It’s the 2rd of March 2019. Journalists and the political class may have been squabbling as the Spanish elections approach, but tonight they are setting aside their differences. Those present have two things in common: they are already tanned at the beginning of spring, and they answer his calls with the same title: “president”. Among the attendees, the only exceptions to the rule are the former Spanish Prime Minister José María Aznar, of the conservative Popular Party (PP); the current European Union’s High Representative for Foreign Affairs, Josep Borrell, a social democrat of the PSOE; his predecessor, the conservative José Manuel García Margallo; and former minister and owner of several businesses Isabel Tocino (PP). Today, the guests from the Popular Party and Florentino Pérez himself have received good news: several former senior officials of the PP and the president of Real Madrid himself had been called to appear before Parliament in relation to the Bárcenas case (an investigation into financing irregularities within the PP), but in the end the PP and the PSOE, with whom the PP has alternated power for decades, voted down the motion. ACS (the construction multinational that Florentino Pérez presides over) donations to the PP, according to documents from Luis Bárcenas, former treasurer of the political party, something that the businessman denies.
Real Madrid is playing at home against FC Barcelona, their great rival in the Spanish league. “I am powerfulto the extent that I am president of Real Madrid. If I leave tomorrow, I’m not powerful anymore,” admitted Florentino Pérez to journalist Jordi Évole, one of the most influential in the country. He recognised in this way what many of his rivals had already said in var- ious forums, such as the late Jesús Gil, another controversial businessman who was president of Madrid’s second football team and to whom HBO has dedicated a series. Gil said that the box at the Santiago Bernabéu football stadium, the home of Real Madrid, “fulfills in democracy the role that Franco’s hunts did in the dictatorship”: a pleasant, intimate and at the same time high-profile place to do business.
A person close to the construction company claims that making deals in the box is already a tired idea, but this is not true. People go there to enjoy themselves, and to share. And you can even enter without a tie. Florentino Pérez abolished the obligation to wear ties after Cándido Méndez, then secretary general of UGT, the largest union in Spain, had trouble entering because he was not wearing one. The former UGT leader confirmed this anecdote to La Marea and says that he feels “respect and affection” for the president of Real Madrid. He is not the only union leader who frequents the Bernabéu box, where an individual VIP space requires a minimum outlay of 5,000 euros per year. Some of them, such as former CCOO leader José Luis Sánchez García, have even ended up joining the club, in his case as a director of Real Madrid.
Also enjoying Spain’s most eagerly anticipated derby are leading media chiefs. This March 3rd, Floren, as he is popularly known, is joined by Juan Luis Cebrián, until very recently the head of the PRISA Group (the conglomerate that controls some of the main Spanish media, including El País, the SER and Cinco Días), Casimiro García-Abadillo (director of El Independiente and former director of El Mundo), Federico Jiménez Losantos (esRadio) and other leading journalists with varying orientations and editorial lines. He notices some attendees in the box from El Confidencial, one of the few national media that publishes uncomfortable information about Florentino Pérez, such as the interview they conducted in September 2019 with Ramón Caldéron, the former president of Real Madrid who has been aiming to bring Peréz down for several years.
The final whistle, end of the match. Madrid lose by a goal to Barça. The defeat marks a new episode in the businessman’s losing streak. The fans ask for his head (“Florentino’s guilty”). A few days after that defeat, the Supreme Court came down on his side in relation to the changes to the statutes that govern the operation of the team in white: if someone wants to dislodge him, they will have to demonstrate at least 20 years as a club mem- ber and provide a guarantee equivalent to 15% of the annual expenditure of the club (around 700 million euros).
Florentino Pérez performs equally well in the premises of a luxury hotel as he does before a motorway set menu, according to the person who runs one of the largest newspapers in Spain. In recent decades, his decisions have transformed the urban landscape of Spain and beyond. However, there are people and gestures that have been with him since before his jump to stardom. Florentino Pérez is among the ten wealthiest men in Spain and one of the richest 1,000 on the planet, with an esti- mated fortune of 1.8 billion euros. King Juan Carlos likes to talk about football with him. So does Silvio Berlusconi, former Italian premier and former owner of FC Milan, ex- plains Juan Carlos Escudier in the book Florentino Pérez: a black and white portrait of an achiever.
