“50% discount on the last tickets for the Titanic!” – Judging by the current events that would be a great slogan for Spain’s real estate market.
The Spanish economy is in free-fall. It only takes a walk to the main Square in Madrid to realize this. Besides the statue of Don Quijote and Sancho Panza, one can also see the unlit windows of the abandoned skyscraper “Spain” in the centre of the Spanish capital. In 2005, “Spain”, back then a symbol of Spanish economic growth and prosperity, was acquired by the Santander Bank. Today, it is a visual representation of the burst real estate bubble.
It did not happen overnight. Foreign investors have been fleeing the country for the last 7 years and all the while the bureaucrats and the Spanish press have been trying to calm the public opinion by stating that “Spain has the best system of financial controls in the world”. Now that the investors are gone, the government has no clue where to find money to pay for this army of controllers and regulators and thousands of Spanish journalists have not been paid their wages in months, a lot of interesting facts on the real effectiveness of Spanish finance controlling have come to light. As it turns out, the Spanish public officials have scared off the foreign investors, but did not do as much for establishing order within their own financial sector.
A good example is the scandal that has surrounded the biggest Spanish banking group, BANKIA, created through the merger of several regional savings banks or “cajas”. Before the newly born bank went on the Stock Exchange, the Spanish financial press had extensively marketed the venture, pointing out its competitiveness and recommending investors to buy BANKIA’s shares. There were superb financial reports published in the newspapers (as it turned out later, paid for by the bankers) that told tales of billionaire profits supposedly reaped by the group in 2011. Several months later it was discovered that there were no profits at all – quite the contrary.
At first, BANKIA announced a 4 billion Euro loss. Two weeks later, that estimate grew to 40 billion. As of this moment, Brussels deems the cost of saving the Spanish financial system to be 100 billion Euro. Spanish minister of economy, Luis de Guindos, has officially asked for a 60 billion aid from the European Union. According to independent sources, Spain is already negotiating a full-scale bailout in the amount of 300 billion Euro. Two big questions remain unanswered: will Europe be able or willing to provide such aid and will the Spanish crisis result in the crash of the whole Euro-zone?
The saddest fact is that, despite the oft-lauded system of financial controls (many local public servants still insist in taking pride in it), nobody trusts Spain’s financial statistics anymore, including the IMF and Brussels. That is why the financial audit of the Spanish banks has to be carried out by independent auditing firms who have no connections to Spain. And yet, the Spanish government has declined any proposal to investigate the reasons behind BANKIA’s debacle, by stating that any information resulting from such investigation would likely create panic and deliver a crushing blow not only to Spain, but to the rest of the Eurozone as well.
The Spanish press should equally share the responsibility for this debacle. The journalists, who have been eagerly discussing the issues of fighting foreign crimes and international corruption, have displayed little to no understanding of the situation within their own country.
Consider the Spanish press’ pursuit of the so-called “international mafia”. Spanish journalists have apparently “fought” the foreign criminals all over the world, and have been regularly informing their readers of it as well. But here comes a problem – many of these “investigations” have turned out to be simple invention, quite possibly made up to distract Spaniards from their own and very real problems. Sadly, this “red herring” is often also a flagrant promotion of xenophobia and particularly anti-Semitism in the Spanish public opinion.
In 2009, a group of US congressmen addressed a letter to the Spanish government, which points out to the worryingly high levels of anti-Semitism amongst Spanish people (for instance, 48% of respondents to the survey carried out by the Anti-Defamation League stated that “Jews still talk too much about Holocaust” and a staggering 68% believed that “Jews carried too much power on the international financial markets”). The letter puts the blame directly on the Spanish press for fuelling and often creating a negative stereotype of the Jewish people. The Spanish mainstream newspaper “El Pais”, for instance, is “consistently publishing articles and cartoons conveying crude anti-Semitic canards and stereotypes” – further states the letter.
For example the same newspaper “El Pais” during the last five years has been regularly publishing materials related to the so-called “Kokorev Case” – named after Vladimir Kokorev, a businessmen of Russian origins (coincidentally, Kokorev’s parents and family are Israeli citizens) residing in Spain, known for his Soviet past as an academic and expert in Africa. In each newspaper issue, one can find more and more details about him and his family, including their financial situation and even private life. One thing remains the same: nobody has ever heard of him in a Spanish court or in the Spanish prosecution office. This is corroborated by official certificates, the last issued by the Spanish Department of the Interior on July 3rd of this year – and which clearly states that Vladimir Kokorev was at no time subject to a criminal investigation and presents no interest to the Spanish police (he does not appear in their records of persons of interest).
However, Vladimir Kokorev is currently quite well known in the Russian courts due to half a dozen defamation cases that he has initiated and won against mass media sources for defamation, including one against the Spanish newspaper “El Mundo”. All of these court decisions state that the shipping company “Kalunga” (which had once belonged to Mr. Kokorev) received money for public contracts with the government of Equatorial Guinea. These funds were paid for the maintenance and building of vessels, and not – as some Spanish mass media sources still insist – for the acquisition of real estate in Spain for President Obiang and his relatives.
‘In Spain, the Kokorevs have filed a civil case against “El Pais” journalist Jose Maria Irujo, who had started this story for reasons we ignore,’ states the lawyer of Kokorev’s family Kirill Yashenkov, ‘On October 18 a Moscow’s Lyublinsky District Court ordered Spanish newspaper El Pais to redact a 2009 article featuring information on Russian national Vladimir Kokorev’s involvement in a Spanish money laundering scheme. A Russian blogger published in his blog fragments of the article translated into Russian. Kokorev then called on the court to recognize the information as false and discrediting to his honor, dignity, and business reputation. The court sided with Kokorev and ordered the Russian blogger, El Pais, and journalist Jose Mario Irujo to redact the information they had disseminated”.
So what are the real reasons behind the media persecution of this family? One might argue that it is a very particular way for the Spanish people to fight for freedom and democracy in Equatorial Guinea (which some Spaniards still consider to be their colony). A more likely explanation is that this, as well as other stories of “investigations” of foreign investors and the consequent winding up of hundreds of companies in Spain, is simply a distraction aimed to divert the attention from the domestic corruption reigning in the Spanish public and private institutions.
This economic debacle shines new light on the relations between the financial interests and the press in Spain and it is obvious that the now insolvent Spanish banks have been generously subsidizing the press for the last decade. For instance, the editorial group PRISA, publisher of “El Pais”, has survived all these years only thanks to the uncanny generosity from the financial sector. As of today, the outstanding debt of PRISA ascends to 3.5 billion (!) Euro. By the way, the biggest share of PRISA’s debt is held by BANKIA, the bailout of which will cost the taxpayers at least 60 billion Euro.
In 2011, while PRISA was reporting losses of 451 million Euro, the chief editor and founder of “El Pais”, Juan Luis Cebrian, became the second highest paid manager in all of Spain. During that year he paid himself a salary of more than 13.5 million Euro. Meanwhile, the journalists of the newspaper have not been paid their wages in months, but in the grand scheme of things, these are minor details.