The nondescript acronym Emarsa (which stands for Metropolitan Entity for Waste Water Treatment) conceals a gripping story about massive plundering of public money.
Emarsa was created by the city of Valencia and 17 other nearby municipalities, and its mission was to treat waste water before discharging it into the sea, using it to water green areas or feeding it into the natural park of L'Albufera. The company ran the plant at Pinedo, the largest in the Valencia region and one of the biggest in Spain. Its funding came partly from a fee that all residents of the metropolitan area of Valencia pay on their water bills.
In July 2010 the Popular Party (PP), which had controlled the company since the 1990s, decided to liquidate it on grounds of bankruptcy. Auditors found a 17-million euro hole in the accounts, leading to an investigation into Emarsa that lasted from 2004 to 2010. So far, 16 people have been charged with misappropriation of funds, fraud and other corporate crimes; documents also reveal that Emarsa's managers paid millions of euros for nonexistent services and supplies. The fraud could run to well over 30 million euros.
Emarsa executives also made all sorts of extravagant personal purchases, which they charged to the company account. They bought jewels, Loewe handbags, luxury watches, Montblanc fountain pens, Armani clothes, electronic devices ranging from iPods to laptops, car accessories, and 1,000 euros' worth of lottery tickets a year. Besides that, Emarsa execs used company money to pay for luxury car rentals, spa circuits, and family trips to Paris, New York, Marrakesh, Stockholm and Johannesburg, where they always stayed at four- and five-star hotels.
Back home, managers stayed regularly at luxury hotels in the company of women described in the books as "Romanian translators." The list of expenses ranges from 92,443 euros a year on carveries and seafood restaurants to 7,50 euros for a pack of cigarettes or the groceries - all of which were charged to Emarsa.
In his more than 50 hours of court statements, former Emarsa manager Esteban Cuesta told the judge the way things worked at the company. Enrique Presto, then the CEO (and now mayor of Manises and deputy chief of the Valencia provincial authority), would come to his office, hand him some bills from the Loewe store, and tell him to go over and pay them. What with purchases, trips and meals, the heads of Emarsa spent nearly a million euros in six years, according to the raft of documents being examined by Judge Vicente Ríos.
And yet everything suggests the real plundering took place through the payment of phony services and supplies. Some are highly implausible, like the time when Emarsa paid for repair work for the treatment tanks numbers four, five and six - when the plant only had two. This work was paid out to companies run by three siblings, María Paz, Víctor Manuel and Sebastián García Martínez, the latter of whom was also the plant's department chief.
Bills also show that Emarsa apparently purchased, over a six-month period, 164 computer keyboards, 149 mice, 155 power supplies, 141 antivirus licenses and 79 monitors, even though the company only employs 32 people who sit at computer stations. The provider was the same Sebastián García Martínez who also worked as computer director at the plant where he was essentially selling his own supplies. In all, 35 companies now being investigated billed Emarsa for 40.3 million euros.
The company was controlled by a metropolitan assembly in which the city of Valencia held 45 percent of the vote and the PP enjoyed a comfortable majority. A job at Emarsa was something of a sinecure - nine of its employees made more than the Spanish prime minister - and the company gradually filled up with secondary party figures, as well as political associates from the regional party Unión Valenciana.
Safe in the knowledge that nobody was overseeing them, Emarsa execs were very careless about covering their tracks. For six straight years, the auditors at Mazars kept flagging up irregular contracting by Emarsa. But its president, Enrique Crespo, ignored the calls and told the board there were no major problems to report. He also turned down a proposal to make it necessary for at least two company execs to approve a contract or an allocation of funds.
The former manager also told the judge that Crespo made him hire four people who only showed up at the plant on pay day. One, Luis Botella, is a PP councilor in Moncada; another, Marisol Giner, is the former PP spokesperson in Benetússer. Meanwhile, the Valencia government almost tripled its funding for Emarsa (from 6.4 million euros in 2004 to 18.4 million euros in 2009), although the amount of treated waste water only grew 6.5 percent.
After avoiding the matter for weeks, regional leaders have finally spoken up this week about the Emarsa scandal. And what they are all essentially saying is that they can wash their hands of the water treatment company with a clean conscience.
"I had nothing to control; it is the justice system that must take action," said Valencia Mayor Rita Barberá. Meanwhile, the regional treasury commissioner, José Manuel Vela, said Emarsa did not answer to the Valencian government, and that he was "not at all" familiar with the firm, several of whose employees were members of the Popular Party, which rules the region. Yet court documents show that Emarsa's manager, Esteban Cuesta (who faces a number of charges and has given vital testimony), enjoyed the favor of the Valencian mayor, who gave him positions of power despite party resistance. Cuesta lacked any formal training to run a company like Emarsa.