Just another engineer in Madrid’s townhall
Florentino Eduardo Pérez Rodríguez (1947) was born into a middle-class family that ran a pharmacy. When he finished his studies at a private Catholic high school, he decided to study Civil Engineering. As soon as he graduated in 1976, he undertook an ephemeral editorial journey with a friend and launched Guía del ocio, an imitation of the French cinema magazine Pariscope. Among his collaborators were the critic Carlos Boyero, one of the most prominent in Spain, as well as the journalist Arsenio Escolar and the Oscar-winning film director Fernando Trueba, then unknown. His first big break came at the hand of Juan de Arespacochaga, his first mentor, a Francoist leader who became mayor of Madrid at the suggestion of the former Francoist minister and then Vice President Manuel Fraga, and by decision of King Juan Carlos. Arespacochaga first pulled strings - according to Escudier and confirmed by a veteran former official of Madrid city council to get the young engineer a position in the “Asociación Española de la Carretera” construction lobby, a valuable mine of contacts that earned him the friendship of businessmen, trade un- ionists and even neighbourhood associations, as Juan Carlos Escudier reports in the book Florentino Pérez black and white portrait of an achiever.
Afterwards, Arespacochaga appointed him as a Sanitation delegate in the city council of the Spanish capital. Florentino Pérez was 29 years old. A technician from the Madrid council who worked with him during that period says that the businessman “was a power in the Madrid City Council from the moment he graduated”, although he also clarifies that it was he himself who launched the first comprehensive sanitation plan of the capital, which laid the foundations for life to be restored to the then stagnant Manzanares River, explains the technician anonymously, a condition that most of the sources that agree to talk to the author of this article about the businessman ask for.
Years later, when Arespacochaga abandoned his po- litical career and left the Senate, his pupil, by then a promising businessman,gave him a well-paid seat on board of Cobra, one of his most international, and also most controversial, companies. After leaving the city council, Florentino Pérez obtained a position of responsibility in the Ministry of Agriculture, in the area of Infrastructure. During those years, in addition to making important contacts, the young engineer also developed an inter- est in the world of politics. It was then that he joined the Democratic Reform Party formed by Miquel Roca, one of the fathers of the Spanish Constitution, and the prestigious lawyer Antonio Garrigues Walker.
The adventure ended in an electoral massacre and the party was barely active between 1983 and 1986. Florentino Pérez said goodbye to institutional policy and went fully into the world of business and construction. Together with his friend Juan Torres, from his time at the Madrid city council, and with the help of Banco Urquijo and other engineers, in the early 1980s Pérez bought first Construcciones Padrós and then Obras y Construcciones Industriales SA (Ocisa), both for a symbolic price: a peseta. By the time of this adventure other famous names from the public sphere had al- ready appeared, such as that of Pedro López Jiménez, former Undersecretary of Public Works, and that of one of the specialists in the purchase and sale of Spain’s best-known companies, José María Loizaga, Pérez’s right-hand man to this day (a title that he now shares with businessman Marcelino Fernández, now chair- man of the executive board of Hochtief, a German construction company which has been under the control of ACS since 2016).
OCP, the embryo of what is now ACS, was the eighth largest public contractor of Spain in 1994. Two years later, with the arrival of conservative President Aznar and Minister Arias-Salgado, it climbed to third place. In 1999, ACS became the main recipient of public con- tracts (often processed urgently and without competition) in the emerging Spanish economy. Already then, Spain stood out in Europe for generating 70% of all pub- lic concessions, according to Public Works Financing. In 2016, ACS became the largest public works contractor internationally according to the Public Works Fiinancing Newsletter. At present, the multinational construction company of Florentino Pérez has more than 200,000 employees, not counting the personnel hired by its subcontractors.
Perez’s entry into the club of VIP contractors was cemented on the day that the big businessmen of the sector in Spain set his place at the so-called “contracting table”. This was the unregistered lobby of brick and mortar bosses that periodically met to have lunch or dinner, share out public contracts and formulate lobbying strategies at reserved tables at exclusive restaurants in Madrid like Zalacaín or Jockey. By then, Florentino Pérez was accumulating ample experience and had had a brilliant career: he practically started from scratch and eventually managed to gain control of Cobra, OCP, Auxini, Dragados, Unión Fenosa, the German colossus Hochtief, Abertis...
In 1996, the PP first came into power in Spain. A year later, ACS was constituted, after the merger of OCP, Ginés, Invesan and Vesan. Florentino Pérez then pronounced a phrase which foreshadowed the con- struction fever to come: “We used to sell 1,000 million (pesetas) a year, and today, one billion a day.” Over the years, the ACS Foundation (the charitable arm of ACS) would become one of the main sponsors of FAES, the think tank of the PP led by former president Aznar.
