU's post-Covid funds. But this week, in a case of spectacularly bad timing, the Spanish high court placed its CEO Ignacio Galan under investigation in connection with allegations of bribery, fraud and spying that date as far back as 2004.

Details emerged of Gallan's alleged subterfuge in late 2019, when two online Spanish papers claimed that he had employed former police chief Jose Villarejo in 2009. Allegedly, Villarejo was tasked with obtaining incriminating information on Florentino Pérez - president of Real Madrid and construction giant ACS - in an attempt to block a hostile takeover. Earlier in 2019, an internal investigation had found that, between 2004 and 2017, Iberdrola used a firm run by Villarejo on seventeen occasions, but supposedly just for market analysis. Another company-wide inquiry into the matter last month found no evidence of wrongdoing, (surprising, that), but conceded that the allegations were causing "significant reputational damage".

You're probably already familiar with shape-shifter Villarejo, whose lethal tape recorder has embarrassed dozens of Spain's leading business figures and politicians over the decades. He also appeared in the Juan Carlos scandal last year, having apparently taped the former king's one-time lover, Corinna zu Sayn-Wittgenstein, talking about the emeritus monarch's alleged money laundering activities. Villarejo is currently implicated in over twenty investigations, and was held in custody from late 2017 to March this year in connection with a separate bribery case.

Alleged association with this shady spymaster isn't the only scandal to have sullied Iberdrola's reputation, though. In May 2017, the High Court - the same tribunal that's just placed Galan under official investigation - received a complaint from an anti-corruption prosecutor claiming that the energy provider had made an "illicit profit of 20 million eiros" during winter 2013.

Iberdrola was adamant that no fraudulent activity had occurred, even though it was fined 25 million euros in 2015, after competition watchdog CNMC found it guilty of price-rigging in the wholesale electricity market. CNMC discovered that the company had withheld electricity from several of its plants throughout the winter of 2013, thus forcing more expensive providers to enter the market and drive up prices - meaning, of course, that Iberdrola could charge more per unit as well.

The recently-launched high court investigation doesn't in itself signify that Galan is guilty, nor will it necessarily result in formal charges - but it adds to the reputational damage Iberdrola has sustained over the last few years. And given that the multi-billion dollar company is also - bafflingly - a potential recipient of EU handouts, the timing couldn't be worse. If any cash does go Iberdrola's way, Brussels better keep an eye on it!