In Spain, Struggling Union Is Accused of Graft

In Spain, Struggling Union Is Accused of Graft

By RAPHAEL MINDER

The regional government of Andalusia says 1.8 million euros in public money was spent illegally to pay for events and gifts to officials.

By RAPHAEL MINDER

Published: December 26, 2013

MADRID — Spain’s shrinking labor unions have struggled during the economic crisis to put a brake on the government’s austerity measures and help reduce record unemployment.

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Marcial Guillen/European Pressphoto Agency

Thousands of people take part in a rally against budget cuts in Murcia, Spain.

Now, one of the country’s two main unions is facing a crisis of its own. It is accused by the regional government of Andalusia, Spain’s largest region, of misusing at least 1.8 million euros, or $2.46 million, in public money mainly intended for unemployed workers to pay for events and gifts to its own officials.

The union has denied any wrongdoing. But the scandal has already led to the resignation of the head of the Andalusian chapter of the union, the left-leaning General Union of Workers, or U.G.T., and a judge has opened a criminal investigation into the chapter’s finances.

The investigation started over a month ago, when the regional government said it had identified €1.8 million of misused subsidies and demanded reimbursement. In recent days, the regional government said it had widened its investigation and was checking another batch of suspicious subsidy claims by the U.G.T. amounting to €7.5 million.

“This is certainly the biggest case of corruption in the history of our unions,” said Roberto Miño Reig, a lawyer who specializes in labor law at Cremades & Calvo-Sotelo, a law firm in Madrid. “The unions should have been playing a key role in this crisis, but instead they have lost a lot of prestige.”

Unless the unions clean up their books and overhaul their management structures, Mr. Miño Reig warned, “such corruption could make them ultimately disappear.”

The case against the Andalusian chapter of the U.G.T. comes as many Spanish institutions have recently found themselves linked to corruption investigations, from the monarchy to the governing Popular Party of Prime Minister Mariano Rajoy.

“All of Spain’s representative institutions are under pressure, because what the crisis has done is bring to the surface a lot of practices that might have been tolerated before, but now no longer,” Mr. Miño Reig said.

Asked to comment on the problems at its Andalusian chapter, the national office of the U.G.T. said it had nothing to add to what its secretary general, Cándido Méndez, said in an interview this month with the Spanish newspaper El País. Mr. Méndez said that 2013 had been “a tough year” but insisted that his national leadership knew nothing about possible wrongdoing by an Andalusian chapter that was “very jealous of its autonomy.”

Mr. Méndez also argued that the U.G.T.'s troubles should not be compared to other corruption investigations that are underway, including a slush fund investigation that has landed at the doorstep of Mr. Rajoy. That case focuses on whether Luis Bárcenas, the former treasurer of the Popular Party, made illegal payments to Mr. Rajoy and other senior conservative politicians by using kickbacks from builders and other companies.

“The U.G.T. has a membership of one million people and very healthy roots in the work places, so one should avoid generalizing,” Mr. Méndez said in the interview with El País. “There is an element of harassment toward unions that goes back a long way, but it is also true that there are problems that we need to confront.”

The combined membership in Spanish unions has fallen to about 2.8 million from 3.2 million in 2007, before the start of the financial crisis. Union membership now stands at 15.9 percent of the Spanish work force, above the rates of only Poland, Estonia and France among European Union nations, according to a recent study by the Instituto de Estudios Económicos, a Spanish research institute.

Even though Spanish unions do not publish their financial accounts, they have also suffered from cuts in government subsidies as part of Mr. Rajoy’s recent austerity budgets.

José Ramón Pin, a professor who specializes in public administration and labor issues at the IESE business school in Madrid, said the crisis had revealed “the very weak financial structure of the unions, which has forced them to look for increasingly murkier sources of funding.” The final step, he said, is “to move from institutional flaws to personal corruption.”

Mr. Méndez, the head of the U.G.T., would not comment on exactly how the Andalusian chapter could have misused Spanish as well as European Union subsidies that it received mainly to help develop training programs for unemployed workers.

But Andalusia’s public prosecution office and the regional government say they have found documents showing that the U.G.T. falsified accounts to claim public subsidies and used the money for frivolous expenses. They include spending just over €100,000 to buy 700 leather bags, as well as pens for participants in one of its conferences and organizing a party during Seville’s annual Feria celebration, at a cost of about €12,000, according to photocopied invoices that were leaked to Spanish media outlets.

Even before the latest accusations against the U.G.T., the unions found themselves entangled in another corruption scandal in Andalusia, centering on whether the region’s governing Socialist politicians, in concert with union officials, paid millions in fictitious early retirement benefits to affiliates and family relatives in Andalusia. The case was opened in early 2011 by Judge Mercedes Alaya but has gradually widened, and her list of suspects now reads like a Who’s Who of Andalusia’s officialdom. Ms. Alaya is also now investigating the U.G.T.'s accounts and subsidy claims.

In March 2012, the U.G.T. and Spain’s other main union, Workers’ Commissions, called a general strike to protest against the government’s overhaul of labor rules to make it less costly for employers to hire and fire workers. Over the past year, however, the unions have used the labor market reforms to cut their own staff in order to help balance their books.

El Mundo, a national newspaper, and local news media started publishing leaked documents detailing the U.G.T.'s expenses after the Andalusian chapter’s management announced earlier this year that it would lay off 159 employees.

“Firing people creates bad blood and a spirit of revenge among those who lose their job, while their bosses continue to live comfortably thanks to subsidies,” said Mr. Pin, the IESE professor.

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