The expansion accelerates
In 2003, ACS took control of the giant construction company Dragados. Around that time the state government and several regional administrations of the conservative persuasion awarded it some of the main projects in Spain: the highway surrounding Madrid, several private highways, the suburban connection to Madrid’s airport, the renovation of the Prado museums and the Reina Sofía, high-speed trains, the Valencia metro, the City of Arts and Sciences... The developer’s businesses began a process of diversification towards sectors also linked to the public sphere, such as waste collection, waste treatment, energy, mining, transportation and auxiliary and socio-sanitary services, from public parking management to hospital cleaning, through the lucrative businesses of nursery schools, migrant centres, nursing homes and even several police stations. Recently, in mid-2018, Florentino Pérez sold 11 police stations used by the Mossos d’Esquadra (Catalan police) to the British fund RiverRock.
Florentino Pérez’s leap to stardom was consolidated in the year 2000, with the arrival of his presidency of Real Madrid. The developer, football enthusiast and Real Madrid fan, had been aspiring to the post for years. One the most important successes for his image came the following year: four skyscrapers that crowned the skyline of Madrid and bore his signature. Previously, the Sports City of Madrid had been located there, on land which was ceded by the city council decades ago on the condition that it be used for sports. In 2001, the mayor’s office (governed by the PP), as well as all the other political parties - including the Izquierda Unida (United Left) - authorised Florentino Pérez to move the sports venue and build on the land. Only one councillor of the PSOE, Matilde Fernández, opposed him, later denouncing the decision in various media.
As soon as he became president of Real Madrid, Florentino Pérez appointed several senior officers of the Ministry of Development (under the control of the conservative party) as directors of the club. Precisely when former Minister Arias-Salgado left office, he became non-executive president of Carrefour Spain, whose first shareholder was the March Group, also the first shareholder of ACS. In 2001, at the dawn of the period in which Spain built more than Italy, Germany, the United Kingdom and France combined, ACS accounted for 21.3% of all works awarded by the Ministry of Development. In 2015, the European magazine Politico points to Florentino Pérez as “one of the 12 men who ruined football” for his prioritisation of business over the sporting spirit. The businessman and his management team signed before a notary that they would not use Real Madrid for profit, but thanks to his trips with the team in white, Pérez has been able to access several Gulf petromonarchies, Asian countries such as China (during a team tour, ACS won the contract for the treatment of waste in Beijing), Japan and Thailand. More recently, Real Madrid has also taken him to Australia and, above all, Latin America.
The empire in whioch the sund never sets
An illustrative case occurred in December 2018, when the Bernabéu hosted the final of the Copa Libertadores, the main championship in Latin America, between the Argentine teams Boca Juniors and River Plate. Just then, the Argentine Executive approved a decree to increase the profitability of access tolls to the country’s capital, a business in which Abertis has an notable presence, with concessions on a 30-year time horizon. A similar coincidence occurred in 2015. Shortly after appearing with President Juan Manuel Santos and announcing the signing of James Rodríguez, Florentino Pérez signed several megacontracts with the Colombian government for the construction of highways and tunnels.
The same happened in Mexico in 2014: two days before appearing with President Enrique Peña Nieto and announcing the signing of Javier Chicharito Hernández, several ACS subsidiaries signed multi-million euro contracts with the state-owned oil company Pemex, including several agreements now under investigation. A report by the Mexican magazine Proceso, published in June 2019, calculates more than 6 billion euros in public contracts in favour of Florentino Pérez in Mexico since 2003 and cites the case of Cobra, one of the most con- troversial subsidiaries of ACS. According to the Mexican magazine Proceso, Florentino Pérez consolidated his business interests in the country by “taking advantage of the international fame” of the club “to win the sympa- thies of the communities where it conducts its business”.
Some of the most explosive projects involving Cobra and other companies of the ACS group took place in Central America, especially in the indigenous territories of Guatemala. The OMAL (Multinational Observatory on Latin America) researcher Elena de Luis, co-author of several reports detailing the effects of the construction of the Renace II Hydroelectric Complex, explains to the project is involved in the violation of the rights of more than 30,000 indigenous Quekchis. In the affected area, in the mountains of the Cahabón River, there have been disappearances of community leaders that remain unsolved.
During an interview on TV3, Lolita Chavez, a Guatemalan indigenous leader, Florentino Pérez of "privatising the rivers that supply water.” “This pro- ject was installed in a framework of corruption that exists in our country,” says Isabel Solis, director of the Human Rights Commission of Guatemala, which provides legal assistance to the populations affected by the ACS hydroelectric plant, such as the indigenous activist Bernardo Caal, sentenced to more than seven years in prison for resisting the project, or the journalist Rolanda García, of Telesur. This hydroelectric project was approved by the government of Otto Pérez Molina, in prison since 2015 for various corruption offences. A year before his arrest, the Guatemalan president posed smiling in a Real Madrid shirt next to Florentino Pérez.
Friends in high places
The entrepreneur’s network of contacts also reaches the highest levels of justice. It is one of the least ex- plored networks of the developer, despite the number of judges and magistrates that accompany him in the Bernabéu box. The case of José Manuel Sieira Míguez, who has a first-class seat, stands out. Sieira Míguez is not just any judge: until mid-2015, he presided over the Contentious Cases Chamber of the Supreme Court, capable of overthrowing Government decrees and re- sponsible for settling appeals filed against the decisions of the Council of Ministers, the General Council of the Judiciary, the Congress of Representatives, the Senate and even the Constitutional Court.
Among the former ministers for Justice who are regulars in the box are Mariano Fernández Bermejo and Rafael Catalá. In 2015, the UDEF suspected that ACS paid more than one million euros in fake invoices and gifts to the PP of Murcia in return for contracts connected to the desalination plant in Escombreras (Cartagena). ACS and its subsidiaries made more than 600 million euros through the contract. A reform of the Criminal Procedure Law, promoted by the PP government and approved in 2015 by order of Minister Catalá, could bring down the case, which is still going through the courts.
The Spanish justice system has never directly charged Florentino Pérez in a corruption case. The name of the businessman is neither among those with charges in the last judicial process against one of his companies. At the beginning of January, Spainish Justice decided to bring Dragados to trial for possible crimes of prevarication and fraud in the contract to expand the port of El Musel (Asturias). The extra costs of this construction amounted to 251 million euros. The trial arrives ten years after the completion of the works. The last scandal of the businessman, related to the Royal House, jumped into Spanish newspapers in January of this year. A labour inspection determined that the company Integra (belonging to Clece) com- mits “serious” infractions with its disabled assistants deployed in the Royal Palace to attend visitors, such as not respecting their rest breaks (with working hours of 11 hours per day on average), not paying extra worked hours or not having a contract.
The conventional press usually echoes the achieve- ments of the developer in the international arena, such as the takeover of Hochtief, the German infrastruc- ture and construction giant, or the entry of the Abertis Foundation into the UN Group for Road Safety. The most recent data from ACS reveals that Spain only represents 14% of its total turnover. It highlights the turnover of its companies in 34 of the 50 countries with the highest rates of corruption perception (according to the Transparency International classification) where ACS has various operations. The most drastic cases take place in Latin America and Africa, where the developer usually takes on col- laborative projects or public-private partnerships. For example, ACS recently signed an agreement with the government of the Democratic Republic of the Congo, one of the nations most afflicted with corruption and misery. The contract is worth 12,200 million euros, together with a Chinese company – equivalent to 40% of the country’s GDP.
Florentino Pérez has avoided conflicts in the regions thanks to the structure of some of his companies, complex networks of overlapping companies in which project management is separated from legal and economic aspects. Thus, it is more difficult to make claims against ACS and its subsidiaries when problems arise, as happened with the construction of the new international airport in Mexico City: Avanzia, an ACS subsidiary in charge of that project, was disqualified from competing in new public projects. The ban does not affect any of the other companies in ACS empire.
In December 2018, President Pedro Sánchez travelled to the inauguration of his Mexican counterpart, Manuel López Obrador, accompanied by several businessmen, including Eugenio Llorente], president of Cobra. In Latin America, the developer’s companies are also proneto the “revolving door” phenomenon, counting among their key players people from all kinds of high public positions, [including former ministers, such as Francisco Gil Díaz, the former Mexican Secretary of Finance in Vicente Fox’s government and President of Avanzia, the company that integrates ACS’s business in Mexico.
In Latin America, the developer’s companies are also prone to the “revolving door” phenomenon, counting among their key players people from all kinds of high public positions, including former ministers, such as Francisco Gil Díaz, the former Mexican Secretary of Finance in Vicente Fox’s government and President of Avanzia, the company that integrates ACS’s business in Mexico.
In tune with the media
Florentino Pérez “is not and never will be a shareholder of a media company,” according to a source close to him. However, he knows the workings of the media business. Florentino Pérez maintains an intimate relationship with the great dinosaurs of Spanish journalism, but also with some promising upstarts on the national scene. In his book The Director, David Jiménez, former director of El Mundo, describes Florentino Pérez as one of “The Untouchables”. In March 2018, ACS organised a press conference to declare that the newly bought Abertis would be integrated into the Hochtief matrix. Florentino Pérez cut off the journalists’ questions a few minutes later. As he left the room, Júlia Manresa, of the Catalan news- paper ARA, asked if Abertis would keep its brand. The de- veloper stroked her face and said: “Everything will remain the same”. Manresa published a tweet that was shared more than 6,000 times: “Today Florentino Pérez caressed my face to answer a question at a press conference as if it were another of his many properties”. None of the jour- nalists present commented on the incident in public, although Manresa says she received several calls from fellow guild members who told her “you are very brave, because if this man chose, you would not work for the media again anywhere in Spain”.
José Bautista (Grupo Caso Castor & La Marea)
Net Worth : 1.8 billion euro in 2019 (Forbes)
= more than 51,000 years of the average salary in Spain
= more than 142,000 years of the Spanish minimum wage
Country : Spain
Sector : Construction
Companies : ACS
Football club : Real Madrid
|CASTOR: The failed project that epitomises Florentino|
Florentino Pérez had to hear Maria Sirvent, a member of Parliament from the CUP (a Catalan leftist pro-independence party), define him in unkind words during her June 2019 appearance before the commission of the Parliament of Catalonia investigating possible irregularities in the Castor project. This undersea gas storage facility is one of the most controversial projects of his company, ACS. “I have had nothing to do with this,” said the head of ACS shortly before, going on to say that he regretted that the Castor case had become “a little politicised”. The altercation with the Catalan representative who dared to interrupt his statement ended with an invitation from Florentino Pérez to Maria Sirvent to sit in the Santiago Bernabéu box at the Real Madrid stadium. The case of the failed Castor project has become a symbol of the squandering and collusion between political and economic powers that citizens end up paying for.
The construction of the underwater gas storage facility, located in the waters off Castellón, was approved by the social democratic government of José Luis Rodríguez Zapatero (PSOE) in 2008. It began operating in 2012, without taking into account independent reports that questioned its usefulness and warned of the risks that it would entail. After several villages near the facility registered around one thousand earthquakes, the Spanish authorities ordered its construction to be halted permanently in 2014. The project generated a debt of 1,350 million euros: 2,420 million including interest. Florentino Pérez was able to cash in everything, including a compensation for the concession’s termination that contemplated ‘fraud or negligence’. Now several banks that financed the costly compensation (Santander, Caixabank and Bankia) claim that Enagás (so to say the State) has to pay back that money through the citizens’ gas bills ; 1.3 billion that were paid to ACS for a project that never worked or will work.
Despite its large size, the Castor project was awarded, without public tender, to Escal UGS, one of the more than 1,200 companies under the control of the multinational ACS. The former PSOE minister Magdalena Álvarez, who was also vice president of the European Investment Bank (EIB), even modified the maritime boundaries of Catalonia and the Valencian Community (two of the most important regions of the Spanish State) to facilitate the project. During his career, Florentino Pérez, specialising in large public works, has made numerous decisions that, under other circumstances, would be considered high-risk. The Castor project is a prime example. In the midst of the economic crisis, marked by austerity and cuts in social policies, the conservative then Prime Minister, Mariano Rajoy, ordered 1,350 million euros in compensation to be paid promptly to ACS for the shutdown of the facility.
However, the Constitutional Court halted the multimillion euro payment, including bank interest. Citizen organizations Xnet, the Observatori del Deute en la Globalització (ODG) [Observatory on Debt in Globalization] and the Institut dels Drets Humans de Catalunya [Catalan Human Rights Institute] created the citizen Castor Case platformand filed a criminal complaint against Florentino Pérez and eight others (including five former ministers) for possible crimes of prevarication, fraud and embezzlement : of public money. Rejected by the National Court and the Constitutional Court, work now continues to prevent citizens from having to once more face the possibility of assuming the payment of the compensation, with interest, again in their gas bills, or through the general state budget or other financial architecture mechanisms. In January of this year, the Association of Those Affected by the Castor Project succeeded in pressing charges for crimes involving the imprisonment of some of Castor’s executives and compensation for the damages the earthquakes caused.
For its part, the EIB has already recognised that it did not evaluate the risk of injecting more than 1.4 billion euros into co-financing the construction of the gas facility. Several previous and subsequent reports highlight serious environmental, social and economic risks of the project. Likewise, the National Markets and Competition Commission (CNMC, after the Spanish acronym) must decide what happens with the debt of 1,350 million euros and the interest on it. The game is not over yet and any outcome is possible.
José Bautista, Group Caso Castor & La Marea